After Correction, Tariffs, & Fed…What Next?
A 10% correction in the S&P 500. A host of new tariff threats. A closely watched Federal Reserve meeting. Investors have had a LOT on their plates. So, where do markets go NEXT? What stocks and funds look the most promising? Top MoneyShow expert contributors weigh in this week.
Lawrence McMillan Option Strategist
A short-term buy signal for the S&P 500 (SPX) was triggered at Friday's close: The 'oscillator differential' buy signal. This occurs when the two breadth oscillators, which had spread far apart in recent weeks, come back within 200 points of each other..
Historically, this has been a reliable short-term, one-week buy signal. For those unfamiliar with this indicator, it's based on the divergence and convergence of two key market breadth oscillators—the NYSE-based oscillator and the 'stocks only' oscillator. These signals have provided strong short-term trading opportunities in the past.
SPX Stocks Only
Still, in the longer term, equity-only put-call ratios have been racing upwards, with put buying very heavy last week. Both remained on sell signals for the stock market since they are rising. The weighted ratio reached the heights of last summer. But it is not the level of the ratio that is important...it's the direction and that is still upward. These put-call ratios won't generate buy signals until they roll over and begin to trend lower.
In summary, we have only one buy signal confirmed, but we expect to see more in the next few days. The ensuing rally is likely to carry upwards to about 5,900 and then run into more trouble. We have been rolling deeply in-the-money puts down and will continue to do so where appropriate.
Jeff Hirsch The Stock Trader's Almanac
Tip-for-tap tariff policy has economic uncertainty swelling – and the market retreating in a manner that some are already comparing to Covid-19 and 2020. This seems like a reasonable comparison...but now is not 2020. I believe many of the market's current concerns could be alleviated.
It could even happen just as quickly as the problems arose, with more clarity and perhaps a slower pace. When (could the correction end) and where (a possible S&P 500 level) are two questions we would like to have answers to as the S&P 500 slips deeper into correction territory.
To gain some potential prospective on the when, we compiled some data on post-inaugural market performance. Aside from confirming the current market retreat has been tough, the table also showed us that this has not been the worst post-inaugural performance. Recent history shows 2009 and 2001 were even worse.
S&P 500 performance
Transforming the data into a chart showing the 30 trading days before and the 100 trading days after the inauguration dates resulted in the chart here. Please note: There are an average of 21 trading days per month. In addition to the 'All' line, we separated out past Republicans and past Democrats. Performance has been adjusted to set zero on Inauguration Day. Trump 2.0 is the current S&P 500 performance as of the March 13 close. The weak market performance by Republicans in the chart is consistent with post-election year performance by party found on page 28 of the 2025 Almanac.
Trump 2.0 does appear to be tracking the Republican line fairly closely, although the magnitude of this year's S&P 500 decline is greater. Should the S&P 500 continue to track the historical Republican line, an initial low/bottom could occur in the second half of March – with a potential retest in sometime possibly in early April. Then the S&P 500 could begin to recover like it historically did under past Republican presidents.
Jay Pelosky TPW Advisory
The enthusiasm and euphoria that greeted the Trump election win, especially among the retail investor base, has been replaced by retail sentiment at levels last seen at the bottom of the 2022 bear market. Additionally, rotation is the lifeblood of bull markets and today, the rotation is global – from the US to the rest. ETFs like the iShares MSCI Emerging Markets ETF (EEM) are benefitting.
Crypto – THE Trump trade (we thought so, too) – has fallen like a stone alongside many growth and hype stocks and segments. Remember the Trump coin? The Melania coin? Down 90%.
Stock market weakness has been concentrated in the Mag 7, which took a shot to the heart with the advent of Deep Seek, something we have discussed at length. The shift out of Mag 7 and into China tech funds like the KraneShares CSI China Internet ETF (KWEB), has been one of the fastest, cleanest, and clearest examples of rotation we have ever seen.
Tech Rotation
Then there is the strong relative performance of the non-US equity markets over the past two weeks, with the iShares MSCI EAFE ETF (EFA) and EEM holding above their 200-day moving averages while the S&P, QQQs, and others broke well below. That is a testimony to the global equity rotation under way. Rotation is the lifeblood of bull markets and here the rotation is global, from the US to the rest.
China Allocations
We continue to strongly favor non-US equity and remain overweight both Europe and Asia. Our focus is on large caps, banks (loan growth, fewer defaults, more M&A), and defense in Europe, and a Japanese focus in Asia.
We also remain overweight EM equity with a strong focus on China, both large cap and tech. We have held these positions for some time in our Global Multi Asset (GMA) model, except for EU defense which we added last month. We would use rips in US equity to reduce positions and employ dips in non-US as opportunities to add.
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