Trump, Tariffs, Taxes, and Treasuries
And a Bounce?
The Markets
Trump, tariffs, taxes, and treasury bond yields have everyone on edge.
And for good reason. Rising bond yields and tariff uncertainty have fueled recent sell-offs, pushing indices toward critical levels. Web reports from Reuters and CNBC note that Trump’s 25% tariffs on Canada and Mexico, plus a 10% hike on Chinese goods, kicked in earlier this month, with retaliatory moves already in play (e.g., Canada’s planned 25% tariffs on ~$106B USD [C$155B CAD] of U.S. goods).
Some see this as a negotiation ploy (“Trump’s bluffing for leverage—markets overreacting”), while others warn of a deeper unwind (“Tariffs + yield volatility = recipe for a 10% S&P drop”).
No way to know how the story resolves. But we can always follow price action.
I don’t usually peek at weekly charts mid-week, but given how close we are to critical levels from last Saturday’s thread, I couldn’t resist. What I’m seeing screams a high-probability bounce next week—though it might not signal the ultimate bottom. Think of it as a classic oversold rally, potentially a face-ripper, before the next leg down. Persistent tariff uncertainty or a yield spike could easily spoil the party post-bounce.
Quick aside: QQQ would need to trade in the $433s to tag a -20% selloff from its December high—about a 12% drop from today’s levels. We’re not there yet, but we know how fast momentum can shift.
Here are the charts.
The Charts
IWF (Growth) vs IWD (Value): A potential hammer forming at a major support/resistance zone. Growth stocks are oversold relative to value—classic mean-reversion setup.
XLY (Consumer Discretionary) vs XLP (Staples): Same deal—a hammer on a trendline. XLY’s taken a tariff-related beating, but this suggests short-term relief could arrive soon.
SPHB (High Beta) vs SPLV (Low Volatility): High-beta names are trying to recover support. The potential for a ‘failed breakdown’ could lead to Risk-on snapping back hard.
QQQ vs QQEW (Equal Weight Tech): If we get a bounce, the favorites will be bought first. Think Mag7 and mega-cap tech. This chart also has a potential hammer forming, just under a key moving average, and with a DeMark 9 buy setup. Worth watching for a resolution higher.
SPY vs ACWX (World ex-U.S.): U.S. outperformance is stretched, but a tariff-driven flight to ‘safety’ could juice SPY short-term. On the chart, RSI < 30, price is below the lower Bollinger Band, near significant support/resistance, and with a DeMark 9 buy setup.
To round it out, we can add seasonality into the mix, finishing a good recipe for an oversold bounce.
Thank you, Ryan Detrick - See his post on X by clicking here.
The Trade
Keep an eye out for that bounce next week—technical setups and seasonality are aligning for a potential snapback.
But don’t get giddy just yet. In this whipsaw market, with tariffs, yields, and Trump’s next move hanging over us, patience and prudent risk management are non-negotiable.
Even if we get a face-ripping rally, it could still be a head-fake before the bigger storm—trade smart.
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