Market When Closed, Monday 21 April
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Only Algos And Boots In The Building
by Alex King, CEO, Cestrian Capital Research, Inc
A big move down in equities today, softened in the last hour or so by some short-covering buying. I am not sure there is much that one can read into this. Volumes are low as a result of it being Easter Monday, so (i) most grownups in the US are either on vacation or may as well be, leaving only the machines and the juniors in the office to play at trading and (ii) most of Europe isn’t trading at all. We can say that there was no news on tariff agreements, and without such news the market is likely to continue to sell off. And we can also say that in the case of the S&P500, the Nasdaq-100 and the Dow Jones, today’s selloff low made a righteous “Wave 2 low” which is to say, if you take the tariff lows on April 2, draw a line to the highs of the month, and then back down to today’s lows, you’ll find that the move back down to today’s lows is a drop of around 70% of the gain put in from April 2 to the month’s highs. This is a typical level at which to find support if the Market Gods have determined that the next move is up. You’ll see this in the charts below.
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US 10-Year Yield
The move up in the yield today was within the bounds of a normal Wave 2 retracement of the prior Wave 1 down. I continue to expect yields to fall medium term.
Equity Volatility
Volatility is unlikely to drop back to the pre-2025 range in my view. Elevated volatility is the new normal I believe.
Disclosure: No position in volatility-linked securities.
Now, for our paying subscribers we move on to bonds, the S&P500, the Nasdaq, the Dow, and key sectors.