We just experienced one of the biggest overnight sessions in market history thanks, as we all know, to Taco Tuesday. (Interestingly, this was a virtually day-for-day replica of what happened precisely a year ago, since likewise on April 7th the white flag went up, but that time for tariffs instead of war). Fortunes were made. Fortunes were lost. And, in some cases, fortunes were nicked (raises hand).
Even at its most severe, the drop was only about 9%, and the majority of that has already been undone. As it stands now, we are a couple hundred points below lifetime highs on the /ES and submerged under a mass of overhead supply.
Fear has left the building, however. Only hours ago, serious people were talking about nuclear weapons and years of war, and yet one social media post has produced trillions of dollars of paper wealth and a VIX headed back into the lands of the teens.
The only asset feeling any heat right now is crude oil, which enjoyed a sensational and historic run, but whose glory days seem to be in the rearview mirror. Somewhere out there are people whose financial lives have been changed, for better or worse, by bets on whether TACO would happen or not. I would simply say to that: the “A” in TACO stands for “always“.
One mildly interesting setup might be in gold, of all things. The rally has pushed it over 3% high, but I’ll be taking a hard look at this later in the morning.
As I wrote last night, today is going to be a gut-punch for me but drastically reduced from its potential awfulness based on the lightness of my positioning. The tasks before me are simple:
- Allow the market to trade for as much as half an hour to let some of the chaos clear
- Terminate any positions whose charts have been rendered moot by the rally
- Look with fresh eyes on my key charts, the ETFs in particular, for some post-TACO opportunities.
It’s going to be a great day for some and a lousy day for others. I hope you’re doing all right, and I wish all of us the best of luck out there!
