Good morning,
If you locked yourself in a windowless room—cut off from headlines, geopolitics, and narrative—and focused only on what markets have done year-to-date, your interpretation might look something like this:
Following new highs at the end of January, markets entered a period of profit-taking, led primarily by large-cap growth and technology. That pullback accelerated through March, with major global equity indices correcting roughly 10%.
Market declines are typically the starting point for investors to search for a bottom. Bottom formation tends to follow a recognizable pattern: an initial bounce, a subsequent test of the lows, and—if that test holds—a powerful rally marked by expanding participation (breadth thrusts) that pushes prices above the prior bounce highs. That sequence signals demand overwhelming supply.
If the price action we’ve seen so far in April ultimately proves to be the bottom, it will be stretching that definition. We have not seen a meaningful retest of the lows, nor have we seen any breadth thrusts—at least not yet—off the rally that began Tuesday evening (ET). There are, in other words, ample reasons for skepticism. That does not preclude the possibility that a bottom is in, but it does argue against conviction.
Layering this technical backdrop onto the current geopolitical environment only reinforces that skepticism. Confidence that the Strait will reopen sustainably—or that any ceasefire will hold—remains fragile at best.
This does not feel over.
I hope I’m wrong—as we all do.
Be well,
Mike