Hi YXI friends,

While the media tried to front-run Trump’s speech last night by citing the “off-ramp” potential, Trump was much more hawkish in his actual speech. The overall strategy can be summarised as " further escalate to de-escalate”.

Does Trump want a quick war? Definitely. He cites the length of this war as an achievement compared with the past wars.

But paradoxically, to achieve the quick result, Trump believes the US must unleash all its might onto Iran, short of a ground invasion (which I would not rule out yet).

I do not believe that Trump would withdraw the attacks until the Strait of Hormuz is reopened, whether willingly or unwillingly by Iran. The high gas prices will hurt the midterms too much.

While Trump can claim “victory”, the oil price - and he is obsessed with lower oil prices - is the ultimate barometer of whether the mission is truly accomplished. And you can’t twist the truth from the trillion-dollar markets.

Other updates: I have added a clear “conditions” tag to each ticker, which will help make my analysis easier to digest. It is meant to provide greater clarity and to be read in conjunction with the analysis below, not in isolation. This tag is still more of a work in progress - I will build on it as we go.

I have made this article free as an Easter gift for everyone. It is of the same length and quality as my routine daily briefings. I wish everyone a great long weekend.

DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

Please check out our glossary for definitions of acronyms, financial terms, and economic data.

Risk appetite pulled back to +0.619z on Wednesday, April 01, down from the +2.495z spike we saw on 31 March. Liquidity conditions also cooled to +0.223z from +0.850z, while inflation expectations turned slightly deflationary at -0.063z.

Equities opened with a gap higher on Wednesday, but the session was marked by afternoon selling pressure that trimmed gains across the board.

SPY finished at 0.73% from previous close after touching a session high of 1.23% around midday, while the equal-weight RSP managed just 0.33% with a more modest peak of 0.79%.

The intraday pattern showed classic momentum exhaustion, with all equity indices peaking between 12:00-13:25 before a sharp reversal into the 2pm hour took SPY from 1.22% down to 0.94%.

Bonds weakened throughout the session with TLT closing at -0.50% from previous close, never managing to hold above flat after briefly touching 0.01%.

Oil continued its sell-off, with USO falling 2.48%, hitting a session low of 3.57% before recovering modestly.

The dollar remained under pressure with UUP at -0.20%, while gold extended its rally to 1.73%.

IBIT showed some strength at +0.52%, though it too faded from an earlier high of 1.93% around the equity peak.

The synchronised afternoon fade across risk assets suggests profit-taking ahead of Trump’s speech on Iran, with bonds failing to benefit from the equity reversal.

GOOGL led the charge at 3.43% from the previous close, and TSLA posted a 2.57% gain.

META delivered 1.19% while AMZN gained 1.06%. NVDA managed 0.79% and AAPL closed at 0.70%, with Apple showing the most choppy action as it dipped to -0.14% around 10:35 before recovering.

MSFT was the session's laggard at -0.22%, unable to hold early gains despite reaching 0.70% intraday.

The crypto-adjacent names diverged on Wednesday, with COIN finishing at -0.97% while HOOD managed a +1.17% gain from the previous close. COIN's session was volatile, opening with a 1.61% gap higher at 09:30 before surrendering those gains by 09:45 and hitting a trough of -1.41%.

Semiconductors led the charge, with AMD posting the strongest performance at +3.34%, peaking at +5.16% intraday. ASML followed closely with +2.84% (peak +4.82%) and ARM gained +2.53% (peak +4.67%). AVGO also participated in the chip rally, closing +1.22%.

The enterprise software cohort showed mixed results. ORCL disappointed with -1.35%. PLTR managed just +0.12% despite reaching +1.31% intraday, while NET closed -0.45% after touching +1.97% earlier. CRWD bucked the software weakness with a +0.77% gain.

Technology led the session, with XLK posting 1.49% from the previous close, peaking at 2.29% midday before fading into the close. Industrials matched the momentum with XLI up 1.66%, reaching session highs of 2.47% around 13:10 before settling back.

Energy sectors faced the sharpest selling pressure with XLE down 3.69% from the previous close, touching a session low of -4.65% before a modest recovery. Consumer staples also declined, with XLP ending -0.56% after struggling throughout the session.

Condition: Neutral

The Treasury General Account ended Tuesday, March 31, at $893bn, up from $868.48bn on March 30th. This $24.52bn daily increase represents the largest single-day build since March 23, when the TGA jumped to $909.51bn.

Overall, the TGA has been volatile in the second half of March, not really providing tailwinds to the market. This pattern suggests Treasury is managing cash flows around quarter-end, likely related to tax receipt timing and debt issuance settlement.

Condition: Neutral

The SOFR-EFFR spread widened to 4bp around quarter-end, which is not surprising. Typically, heightened demand for cash around the month-ends and quarter-ends pushes up the lending rate. I am not worried unless this spread continues to climb into mid-April.

Condition: Neutral, But Leaning More Bullish

Surprisingly (in a good way), the HYG/IEF ratio is showing a positive near-term trend, with Wednesday’s ratio the highest since late February. Credit markets continue to price in contained financial conditions rather than any meaningful stress.

Condition: Hawkish Headwind

The FOMC projections by the Fed Funds Futures are now oscillating around the base case of no rate cuts this year. Unfortunately, this positioning is a bearish signal as it suggests tighter financial conditions than the Fed’s own FOMC projections and the market pricing early in the year.

Condition: Hawkish Headwind, Bear Flattening

Yields have retreated from the highs of late March, but remain elevated compared with a month ago. The fact that the curve has flattened does suggest growth concerns, too, amidst inflation worries.

Condition: Near-term Bearish

TLT has retested and failed again at the 200-day MA. Wave v could test one more low below $85.

Condition: Near-term Higher (Weigh On Other Assets)

USO is up 7% after Trump’s Iran speech. This (unfortunately) plays into our wave 5 expectation, which could easily push above $140.

Condition: Near-term Higher (Weigh On Other Assets)

DXY could accompany USO to reach one more high above $101.

Condition: Near-term Higher (Normally a tailwind)

USDJPY could move higher still above $161 in a wave 5 push.

Normally, a higher USDJPY is a tailwind for risk assets, as it reduces the carry unwind risks. However, the move has been a US dollar-dominated story, which probably negates the positive impact of a weaker Yen.

Condition: Headwind Concerns

VIX remains very elevated above 25, despite this week’s pullback. This means the market is still very anxious about the downside risks in the S&P.

Condition: Headwind Concerns

SPY’s realised 21-day vol has now climbed above its 1-year average, which could precede a larger drawdown.

Condition: Near-term Bearish

The two-day rally this week has taken SPY back to the 200-day MA. However, SPY was rejected at $660, maintaining the downward trend. I expect SPY to probe the downside next, with the potential for one more low.

The US Administration seems okay with a 10% drop in markets, as they expect Iran to fold within the next 2-3 weeks.

Condition: Near-term Bearish

QQQ didn’t quite make it to the 200-day MA before Trumps speech, but it could start reversing here to probe for one more low.

Condition: Near-term Bearish

The current downturn was larger than I had initially expected, and is now in a more 5-wave-like pattern. I am preparing for a more pessimistic scenario in which we still have one more leg down (alongside SPY and QQQ). Beyond this drop, if rates remain elevated, IWM may lag behind the recovery again, forcing a more prolonged consolidation.

Condition: Near-term Neutral, leaning Bearish

We may have topped in SOXX (prematurely), as the latest pullback clearly broke below the December high.

SOXX also struggles to break above the 50-day MA.

There is still a chance that the chart could produce an ending diagonal pattern with one more high, but I want to highlight that the risk is balanced here.

Condition: Near-term Neutral, Consolidation

IGV’s latest pullback managed to stay inches above the February low. It is too steep to my liking, but we cannot rule out a double-bottom formation here.

My read is further near-term consolidation, and there is no need to rush in size until it moves above the 50-day MA (blue line).

Condition: Near-term Neutral, Consolidation

The BTC chart isn’t too dissimilar to IGV. The latest pullback has stood above the February lows, which remains a positive technical factor. I expect further consolidation ahead, and a decisive break above $70k could help us get more bullish.

Condition: Near-term Bearish

The latest rally appears to be a counter-trend wave 4 rally. I expect one more low that tests the 200-day MA next.

PLTR, ORCL, APP, CRWD, NET, AVGO, ASML, ARM, AMD are covered between Tuesday and Thursday

Condition: Near-term Neutral, Leaning Bearish

AAPL has stayed above the 200-day MA, but the near-term pressure remains downwards.

The valuation is neutral.

Condition: Near-term Neutral, Bearish

AMZN has managed to hold above the February low, but the February-March rally was a clear counter-trend move. My expectation is one more low in wave v below $190.

AMZN’s valuation (except for FCF) is becoming attractive, but investors remain concerned about the high CapEx.

Condition: Near-term Bearish

GOOGL attempted to move above the neckline yesterday but is likely to reverse these gains today.

The near-term pressure remains downward.

GOOGL’s valuation is still elevated vs its history.

Condition: Near-term Bearish

META’s latest bounce appears counter-trend. We could see one more low below $500 to complete the cycle.

META’s profit valuations (EV/FCF and P/E) are not yet screaming “historically cheap”. But when the share price hits $500, it could look very attractive.

Condition: Near-term Neutral

It is hard to get more bearish on MSFT after the stock has disappointed us so many times in its search for a bottom.

While the technical trend remains downward, I am neutral on the company here, as the valuation is becoming quite attractive. We can get more bullish when the technicals start to align.

Condition: Near-term Bearish

NVDA’s drop last Friday - this Monday breached the prior support zone. We are likely confirming the 5-wave down expectation for (c) today.

NVDA’s valuation is getting even more attractive, although not yet at its 2-year low. If it reaches that point, it would be a compelling buying opportunity.

Condition: Near-term Bearish

TSLA is in a pretty clear near-term downtrend. The Elliott Waves counts, however, are slightly less clear. $340 provides significant support for a bottom, which I have identified as the likely downward target.

TSLA’s valuation remains elevated compared with its recent history.

Condition: Near-term Neutral, Learning Bearish

ASML was rejected by the 50-day MA, but has held above the neckline of a potential “head and shoulders” pattern. If that neckline is broken, we can look for a rapid descent towards $1100.

ASML’s valuation remains elevated.

Condition: Near-term Bullish

ARM could find one more high in wave 5 from here, towards $180.

ARM’s valuation is now near the median of its 2-year history, having rallied off the lows.

Condition: Near-term Neutral

AMD’s March rally was in a clear 3-wave structure, making it counter-trend. It is pinned in a neutral zone between the 50 and the 200-day MAs. I would not be surprised to see one more flush lower in wave (5).

AMD’s valuation is near its 2-year median.

Flows are expressed as a percentage of the AUM prior to the flow.

Please help me improve the service with your immediate feedback - thank you.