Market Pullback Playbook - April 6th, 2025
The market absolutely collapsed in the past 30 days. I don't have to do a recap on this. I assume you know what happened. But just a quick rundown, anyway.
President Trump’s new tariff announcement was more aggressive than expected, with headline rates jumping as high as 49%, far beyond almost any analyst expectations, such as 10–15%.
Economically, these higher tariffs create a challenging trade-off. They are expected to exert upward pressure on inflation, meaning that consumer prices will likely rise as the cost of imported goods increases.
In my previous article, I created this graph to keep track of the show. I should update this since it's been wild. It probably couldn't fit into 1 page
Simultaneously, these same tariffs are expected to drag the economy, slowing overall growth and hindering job creation. This negative impact stems from increased costs for businesses relying on imported materials and potentially reduced consumer spending due to higher prices.
Internationally, the situation is dynamic. Early reactions show potential retaliatory tariffs from major economies like China, France, and Germany, indicating they may impose taxes on US goods. Meanwhile, Cambodia, Vietnam, and India are pursuing negotiations to lower tariffs on their US exports. The report also suggests that the White House has broad discretion to adjust these rates in the future.
Canada, Mexico, and some sectors are exempt—about 25% of imports. However, the average effective tariff is expected to rise sharply to 23%, up from 2.4% in 2024.
These higher import taxes are expected to push consumer prices up (inflation) since companies typically pass the added costs on to buyers. At the same time, they may slow down economic growth and hurt jobs as businesses face higher expenses and potentially weaker demand.
Some countries, including China, France, and Germany, are already signaling retaliation by imposing tariffs on U.S. goods, while others, like Vietnam, Cambodia, and India, are opting to negotiate exemptions.
In short, the new U.S. tariffs are steeper than expected and, despite some carve-outs, are likely to raise prices, hurt the economy, and trigger trade tensions globally.
KEEP IN MIND THAT THIS IS A FOLLOW-UP ARTICLE TO MY LAST ONE. I STATED ON MARCH 10th (actually 9th, but it was Sunday night)
Romano
I posted this on my Discord channel last Friday, April 4th
If SPX drops to 5100–5200, scaling in is getting more attractive. Start buying assets that could benefit from a policy pivot such as
- Federal Reserve cutting rates
- Potential U.S. tax cuts
- Monetary easing in Europe and Asia
Example trades
- US small-cap stocks, retail, and homebuilders
- European cyclical stocks (tied to economic growth)
- Asian tech stocks
IF Recession scenario – wait for SPX 4800–5000
If a recession hits, wait for a deeper correction before buying aggressively.
- Target: Look for the S&P to fall to around 4800–5000.
- The “Trump put” trigger:
- Trump with a low approval (40–45%) and if unemployment claims rise above 300k, indicating economic weakness.
→ At that point, markets might expect strong pro-market or pro-growth policy moves (such as rate cuts, tax cuts, or stimulus), which would be bullish for stocks. I am willing to go “all-in”
I bought 10 delta puts last week to protect myself against the heavy storm, yet it wasn't enough to cover, and I did some experimental trades. My reasoning for
Elevated VIX
— Romano (@RNR_0) March 7, 2025
Price dropping, skew dropping lower
Price dropping lower, skew reset lower
Deja vu 2022 🤮 https://t.co/EZEtt72wwg
SPX500 today vs 2022
— Romano (@RNR_0) April 3, 2025
Now that would SUCK pic.twitter.com/flwi9fapCe
An example of an experimental options trade was buying 3x 10 delta puts while selling 1x 25 delta puts, assuming the 10 delta puts would jump higher due to the market-reassessing risk.
this week's large drawdown, I expect panic and
The second 1-day drop on the SPX
The largest 1-day drop was COVID
So I posted this SPX500 2022 vs 2025 chart
The one for the bulls would be this
I also noticed something odd with BTC again with the BVIV/VIX ratio. BVIV is by Volmex, a sort of volatility VIX but for Bitcoin. (I don't have the time to explain in detail.) I posted once about the BVIV/VIX ratio on August 4th, a day before the big BTC collapse.
This happened again last Friday.
BVIV/VIX
— Romano (@RNR_0) April 4, 2025
Bitcoin volatility by @volmexfinance vs the VIX
Something is up here. Explosive move for BTC or the VIX falling by stock rebound. I'm still trying to figure out https://t.co/gsVONJtgoM pic.twitter.com/FjyW63ptSd
Now, let's cover this Sunday night
Anyway, it's Sunday night here. A bit after midnight, actually and I just saw the Nasdaq (NQ) and SPX500 (ES) futures puke.
I am writing this article in a bit of a rush because I don't have time for a full-fledged article while people skim anyway.
Despite the big SPX swings, there hasn't been full-blown panic. Sell flow was only $69B, and volume in cash and futures was just 68% and 42% above average. Retail bought the most in 4 years, and outflows from foreign-listed US ETFs were minor.
According to UBS Rebecca, Capitulation signs are flashing. VIX Cross-Asset Rank hit 97% on April 3. This points to institutional capitulation, not retail. Retail wasn’t selling, and there were no signs of cross-asset unwinds.
Systematic rebalancers still have more to sell, though. After $25–35B was dumped by risk-control strategies and $26B from leveraged/inverse ETPs on Thursday, after Friday’s unwind, risk control exposure probably dropped to 41% & even a -3% SPX move would only trigger ~$25–30B in additional selling (not a lot). CTAs have only 1 sell trigger left for ES and NQ and none for RTY1.
"Normally", strong VIX signals, intraday capitulation & retail dip-buying would mark a bottom.
But because of this week's large drawdown, I expect panic and margin calls to continue into Monday morning. That’s likely when we’ll see a local bottom, +4–8% SPX rebound, and VIX collapse. The intraday structure still looks neutral, so expect more chop in the short term as well.
Become a Premium member. Premium newsletters & Discord community access
Join Discord to get the full value out of the newsletter. There's no extra cost associated with Discord. Yes, options data, such as dark pools, options gamma, unusual flow, etc., are also included. Also, educational content, reports, and direct questions to me, and often, I share my trades & thoughts in real-time as the market moves.
Also, if you are a premium member, join Discord for full benefits.
Yes, options data, such as dark pools, options gamma, unusual flow, etc., are also included.
