How to Survive This Market Without Picking a Side
Let’s be honest — this market has been brutal.
Sectors are falling like dominoes. And we’re not just talking about the usual suspects like Tech (XLK), which has already taken a beating in 2025.
This week, Energy (XLE) — which had been one of the strongest performers all year — completely rolled over. Phillips 66 (PSX) dropped 11% in a single day. Financials (XLF) have been crushed. Even sectors that were starting to rebound, like Communications (XLC), got yanked lower with everything else.
And yet, in all this chaos, a few things are starting to stand out.
First: not everything is getting destroyed equally. The more defensive sectors — like Utilities (XLU) and Consumer Staples (XLP) — are holding up relatively well. No surprise there. These are the “must-have” names. People don’t stop buying soap, soda, or electricity just because the market’s down. So stocks like Coca-Cola (KO), Procter & Gamble (PG), and Clorox (CLX) are showing that calm strength — and that matters.
Second (and I would say more importantly): we’re starting to see signs that some of the most beaten-down names might be oversold. Discretionary (XLY), which has led the downside all year, suddenly isn’t dropping as fast as the broader market.
Now, you might think it’s odd to celebrate a sector that dropped another 10% in the last week, but it’s often in these aggressive drops you can best tell if a stock is truly oversold. I think we’re seeing that now.
Tesla is another great example. It’s still ugly, don’t get me wrong… The last week has been ugly, don’t get me wrong…
But since April 1, Tesla is down 14% and Apple is down 20%.
Again, I don’t think that is some big win for Tesla, but it starts to hint that Tesla might be overcooked.
Same with the MAG 7 in more general terms. They’ve been absolutely hammered since March — trillions of dollars in market cap gone — but now they’re holding up a little better than the S&P 500 (SPY) since liberation day. That shift in behavior is worth watching.
So what do you do in a market that’s this volatile?
You stop guessing direction — and start trading relative strength. That’s where pair trades come in.
Here’s the setup: you go long a strong stock and short a weak one — ideally from the same sector or something highly correlated. That way, you’re not making a call on whether the market goes up or down. You’re making a call on which stock is likely to perform better in whatever environment we’re in.
A great example this week? Our PSX vs. EQT trade. Both are Energy names. But EQT had been showing a little more strength — while PSX was clearly the laggard. So we went long EQT and short PSX.
And what happened? Energy dropped — and PSX dropped harder. EQT went down too, but not nearly as much. That’s how a pair trade works: it thrives on the difference between two stocks.
This strategy has been one of the most consistent ways to stay active in a downtrending market. It lets you put probability in your favor, especially when volatility is ripping higher and direction is a coin toss.
If the market rebounds, your stronger stock has the edge. If the market continues to flush, your weaker stock should do the heavy lifting. Either way, you’ve given yourself a shot — without betting the farm on a big directional move.
In fact, if you were with me on Friday, I gave out 4 more pair trades. All 4 are profitable today.
In a market like this, that kind of edge matters.
I’ll be going live at 1:30 PM ET today to break down another unbelievably wild day in the markets.
We’ll also talk more about Pairs Trading, as I’ve closed out several winners lately. It’s a great way to handle these crazy times.
Hope to see you at 1:30 PM!
— Nate Tucci
