4/9/25 Recap

China retaliated this morning taking tariffs up to 84% after we went to 104% yesterday. This was the second retaliation when Trump warned them not to, will we come back with a third increase? The SPY remains in all pops sold mode right now, the 8 ema is still almost 4% away and the 21 ema remains almost 8% away. Yesterday was the first day the VIX closed over 50 since March 2020, we’ve had other moves over like last August, but none closed over 50. Just looking at how far away the moving averages are, we have a long time to go before we can even discuss bottoming. That 21 ema needs a couple weeks just to catch up to us if we’re going to keep selling down here. This morning President Trump posted on Truth Social that it was a “Good time to buy” and stocks rallied but were sold off within an hour. This is just a technical thing now, if we’re looking at a 15% earnings decline that is now priced in, but when technicals break like this there isn’t much anyone can do until the moving averages catch up. Ideally the recent lows of 481.80 hold but at this point, I still do think we meet the 200 week which right now is around 5% lower.

The bigger issue we’re facing now is yields are spiking which is the complete opposite of what Bessent and Trump have been going for, whether it is China or other nations dumping our treasuries, yields going up was not in the plans for our leadership. The 10 year went from 3.86 to 4.51 in a matter of days. You have to keep an eye on this because if upcoming auctions go poorly meaning lack of people willing to fund our deficit spending then Trump might have to give in and back off. This is just a mess at this point. If you remember Bessent said he wanted lower rates 2 months ago to “unlock housing” and here we are with mortgage rates soaring back over 7% when normally if stocks fell like that, yields would have tumbled alongside them.

My Open Book

I added to my WYNN call spread after I flagged a large $25M buy on another strike today. I sold some short puts on Wynn as well for this week, AMZN for this week and AAPL next week, with how elevated this VIX is you want to be selling puts. You can go well OTM and with these names already slammed so quickly I don’t see another 10-15% downside that quick. You do not get a 50 VIX often and any normalization will lead to quick gains, the flip side is they’re elevated because of the risks but at this point I think most of the short term downside is priced in until we hear more so 1-2 week short puts should be ok.