The proverbial “fog of war” continues to descend faster than Trump’s poll numbers and tonight is no different.
This headline from the Wall Street Journal trigger a massive buy program via the algorithms on Wall Street in the thinly traded overnight session after another disastrous intraday reversal in equities:
Thus begins the questions, again, of is this a true Trump Always Chickens Out event or an olive branch to end the conflict because Trump recognizes this conflict is about to trigger a much more violent reaction in the US bond market as a consequence of starving Asia of necessary products from the region?
The reality is easy to detect by looking at equity prices and the reason President Trump and his economic advisors are starting to panic.
First the S&P 500 (all charts via Stockcharts.com):
To anyone with two eyes and a brain, one can see the massive consolidation which started in late 2025 and lasted until the beginning of the Iran war a month ago. Once the markets needed and excuse or catalyst to decline, the war provided it for the sellers who took over with a vengeance.
But is the selling really that bad? Other than a huge volume day a few Fridays ago during options expiration, the selling has been organized, logical, and methodical. No massive panic and no signs of retail begging for mercy.
With the violations of all the moving averages and a sustained move below the 200 day, it is logical to assume a bounce will occur on Tuesday to wrap up quarter and month end so the junior traders running the trading floors can paint the proverbial tape to make the masses feel ‘not as bad’ about the flat to declining 401K performance.
But how bad and broad has this quarter been?
A lot worse than the key indices indicate.
For example, check out this recent capitulation in the SOX (Philadelphia Semiconductor) index:
Nice, clean double top, a scare, attempted bounce then rollover due to the panic over a total economic implosion and shortage of raw materials to make semiconductors and other chip products. The 200 day moving average is holding but by next week, this author doubts that it does.
Next up, the IWM (Russell 2000 ETF):
Unlike other indexes or ETFs, this dog couldn’t even come close to a nice double top. It rolled over before the war, attempted to consolidate then died like an armadillo hit by a semi on a Florida interstate at 2 a.m.
Small caps are definitely not defensive and in fact, doomed should interest rates continue to rise and selling voracity picks up.
Last but not least, the financials:
This chart is so elegant it should be wearing a slutty dress and high heels.
It rallied to new highs then collapsed all based on easy money.
With a death cross, all averages rolling over, and a deep descent below the 50, 100, and 200 DMA, it is primed to go retest the 2022 lows should this continue.
Which it will.
This should be a reminder that no matter what one hears on the talking head networks be they cable news or a financial information station, the reality is they need suckers to buy the pump so the big money can dump.
Guard one’s ASSets first and foremost, it’s about to get a bit stormy as Trump’s TACO’s impact indexes but not economic reality.
