Trump’s assaults on Powell ramp up … will he attempt to hearth the Fed Chair? … Jeff Clark’s short-term market forecast … why Luke Lango sees “15% larger” by summer season
Shares are falling quick as I write Monday method lunch. All three main inventory indexes are down sharply, led by the Nasdaq, off 3%.
In the meantime, gold futures have damaged $3,400, setting a brand new all-time excessive.
Behind this “danger off” market motion is President Donald Trump and his newest assault on Federal Reserve Chairman Jerome Powell.
As we famous in final Thursday’s Digest, Trump needs decrease rates of interest…yesterday.
Final week, Trump referred to Powell as “‘Too Late’ Jerome Powell of the Fed,” writing that “Powell’s termination can’t come quick sufficient!”
The assaults continued this morning with Trump calling the Fed Chair a “main loser” whereas once more demanding decrease rates of interest.
However it isn’t the insults roiling the funding markets right now. Relatively, it’s Trump’s latest saber rattling about firing Powell.
Wall Avenue needs stability. Trump firing the sitting Fed chair for not doing his bidding – regardless of the chance of reinflation – would rattle the market. As a lot as shares have fallen in latest weeks, a “Powell firing” shouldn’t be priced in.
Right here’s Bloomberg:
The sell-America commerce gathered momentum on Monday on concern President Donald Trump will act upon his risk of firing Federal Reserve Chairman Jerome Powell and implement insurance policies that result in a recession.
The greenback, US inventory futures and Treasuries slid, pushing the yield on 30-year bonds larger by as a lot as 10 foundation factors in thinner-than-normal, post-holiday buying and selling.
Traders are grappling with the chance of Powell’s dismissal, which the White Home stated final week it was assessing, and the implications of his insurance policies on the world’s largest economic system.
So, how will all this play out?
Right this moment, let’s consider two totally different market forecasts. One bullish, one bearish.
In any case, the extra angles you’ve gotten, the higher ready you’ll be.
On Wednesday, April 9, the inventory market erupted after President Trump introduced a 90-day tariff pause on sure levies
I reached out to grasp dealer Jeff Clark, editor of Jeff Clark Dealer, to ask if the surging market had modified his bearish forecast.
Previous to that historic rally, Jeff had informed his subscribers:
In the end, I feel the place we’re headed, if that is really a bear market as I feel it’s, is identical degree as late-2023 after we had been someplace across the 4,150 degree or 4,100 degree (for the S&P).
The actual alternative to purchase I feel might be going to wind up someday in October, November.
We are able to commerce between from time to time, however…like oftentimes occurs, you get that ultimate washout in October or November, and that’ll give us a very good alternative to leap in and put some capital to work at tremendous depressed costs.
Jeff informed me the tariff-pause rally has not modified his opinion.
He was sticking by his forecast for a reduction rally that, finally, would fizzle and switch into a brand new leg decrease.
Since then, the S&P jumped to roughly 5,453 however then ran out of steam. It fell again to five,275, efficiently holding that assist degree twice. However as you’ll be able to see beneath, as I write Monday, we’ve fallen by that degree to five,138.
Supply: TradingView
Medium-term, Jeff believes we’re headed lower. But in the short-term, the level to watch is 5,200.
As of last week, Jeff was in the camp that this recent pullback was not the beginning of his predicted next leg lower
Rather, he expected the relief rally that began two Wednesdays ago would have more room to run.
That still may be the case. But before we get to what’s changed, let’s map out that original scenario.
Let’s go to Jeff’s Morning Update from last Thursday:
Stocks are likely headed higher in the short term.
Conditions are oversold enough to justify a rally towards the upper end of our 5,400-5,500 target zone.
In fact, I can make a case for higher levels if the rally happens fast enough. But I don’t think we have any chance of getting above the 50- and 200-day moving averages near 5,750.
The closer the S&P gets to 5,750 the better the odds for adding short exposure.
Ultimately, the index will need to retest the 4,835 low, and more likely, break below that level.
For the next few days, I am leaning bullish. But, with one eye glued to the exit sign.
To better contextualize Jeff’s predictions, a rally to 5,750 would mean we’re in for another 12% climb based on where the S&P trades as I write Monday.
Assuming that happens, the subsequent fall to 4,835 (and potentially, beyond) would mean a 16% drop.
But Jeff’s update this morning puts the key level of 5,200 into the spotlight. Where we close today has the potential to change Jeff’s short-term outlook:
As long as 5,200 holds, on a closing basis, I favor an upside move over the next few days.
If the S&P closes below 5,200, then the odds favor a retest of at least the 5,000 level, and possibly an immediate retest of the recent low at 4,835.
I am leaning mildly bullish for the week. That will change if the S&P closes below 5,200.
For now, though, sentiment is so poor, and the daily technical indicators are starting to turn bullish. So, I tend to think we’re due for a quick pop higher before we get a retest of the recent lows.
So, all eyes on whether the S&P closes above or below 5,200 today.
Regardless of which way the S&P moves in the short term, let’s revisit Jeff’s overall forecast.
As noted earlier, 4,150 or 4,100 is Jeff’s predicted bear-market low. That would mean a 29% fall from where he thinks a relief rally could top out (5,750).
Here’s Jeff:
If you’re holding stocks long all the way through that, that could spell a little bit of trouble.
But if you take advantage of opportunities where you get deeply oversold conditions, where you can get into a good bounce – play that bounce.
But be quick to take your profits off the table and then allow the market to come back down again and give you another opportunity…
Bottom line is, I think there’s going to be an awful lot of opportunity to trade.
To dive into exactly how Jeff plans on trading a bear market, you can revisit our April 11, 2025, Digest here.
Our hypergrowth professional Luke Lango has a unique tackle the place the S&P is headed
Prepared for the S&P to be 15% larger and searching bullish by late summer season?
Based on Luke, that’s attainable, however it all hinges on two massive developments:
- Fee cuts from the Federal Reserve
- Commerce battle de-escalation
Luke believes every is coming.
Starting with the Fed and fee cuts, Luke’s evaluation from late final week begins with Federal Reserve Chairman Jerome Powell and his ostensible nonchalance about right now’s deteriorating financial situations.
Talking final Wednesday, Powell gave the impression to be in no hurry in anyway to chop charges
As we profiled within the Digest, this drew the wrath of President Trump (which is continuous this morning). The day after Powell’s speech, Trump took to Reality Social, writing “Powell’s termination can’t come quick sufficient!”
Right here’s Luke’s tackle Powell and this gradual play:
Don’t panic simply but. Extra importantly, don’t hearken to the phrases; watch the ft.
Powell might have stated “no cuts for now,” however the evolving actuality on the bottom says one thing very totally different…
In reality, we consider the Fed is getting ready to launching a full-blown rescue mission for the U.S. economic system – and it might ship shares hovering.
To make the case for this rescue, Luke factors towards Bloomberg’s U.S. Monetary Situations Index – a catch-all measure of credit score spreads, fairness ranges, and cash provide.
Right this moment, it’s displaying that exterior of 2020’s COVID crash, monetary situations are tighter than they’ve been at any time prior to now decade.
On the identical time…
- Client confidence is close to a 50-year low
- Retail gross sales are slowing
- Enterprise funding has stalled
- The housing market is frozen stable
- And but bond yields have been spiking
Right here’s Luke:
This isn’t cocktail.
It virtually screams for Fed motion. And we consider Powell is quietly making ready for that – no matter what he’s saying in public…
So, when does the cavalry arrive?
We expect it’s coming in June.
That’s when the info will seemingly have piled up simply sufficient to present Powell and his colleagues the political and tutorial cowl to begin reducing.
That doesn’t imply we have to wait till June for optimism to start. Luke expects robust ahead steerage to come back out of the Fed’s Could assembly (about two weeks away). In that case, that’s going to start to maneuver shares larger.
However a pivot from the Fed is simply half of what’s wanted to push shares 15% larger by late summer season
The opposite half is enchancment on the worldwide commerce battle.
And right here, Luke is optimistic, reporting that the battle is dissipating:
Because the U.S. launched its “Liberation Day” tariffs in early April, we’ve really seen tariff charges fall, not rise.
The common U.S. tariff fee spiked from 2.5% to 27% on April 2. However with the 90-day pause and electronics exemptions, that quantity has already fallen to about 23%.
If rumored auto components exemptions come to fruition, we’ll drop to ~20%. And if metal/aluminum or China offers are locked in, we’ll slide nearer to 10%.
That’s a fairly sharp reversal.
Luke is evident that the rhetoric from Washington stays aggressive. However as with the Fed, actions communicate louder than phrases. And right now, the actions counsel de-escalation.
Placing it altogether, we’re nonetheless in for volatility over the approaching days. However the Federal Reserve’s subsequent FOMC assembly concludes in simply two weeks on Wednesday, Could 7. If Luke is true above dovish signaling from Powell, Wall Avenue will start repositioning instantly.
Then, if we get optimistic headlines on commerce offers and the decreasing of tariffs, that’ll proceed to gasoline a rally.
Subsequent up, throw in a possible fee minimize in June, and Luke believes…
The inventory market might rip larger.
We wouldn’t be shocked to see the S&P 500 up 10% to fifteen% from present ranges by late summer season.
So, whereas others panic, we’re on the brink of pounce.
How do you resolve Luke’s and Jeff’s totally different forecasts?
First, you don’t attempt.
InvestorPlace and our company associate TradeSmith are impartial publishers, and we consider it’s a energy to carry you the unfiltered market views of our veteran analysts.
As American entrepreneur and writer Jim Rohn as soon as stated:
At all times be keen to take a look at each side of the argument.
Understanding the opposite facet is one of the simplest ways to strengthen your individual.
However I’ll word that in risky markets, your odds of creating worthwhile market choices improve in the event you restrict how far forward that you just’re trying.
And that brings us to TradeSmith’s breakthrough AI algorithm – calledAn-E.
As we detailed within the Digest final week, “An-E” (brief for Analytical Engine), forecasts the share worth of 1000’s of shares, funds, and ETFs one month into the longer term together with the conviction degree of that prediction. It’s equally relevant in each bull and bear markets.
Inbuilt-house utilizing machine studying fashions educated on over 1.3 quadrillion information factors and 50,000+ backtests, this quantitative buying and selling platform may help you higher time and goal your commerce entries/exits inside a 30-day worth projection.
In case you missed final week’s presentation from Keith Kaplan, TradeSmith’s CEO, you’ll be able to catch a free replay here.
Whether or not you lean extra bearish like Jeff, or extra bullish like Luke, An-E may help you deal with what the info suggests is on the way in which – which can make all the difference in your shorter-term market positioning.
Have night,
Jeff Remsburg
