Market Milestones: History Repeats

Welcome back to another Market Milestone! When we last talked, we were on the lookout for bottoming signals, but none have shown up in the past week. We didn’t get lucky with a capitulation gap last Friday, and every bullish gap has been aggressively sold. Monday, Wednesday, and Thursday all produced similar bullish candles on SPY, each with large upper wicks. The bulls aren’t willing to hold overnight, the rips keep getting sold, and overall weakness is overwhelming any bullish momentum.

The bulls' complete inability to sustain a bounce this week makes it very plausible that we head lower before seeing any real relief rally. That lines up with a possible fifth wave in this correction, something to consider when entering swings and placing stops. Resistance above is fierce right now, with the 200-day SMA and double-top neckline sitting just overhead at $573 and $575, respectively. Even if we get a strong bullish close above this week's upper wicks, it will be slamming into solid resistance and will likely be met with more selling.

For the past two weeks, I’ve been calling for a bounce, but uncertainty is overwhelming sentiment. I still think a bounce is coming, but another leg lower before that happens is definitely on the table. The risk/reward to the downside isn’t great, but a break below Thursday’s bullish inverted hammer would also mean a break below the anchored VWAP and the 50-week EMA, which could open up a decent short opportunity into the $550-$540 range on SPY. Otherwise, I’d prefer to see a more sustained bounce before layering into shorts, hedging positions, or entering collars.

SPY

Is the Trump Administration Intentionally Pressuring the Market?

In the March 4th newsletter, I first wrote about the idea that the Trump administration could be intentionally pressuring the markets—and by extension, the economy. The theory is that in his first year back, Trump can still blame economic weakness on the previous administration. With stock prices and valuations still extremely high after two years of uninterrupted gains, a market drawdown now is preferable to one later in his term, when midterm elections and the next presidential race could be at stake.

A larger pullback and mild recession at this stage could serve a strategic purpose—helping to curb inflation while, perhaps most importantly, allowing the government to refinance its massive rolling debt at more reasonable levels. With nearly $7 trillion set to roll over, a slowdown that pushes bond yields lower would provide much-needed relief to an already strained system.

The fact that the administration is openly discussing a potential recession is notable—these things can become self-fulfilling prophecies. And with the massive tariff announcements set for April 2nd, I don’t think we are in for smooth sailing anytime soon.

TLT

History Repeats? Comparing Trump to Reagan

When Ronald Reagan was elected, the stock market had just hit all-time highs after surging 63% over the previous 2.5 years. From the October 2022 lows to Trump’s election in November 2024, the market surged 67%—a remarkably similar move.

After Reagan’s election, the market corrected 28% over 21 months before launching into an epic 235% rally leading up to the 1987 flash crash. The August 1982 low turned out to be one of the best buying opportunities in stock market history, never to be revisited. If we see a similar pullback now, it could set up an equally massive opportunity for building generational wealth in a rapidly changing world.

You’re going to want to be on the right side of this trade—and have capital ready to deploy when the time comes.

SPY 1980

The AI Revolution & Long-Term Opportunity

It only took the market one month to forget about the AI revolution, and a recession or bear market will sour sentiment on these high-flying AI names even more. But for those patient enough, 2025 could offer a generational buying opportunity. This is why protecting capital and staying patient in this market is more important than ever.

The AI revolution isn’t a short-term hype cycle—it’s here, and it will reshape the world over the next 5-10 years, maybe even sooner. The valuations of AI winners will skyrocket, concentrating wealth into a select few names. We can’t predict exactly how everything will play out, but what we do know is that massive job displacement is coming as AI improves, and those holding the right AI assets will be in a much stronger financial position.

If we get deep pullbacks—deeper than what we’ve seen so far—in top AI names like NVDA, META, MSFT, AVGO, TSM, and TSLA, it could be a once-in-a-lifetime opportunity to buy before the true AI revolution takes off.

NVDA

Navigating This Market

To be clear, I’m not necessarily calling for a massive bear market. It’s still possible that this market makes new highs from here. Check out our daily RLT Newsletter and Slack Channel for detailed breakdowns of daily price action. That said, there are warning signs that the top could be in, and we could be entering a larger correction than most are prepared for.

For that reason, traders and investors should be a bit more cautious right now and more aggressive with risk management. Bear markets take time to play out—unless it’s a COVID-style black swan event, there are always rallies that can be used to de-risk, hedge, and reassess positions.

However, once we get into the heart of a large C-wave lower, markets drop quickly, and the time to hedge is past. Risk happens fast, especially in high-beta names. Anyone who was trading high-beta tech stocks in 2021—ROKU, TDOC, ZM—knows exactly how brutal that can be and knows that simply HODLing was the worst thing to do.

This is why knowing what you own, why you own it, and what levels you’ll protect to the downside is critical—especially as bull markets start getting long in the tooth.