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VIDEO: Equities continue to drift higher, more evidence that many stocks got “washed out.” and as long as macro developments remain supportive, we see upside.

Please click below to view our Macro Minute (duration: 6:29).

Equities managed to post gains for 7 consecutive days, and coupled with the 5 confirming “bottom signals” seen in the past week, strengthen the case that some meaningful bottom was established April 7-8 (S&P 500 4,835). Incrementally, developments today were on balance positive offsetting broadening signs of economic weakness.

• On the positive macro front today:
  – Commerce Secretary Lutnick told CNBC today “one trade deal is done”
  – but waiting for gov’t leaders to approve = big positive
  – Pres. Trump signed an executive order aiding auto workers
  – this removes stacking of tariff burdens = good
  – also provides a rebate to makers,
  – providing cushion while infrastructure moves to US
  – overall, evidence of “de-escalation” which is a good thing
• On the economic news, the data was soft and confirming what we know:
  – Feb JOLTS shows job openings tanking to 7.192mm vs 7.5mm expected
  – Conf Board consumer confidence shows surge in Apr inflation expectations
  – On Wed is March Core PCE, Street looking for +0.11%
  – this is an improvement vs +0.37% in Feb
  – and lower than +0.34% in Mar 2024
  – but markets likely will not care since these don’t reflect tariff impacts
• Collected tariff revenues are not near the $ billions a day that ostensibly these rates were supposed to produce. And does this mean that inbound traffic has cratered? Maybe, and if so, raises concerns of spiraling economic weakness. Polymarket odds of a recession bet rose to 64% today and while not near as high as 68% on April 9th, these odds have risen in the past few days.
• Earnings remains a focus this week, but so far there are few “tape bombs” — but there are some key reports on Wed including META 5.04%  and MSFT 8.71% . So we will be watching those after the closed.
• Equities have managed to close now 3 consecutive days above S&P 500 5,491 (50% retracement level) and this is a good sign. We will write about this in coming days, but closing above the 50% retrace level often signals the worst of the selling is behind us. And this reduces the risk of re-testing the lows.
• Of course, the problem is 2025 is not a normal market and the economic data is being polluted by tariff distortions. We continue to believe companies are resilient and dynamic, and this is why we remain “half-full”:
  – recall, many skeptics proclaimed US corp profits would be decimated in 2022-2023
  – that was both the Fed hike cycle, bullwhip effect plus inflation falling
  – but companies remained nimble
  – keep this in mind

• But quantitatively, we received 5 confirming signs of a bottom (5th triggered 4/25):
  – First, on 4/14: VIX surged to >50 and then closed below 31:
  – bottom in 2009 and 2020
  – Second, on 4/22: Two consecutive +90% advancer days,
  – 3 of 3 times previously confirmed low (3/12/09, 8/9/11 and 4/6/20)
  – Third, on 4/23: High-yield OaS recover 50% widening
  – confirms we are walking back from recession
  – Fourth, on 4/24: Zweig Breadth Thrust triggered
  – 11 previous signals, 100% win-ratio 1M, 6M and 12M later
  – Fifth, on 4/25: 50% retrace, S&P 500 closed above 5,491 <– 4/25 close 5,525 CLOSE!

• WHAT COULD GO WRONG? The other shoes to drop (worrying investors) are:
  – Tariff war turns into “Cold War”
  – Economic ripples from “shock” lead to global recession
  – Financial crisis ensues from rapid financial de-leveraging
  – Inflation expectations surge leading to “greed-flation” and Fed is forced to hike rates
  – S&P 500 EPS estimates fall >20% from here

BOTTOM LINE: Probabilities favor “V-shaped” recovery

Given the confirmation signals above, we believe the probabilities favor a V-shaped recovery (versus a W-shaped ala 2011). We realize this is counterintuitive given the lack of earnings visibility. But the likely reason is equities collapsed from 2/18 to 4/7, and this waterfall decline reset positioning and sentiment in a way to allow for a V-shaped recovery.

The bull market has proven itself intact. We have identified two lists of “wash out” stocks, both large-cap (22 names) and SMID-cap (27 names). We want to look at stocks which did not make a new low between April 1-April 8, even as the S&P 500 fell to new lows.

The large-cap criteria is as follows:

• Current Market Cap >$15 Billion
• Declined more than 30% before Feb 18th
• Didn’t make new closing low between April 1^st & April 8th
• Current price down more than 25% from 52W High

The large-cap “washed out” tickers are:

WBD -1.67% LULU -0.12% TSLA 0.36% DKNG 0.62% DG -2.84% DLTR -0.13% BF STZ -0.62% RKT -0.85% COIN 0.67% HOOD -3.56% HUM -1.27% UAL 1.33% LDOS 0.20% TEAM 1.47% HUBS 2.87% MSTR 1.83% CRM 0.80% NET 2.57% SMCI 3.64% EIX 1.80% VST 6.75%

The SMID-cap criteria is as follows:

• Current Market Cap <$15 Billion
• Declined more than 30% before Feb 18th
• Didn’t make new closing low between April 1st & April 8th
• Current price down more than 25% from 52W High
• Short interest Day to Cover Ratio >2

The SMID-cap “washed out” tickers are:

DJT 1.60% ROKU -0.50% AS 0.58% LCID 0.40% RIVN 1.50% LKQ -0.08% CROX -1.20% NCLH 1.47% WBA -0.32% CELH 0.30% SOFI 0.52% MKTX 1.41% COLB 3.35% GRAL -4.86% INSP 0.28% PRGO -1.28% CNXC -0.17% DAY 2.30% LUV 3.31% LYFT 1.25% CFLT -18.52% DT 1.92% ESTC 0.73% PCOR -0.47% LITE 1.80% ALAB 6.55% AES -0.20%

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45 SMID Granny Shot Ideas: We performed our quarterly rebalance on 2/18. Full stock list here -> Click here

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Key incoming data April:

• 4/1 9:45 AM ET: Mar F S&P Global Manufacturing PMI Tame
• 4/1 10:00 AM ET: Mar ISM Manufacturing PMI Tame
• 4/1 10:00 AM ET: Feb JOLTS Job Openings Tame
• 4/2 10:00 AM ET: Feb F Durable Goods Orders MoM Tame
• 4/3 8:30 AM ET: Feb Trade Balance Tame
• 4/3 9:45 AM ET: Mar F S&P Global Services PMI Tame
• 4/3 10:00 AM ET: Mar ISM Services PMI Tame
• 4/4 8:30 AM ET: Mar Non-farm Payrolls Hot
• 4/7 9:00 AM ET: Mar F Manheim Used Vehicle Index Tame
• 4/8 6:00 AM ET: Mar Small Business Optimism Survey Tame
• 4/9 2:00 PM ET: Mar FOMC Meeting Minutes Mixed
• 4/10 8:30 AM ET: Mar Core CPI MoM Tame
• 4/11 8:30 AM ET: Mar Core PPI MoM Tame
• 4/11 10:00 AM ET: Apr P U. Mich. 1yr Inf Exp Hot
• 4/14 11:00 AM ET: Mar NYFed 1yr Inf Exp Mixed
• 4/15 8:30 AM ET: Apr Empire Manufacturing Survey Tame
• 4/16 8:30 AM ET: Mar Retail Sales Tame
• 4/16 10:00 AM ET: Apr NAHB Housing Market Index Tame
• 4/16 4:00 PM ET: Feb Net TIC Flows Tame
• 4/17 8:30 AM ET: Apr Philly Fed Business Outlook Tame
• 4/17 9:00 AM ET: Apr M Manheim Used Vehicle Index Mixed
• 4/23 9:45 AM ET: Apr P S&P Global Services PMI Tame
• 4/23 9:45 AM ET: Apr P S&P Global Manufacturing PMI Tame
• 4/23 10:00 AM ET: Mar New Home Sales Tame
• 4/23 2:00 PM ET: Apr Fed Releases Beige Book Mixed
• 4/24 8:30 AM ET: Mar P Durable Goods Orders MoM Hot
• 4/24 8:30 AM ET: Mar Chicago Fed Nat Activity Index Tame
• 4/24 10:00 AM ET: Mar Existing Home Sales Tame
• 4/25 10:00 AM ET: Apr F U. Mich. 1yr Inf Exp Mixed
• 4/28 10:30 AM ET: Apr Dallas Fed Manuf. Activity Survey Tame
• 4/29 9:00 AM ET: Feb S&P CS home price 20-City MoM Tame
• 4/29 10:00 AM ET: Apr Conference Board Consumer Confidence Tame
• 4/29 10:00 AM ET: Mar JOLTS Job Openings Tame
• 4/30 8:30 AM ET: 1Q A GDP QoQ
• 4/30 8:30 AM ET: 1Q ECI QoQ
• 4/30 10:00 AM ET: Mar Core PCE MoM

Economic Data Performance Tracker 2025:

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: