“Tactical Equity Timing: Liberation Day Resistance Levels Looming – What’s Next? PLUS America’s ‘Exorbitant Privilege’ Revisited (All is Not What It Seems)”

Equities, Bonds & The Dollar: Liberation Day Resistance Levels Looming – What’s Next?

Panic was at its peak on Monday 7^th April (5 days after Liberation Day). The VIX index reached 60% intraday; equities, having sold off sharply on the prior two trading sessions, opened 240 points lower (S&P500), while bonds were rallying sharply (with the 10 year yield below 3.90% at one stage).

Since then, though, panic has subsided rapidly. The VVIX, for example, is now back at its 200 day moving average (having been as high as 175 – FIG 1), the VIX has more than halved from its highs, while bond yields have backed up (currently 4.27%).

FIG 1: VVIX (closing prices, i.e. a measure of the ‘volatility of the VIX’) shown vs. S&P500

In part that subsidence reflects the rolling back of the initial measures announced on Liberation Day (as forced by the disorderly back-up in bond yields). It also reflects the market’s growing understanding of Trump’s approach to negotiating and the limits on how far he will go.

In that respect, it’s become clear over the past two weeks that he’s created significant problems in the global trading system for Americans and certain American companies. Those problems include accessing rare earth minerals without China’s acquiescence, the high dependence of certain US companies on China (e.g. Apple, and so on). He’s therefore brought in various exemptions (as well as pausing reciprocal tariffs for 90 days).

Equities, Bonds & The Dollar: Updates on Key Market Timing Models

The market timing models, though, also had a very clear message on 7^th/8^th April (at the lows).

As we wrote in our Longview Tactical Alert (8^th April):

“(there is clear) evidence of washout selling in markets. That includes, for example, the sharp rise in (i) the share of stocks making new 52 week lows; and, similarly, (ii) the share of US/Western stocks trading below their 200 day moving averages (fig 6). Elsewhere the Longview Colvin model, which measures breadth in global markets, points to indiscriminate/panic selling of risk assets around the globe (and is on strong BUY, fig 2).”

Source: Longview Tactical Alert, 8^th April 2025: “Start Re-BUILDing OW in Tactical

Portfolio”

As a result, we started re-building tactical OW equity positions at that time (and closed our overweight bonds position - which we had initially opened on 15^th January 2025, see Longview Alert no. 87: “MOVE Tactically OW BONDS”).