March 2025 DDD

[ducati916]

True:

When extreme fear takes over, fundamentals don’t matter — sentiment does.

Gold moves higher when there are full moons but also, stocks tend to bottom.



The first firm I worked for was named after a bunch of rocks in Europe.



And let me tell you — some of the people there were just as stubborn as those rocks. Value guys. Fundamental purists. If it wasn’t a discounted cash flow model, they didn’t want to hear about it.



But the CEO? He wanted someone different. Someone who could think outside of that rigid framework. So he paired me with the one guy in the firm who was actually making money — year after year.



This guy was a mystery. He didn’t talk much. He used technicals, sure — but there was something else. Certain days, he’d get really excited about market bottoms, almost like he knew they were coming.



So one day, I asked him about it.



He smirked and said, "Markets bottom the same way, over and over again."



And then he laid it out:



A lot of market bottoms happen in March and October.
Stocks tend to V-bottom. Commodities? They consolidate, base, then turn.
And the last one is weird… full moons.



Seriously. Full moons.



At first, I thought he was joking. But then I started looking into it. Turns out, Paul Montgomery—a legit market analyst—had studied this for years. He found that major market bottoms often coincided with full moons. Not because of astrology or magic, but because of investor psychology.



See, when markets tank, it’s never about the numbers. It’s about sentiment.Panic selling. Extreme fear. The absolute peak of capitulation.



And weirdly enough, these emotional extremes tend to cluster around full moons. Montgomery’s research showed it, and history backs it up—some of the biggest market bottoms formed within a few days of a full moon.



Now, am I saying go out and trade based on moon cycles? No. But if you’re ignoring sentiment, you’re missing half the picture.



This guy I worked with — he didn’t trade off moons alone. He used sentiment, positioning, technicals, price action. The full picture. And he made money while others scratched their heads.



My Own Take:



Patterns like this? They only work when markets are at extremes.



Extreme fear.
Extreme offside positioning.
Everyone caught leaning the wrong way.



That’s when sentiment beats fundamentals. That’s when emotions drive price action.



And there’s data to back this up. The University of Basel ran a study on trading strategies using moon phases (yes, a real academic study). And guess what? It led to a 10.9% increase in returns in the S&P 500 over a decade.



Because the market isn’t just about numbers. It’s about human nature.

jog on
duc

 

[qldfrog]

Gold...the post..not the shiny metal

 

[divs4ever]

And finally: I really dislike the word “correction,” and particularly the notion that it means a 10% fall from peak to trough. That 10% number is arbitrary.

i prefer 'healthy retrace ' for 10% dips , after all a 10% drop in a day ( for individual stocks ) , is not that uncommon in recent years

and for 10% to 25% dips 'correction '

It's hard to have any kind of credit event out there with massive economies like China and Europe doing as well as they're doing.

which to me increases my wariness ( they are either gas-lighting us , or borrowing recklessly )

 

[ducati916]

Semiconductors rallied this week with Nvidia ripping almost 8%. This all comes as journalists on basic cable tell your parents that the Nasdaq is in a correction. You see how this works? Here's Nvidia finding support at the same key extension levels where the buyers stepped up in the Fall:

​

As I've said a whole bunch of times, if the Semiconductor Index completes this massive top relative to the S&P500, then chances are that the bull market is cancelled. With Semi's rallying this week, despite the selling pressure in other areas of the market, that alpha put the Semiconductor Index back above all that support, invalidating any bearish implications that may have occurred earlier in March:

​

If Semi's do actually break, then I believe there is a bigger structural problem in the market, particularly in U.S. equities. Global equities continue to act well, pointing more towards a rotation, rather than a full blown credit event. See here. Look at the second largest U.S. Semiconductor - Broadcom. Prices are back down to all that former resistance from 2024, and so far it's turning into support:

Look for a break in $AVGO to new lows, to confirm that any selling pressure in Semi's is still not over. Based on the weight-of-the-evidence, my suspicion is that these levels hold and the mean reversion is already underway. But whether that's the case or not, there are still plenty of opportunities to make money in this market. Gold stocks are hitting new highs. European stocks are hitting new highs. Chinese stocks are hitting new highs. And there are U.S. stocks that are bucking the trend and continuing to rally as well.

First, the good news: There's no solid evidence right now that the economy is in recession, or even particularly close to it.

• The bad news: Red flags are popping up every which way, Axios chief economic correspondent Neil Irwin writes.

The big picture: Warnings are piling up, including from surveys of consumers and businesses, corporate earnings and financial markets.

• It all suggests the economic ground may — emphasis may — be shifting beneath our feet.
• The evidence so far is all in the realm of anecdotes, or "soft data," not the kind of definitive, "hard data" evidence of a downturn that would make economists believe a recession is beginning.

Zoom out: A confluence of forces emanating from Washington is driving the vibe shift.

• The threat of new tariffs far larger than those enacted in the previous Trump term is part of it, as is the erratic implementation.
• Cuts to the federal workforce and government contracting may be leading some wary consumers to slow spending (as is already evident in credit card data for the D.C. area).
• It all adds a layer of uncertainty for companies trying to decide whether to engage in new capital spending or hiring.

Zoom in: Yesterday, the University of Michigan's preliminary survey of consumer sentiment for March plunged for the third straight month, showing sharply lower expectations for the future among Democrats and Republicans alike.

• Thursday, the S&P 500 fell into official correction territory — a 10% drop from its peak. (It rebounded sharply yesterday.)
• Leaders of businesses large and small are showing less confidence in the outlook.

Warnings have percolated from airlines and retailers, including Dollar General and Walmart, about underwhelming consumer demand.

• Announced layoffs reached their highest levels since the summer of 2020, when the pandemic was in full force — and highest for the month of February since 2009, per outplacement firm Challenger Gray & Christmas.

The bottom line: None of this means that a recession is underway, or inevitable. The U.S. economy is like a tanker ship that normally moves forward, and it takes a lot to stop that progress.

• But what's striking is how pervasive these warning signs have been lately.

The S&P 500 was headed for its worst week since 2020 yesterday. However, it bounced +2.1% on Friday, marking its best day since the election. It still fell -2.3% this week, but last week was worse (-3.1%). The weekly candle (not shown) printed its largest lower wick since July 2022, signifying a bullish reversal. Larry points out that the last few days could be a bear trap if $SPY reclaims former support at $565 next week. Sentiment and seasonality suggest a bottom is near. However, Larry notes that breadth and momentum are lacking. Less than 30% of stocks are above their 20-DMA, and RSI printed its most oversold reading since the 2022 bear market low, confirming yesterday's low rather than diverging. The Takeaway: The S&P 500 avoided its worst week since 2020, thanks to Friday's bounce. The bounce could have legs if $SPY reclaims $565 next week. However, trend, breadth, and momentum remain damaged.

Everyone and their granny is looking at what happens Monday.

As @peter2 has pointed out: Trump news could derail the whole thing.

But.

You need new selling. While it is true market crashes START from OVERSOLD levels, Friday just did not have that feel or volume.

So I don't believe that the selling is over, it is just over while this bounce takes us higher. I see $505 on QQQ, then we see what happens. To get to $505 will be a churn with higher volatility predominating.

Mean Reversion:

This is something that I will always trade.



Sometimes I am early, but mean reversion is one of those market truisms. Currently we are oversold. Whether it be short covering, trapped late shorts or speculative longs for the bounce, bounces happen and they are vicious if you are short.

We are also at Quad Witching (upcoming) Options Expiry



This is a strange one. The 'shakeout' phase starts about 30 days out. Where was that? At the highs, where price reverses at the pivot level and then 10 to 14 days out, where we are now, a pin move that traps both sides (refer chart above).

The Options market is actually multiple times larger now than the stock market (due to the leverage) and 0DTE crazies.

So Quad expiry is Friday 21 March. It's even in my diary.

So I definitely expect the bounce to continue into at least Wednesday, possibly Thursday before selling pressure comes back into the market. That pressure sits at $505 QQQ.

The fundamentals of the markets and economy are horrible. So the selloff and start of a bear market makes total sense to me. However, bear markets rarely go straight down.

Look at 2008 Bear:



Lots of denial and BS occurring, same as today. It was only the final phase, capitulation, that we went straight down. Markets = tax revenue. The Powers that be, hate bear markets and fight them tooth and nail. So for the moment I'm expecting a bounce.


jog on
duc

 

[ducati916]

Last week:

Friday



The week




For next week:



From JC;

I'm constantly on the lookout for opportunities where market participants are most vulnerable. If our data suggests that a market is too extended in one direction, I want to find ways to profit from an unwind in that positioning. You saw it recently with how well we've done in our China trades, where 8 out of 8 trades since the election have all at least doubled in value. Think about how much money we've made in these stocks, despite any selling pressure you've seen in the United States recently. It's not about the fundamentals. It's the positioning. No one owned Chinese stocks, and so the squeeze was on! Last summer when all the libs were upset with Elon becoming besties with President Trump, we saw a tremendous opportunity to fade their negativity. See: Long Tesla and Long Elon (June 14, 2024) Tesla and Elon immediately went on to create more shareholder value during the back half of last year than any other stock on the planet. Talk about one for the good guys! Now fast forward to mid-March of 2025, the present, and I think there's a similar opportunity brewing in shares of Tesla once again. I was on the phone with normies yesterday, and it shocked me just how upset they are with Elon Musk and Tesla. They were talking about boycotting twitter and how one of their college professors apologized for using Tesla as a case study in their masters program. I'm not the type of person who follows the "news". So it caught me a bit off guard just how upset they were with Elon. Coincidentally, this Friday I saw a Tesla commercial online and noticed that my friend's husband was actually featured right at the beginning of it. So I texted her and asked if that was in fact her husband in the Tesla commercial because I found that so funny, and random. Her response was that yes, it was him. But added, "It seemed a lot cooler before Elon went crazy". When I see emotions like this from civilians, especially when I didn't see it coming at all, that kind of sentiment stands out. And just look at the stock. Tesla has retraced exactly 61.8% of the entire rally off the late 2022 lows. Do you think just that's a coincidence? Also notice that key reversal this week, right at that key retracement level:

​

There are several ways to play this one from the long side. But keep in mind, that this isn't a political thing. So don't turn it into one. I don't care who your president is. I don't care who you voted for. I don't care what car you drive. And I definitely don't care about your conspiracy theories. When it comes to the market, I'm only interested in making money. None of that other stuff is relevant. Some people are just too mentally weak to overcome those things, and therefore can't think straight. Those are the exact types of people who we're trying to profit from in a squeeze like this. These are the same folks who helped us crush this exact same trade during the back half of last year. If it wasn't for their mental disabilities, those opportunities would not have been created. So we want to be grateful. Don't forget that part. Gratitude goes a long way. These folks we're describing are the vulnerable ones here. They're the ones who I believe are offsides. They can't think straight because of all the political poison rotting their brains. At least, that's the bet we're making anyway.

Check out the TSLA thread here on ASF. LOL.

President Trump's tariffs are rattling the economy and drawing attacks from Democrats. But some key party members are largely backing his approach — arguing that Democrats need their own pro-tariff agenda to win back working-class voters.

• Instead of warning about tariffs hiking prices, they say, Democrats should be talking about how they'd use tariffs more effectively — even if that means using them against allies, including Canada and Mexico, Axios' Alex Thompson reports.

Why it matters: It's the latest example of Democrats' soul-searching and agenda-tweaking after Trump made inroads among blue-collar workers with promises to use tariffs to boost American manufacturing.

Democrats across the Rust Belt and in several congressional swing districts, along with leaders of historically Democratic unions, have voiced support for many of Trump's tariffs — even if they believe he's haphazardly implementing them.

• Rep. Jared Golden of Maine introduced legislation to put a 10% tariff on all goods coming into the U.S. He told Axios: "The world is changing, and some Democrats haven't quite caught up to that fact."
• The United Auto Workers union, which endorsed then-President Biden last year, said this month: "We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class."

Faiz Shakir, a close adviser to Sen. Bernie Sanders (I-Vt.) who ran his 2020 presidential campaign, told Axios: "I disagree with the Democrats who live in the framework that we just need cheap goods from China and Mexico, and their message is: 'Washing machines and avocados are going to get more expensive.'"

• Shakir said he believed Trump was implementing tariffs poorly, but added: "There's a desire for tariffs for a reason. Voters hear that Trump is making these corporations pay a price for shipping jobs overseas."

jog on
duc