To The Moon

Yesterday, U.S. stocks saw a brief rebound in pre-market trading. However, this uptick was short-lived, dragged down by a combination of factors: multiple negative economic data points and the official implementation of tariffs on Canada and Mexico. The initial bounce quickly faded, and bullish momentum fizzled out. Stocks retreated, though they managed to hold a sideways consolidation pattern throughout the early session. It wasn’t until the afternoon that a sharp deterioration set in, with losses deepening. The major indices closed significantly lower: the S&P 500 dropped 1.76% after falling over 2% intraday, the Nasdaq slumped 2.64% after a peak decline of over 3%, and the Dow shed 1.48%. 

Bitcoin started the day strong, buoyed by Trump’s talk of a crypto strategic reserve, but it tanked alongside U.S. stocks—sliding from an intraday high of $94,000 to $85,000. Trump’s tweets couldn’t reverse the downtrend, as risk-off sentiment dragged crypto down too. Over the past couple of years, Bitcoin’s price has increasingly tracked the Nasdaq 100—when stocks crash, crypto tends to follow. The crypto sector surged in pre-market but gave back all gains intraday. MicroStrategy, for instance, spiked 8.5% at the open but ended down 6.4% with a menacing long black candle. Still, this pullback might not be all bad—it could offer a second chance for those who missed the earlier rally. On Friday, March 7, Trump will host his first White House crypto summit, reinforcing his pro-crypto stance. His election win was heavily backed by crypto donors, so despite today’s flop, the sector could rebound once markets stabilize.

The broader market saw widespread selling, with new energy sectors hit hardest. Meanwhile, capital flooded into defensive sectors like healthcare, tobacco, and utilities as investors sought safety. On the tariff front, Trump confirmed that starting today, the U.S. will impose a 25% tariff on goods imported from Canada and Mexico, alongside an additional 10% tariff on Chinese imports. He also stated there’s no room left for negotiation with Canada and Mexico. Canada isn’t backing down either—its foreign minister announced plans to slap tariffs on $155.1 billion CAD worth of U.S. goods, starting with $30 billion CAD in the first wave. Mexico and China are likely to follow suit with retaliatory measures. The trade war is heating up, opening the door to more uncertainty and volatility in U.S. stock markets. The real impact and duration of these developments may not become clear until late March or early April, leaving investors wondering if the market will remain in a rut until then.

Adding to the gloom, investors digested a decline in the U.S. ISM Manufacturing PMI for February, which fell to 50.3 from January’s 50.9—below the expected 50.8 and dangerously close to the 50 contraction threshold. Against a backdrop of shrinking orders, U.S. manufacturing growth nearly stalled. Companies are still assessing the fallout from Trump’s tariffs, and declining orders signal weakening demand. If sales continue to soften, manufacturers may struggle to pass higher costs onto consumers. Another blow came from the Atlanta Fed’s GDPNow model, which now projects a 2.8% GDP contraction for Q1—the worst forecast since the COVID-19 pandemic in 2020. Just last Friday, it estimated a 1.5% decline, but the outlook worsened over the weekend, amplifying market pessimism.

As a result, U.S. stocks have shifted into full risk-off mode. The S&P 500, after four failed attempts to breach 6,000, keeps getting slapped back down. Last Friday’s pension-fund buying gave it a temporary lift, but today’s drop erased those hopes, plunging below the three-week low. The index hit an intraday bottom of 5,800 and closed at 5,887—just below the CTA’s medium-term support level. This week, whether the market tries to rebound or keeps sliding, CTAs are expected to sell off $24 billion in U.S. equity indices, increasing the odds of a drop toward the year-end support at 5,720. Goldman Sachs strategists noted that investor risk appetite has dipped since last week’s sell-off—a silver lining—but it’s still not low enough to signal a tactical buying opportunity. The market is likely in the final stages of repositioning, potentially needing a capitulation-style sell-off before finding a true bottom.

The Nasdaq 100 printed a long red candle on the daily chart, testing its yearly support zone, though it’s uncertain whether this level will hold. The "Magnificent Seven" tech giants shed $570 billion in market cap today, as confidence wanes and buyers fail to step in during this pullback. Last Friday’s pension-fund buying was a one-off—it’s not a bottomless well of support. A trend reversal will require fresh capital inflows, but sidelined money is hesitant to wade into these murky waters. Investors want tangible signs of cooling trade tensions or a meaningful improvement in economic growth before committing to bargain hunting.

Market volatility is spiking—the VIX hit 24.3 today, reflecting jittery sentiment. Demand for put options is surging, driving up hedging costs across the board, especially for tech giants. If the VIX climbs to 30, we could see a mass capitulation event, potentially marking the market’s true bottom. The CNN Fear & Greed Index, however, seems off-kilter: despite today’s breakdown to new lows, it rose to 24—still in "extreme fear" territory but milder than last Thursday and Friday’s readings of 16 and 18. Pairing it with the VIX might offer a clearer picture.

$Cboe Volatility Index(VIX)$ 

$MicroStrategy(MSTR)$ 

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