Market On Open, Thursday 10 April
DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. 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. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
Grizzly-Free, For Now
by Alex King, CEO, Cestrian Capital Research, Inc
Tuesday after the close I wrote:
Well, tomorrow the Administration’s reciprocal tariffs go into operation. As is now widely understood, the tariff rates themselves have been calculated on the basis of trade deficits, not upon actual inbound tariffs; and as regards China they have been escalated further since Liberation Day.
We're at the event horizon.
If these tariffs hold, I know of no independent economist who does not believe a US recession will be ushered in as a result. I also think that the Microsoft announcement today - cutting a $1bn capex commitment in Ohio - will be the first of many, with companies choosing to not invest due to the cost of capital in doing so vs. the uncertainty of economic outlook. This, I believe, will usher in a new bear market.
In the alternative, some set of negotiated settlements are reached such that the major players - the US, China, the EU - can de-escalate and get on with doing business. In which case cue a very large and rapid recovery in both equities and bonds, I think.
There’s not really much more to say; the outcome of the above is the primary driver of all markets right now.
Wednesday, this is what happened.
First, if you watched equity futures overnight, all three index futures retraced the Monday highs but did not make new lows. In fact they held around key technical levels. That was a clue.
Second, the Secretary of the Treasury published a paper on fentanyl. Yes, the Treasury. Which was another clue. Less fentanyl, less tariffs.
Third, the bond market was stamping its collective feet ahead of a sizeable auction of new 10 year paper scheduled for 1pm Eastern Wednesday.
Fourth, the Barons Of Corporate America sent messages to the Court via Twitter, Fox Business, and other quasi-official channels, to the effect that the Tariff Board Of Shame could not linger longer on account of (i) yields going crazy (ii) recession risk (iii) job cuts - Microsoft announced a RIF in addition to the capex cut above and (iv) the bear market point above.
Then this happened:
And the rest was moonage.
For now we have a pause in tariffs and a hike on China tariffs. This means the can has been kicked down the road and it means more volatility ahead. Which means that more than ever, you need your wits about you in this market.
If you want to trade this market manually, you need a reliable set of price pattern recognition tools, an ice-cold mentality, the discipline to separate signal from narrative on social media (and there is plenty of signal on social media, believe me), and the ability to treat this whole thing as nothing more than a videogame casino. These are the necessary conditions for success in this market if you are human.
Machines, however, do this differently.
This Is Our Quant.
Drawdowns are bad for the wallet but they are terrible for the mind. They flood your own particular zone with garbage so that you can’t think straight and then compound bad decisions with more bad decisions. In my view anything you can do to avoid drawdowns helps you get set for more success.
Our SignalFlow family of quantitative signal services are built on the idea that the machine can help you avoid material drawdowns in the securities they cover. Right now this is in the S&P500 and Nasdaq-100 complex - we will be adding more categories soon.
Here’s three testimonials we received after the current market turmoil. The SignalFlow AI model declared “Risk Off” in the S&P on March 3rd; the index dropped some 15% thereafter since then - a drawdown the model could have helped you avoid if you were a member.
- "I am wildly thrilled with SignalFlow AI for $SPY! I have been following the signals and moved almost completely to cash with the most recent change to risk off. Absolutely incredible for me, mentally and financially. Thanks so much to the team for developing this service.” - April 2025
- “The long/short service paid for itself in one day overnight by the way! Thankyou.” - April 2025
- “Rather than a day that could have ruined the weekend, I was able to watch the market tank knowing that I had the knowledge to weather the storm and come out far ahead.” - April 2025
The latest SignalFlow service provides long/short signals for the S&P500 and Nasdaq-100. This is a very easy to use service running on a quantitative model; complex below the waterline, simple above it. This is pure machine logic driven by price alone, not by the news, not by narrative, not by fear or greed.
Please do take a moment to read about what I believe to be a truly excellent service - here.
Alex King
Short- And Medium-Term Market Analysis
If you want this daily dose of pattern recognition, and you aren’t yet a subscriber of course, you can read about and choose from all the subscription services that include this note, here.
US 10-Year Yield
I don’t know, but I would guess, that part of making nice with the Administration is to pony up and buy some bonds. And that, together with a general settling-down of the recent crazy, could lead to a material drop in the 10yr yield I think. Possible parameters below.
Equity Volatility
Vix futures are climbing at present. So the dust storm has yet to settle I would say.
Disclosure: No position in volatility-linked securities.
Now, for our paying subscribers we move on to bonds, the S&P500, the Nasdaq, the Dow, and key sectors.