Original author: The Kobeissi Letter
Original translation: TechFlow
U.S. stock futures fell again today, with the SP 500 futures falling by -22%, officially entering bear market territory.
Over the past 32 trading days, the U.S. stock market has lost an average of $400 billion in market value every day.
Is now the time to “buy the dip” in stocks?
Just 32 trading days ago, the SP 500 hit a new all-time high of 6,147.
In the timeline below, we explain how the SP 500 lost more than 1,300 points in 32 trading days.
This is a plunge similar to the March 2020 crash, and market sentiment has reached one of the most pessimistic levels in history.
Key time points:
12pm ET: Crypto markets begin to fall.
5pm: The decline has accelerated dramatically, wiping out around $200 billion in market value. We see this as a clear sign that the risk-off trade is intensifying again.
6pm: US futures markets open with a 6% drop.
So, what has changed since Friday?
More accurately, “nothing” has changed since Friday — when President Trump doubled down on his trade war stance.
Before Fridays close, investors also held out hope that signs of a trade deal could emerge by the end of the week.
However, the result was complete silence, and the market was extremely dissatisfied with this.
President Trump just responded to the stock market crash:
The SP 500 is expected to fall 15% in 3 days, one of the largest 3-day declines in recent history.
His response: “Sometimes you have to take medicine.”
In other words, short-term pain for long-term gain.
The latest AAII Sentiment Survey further reveals pessimism:
Only 21.8% of investors are optimistic.
61.9% of investors are pessimistic, the third-highest reading on record.
Only March 2009 and October 1990 were more pessimistic.
It’s worth noting that most of these findings were collected before April 2
Todays Market Watch: Panic surges, markets enter extreme state
Today, Volatility Index futures ($VIX) surged above the August 2024 peak.
We have been short the SP 500 for several weeks and have called the previous SP 500 decline an “orderly correction.”
But now, the decline no longer appears orderly and panic has reached extreme levels.
The market may be about to bottom out.
A significant bottoming signal?
Even safe-haven assets like gold saw a sharp sell-off.
Prior to Friday, gold had rallied sharply on tariff uncertainty.
But today, gold prices have fallen back below $3,000 an ounce, indicating that investors are accelerating their exit from the market.
Panic intensified again.
On Friday, retail investors sold $1.5 billion of stocks between 9:30 a.m. and 12:00 p.m. ET.
This was the largest sell-off in 2.5 hours in history.
Retail investors have been steadfast in buying the dips since 2022, but that trend appears to be reversing quickly.
The massive withdrawal of institutional capital, combined with the large-scale transfer of cash to the OTC market, further exacerbated the sharp decline in the market.
March 2025 marks the most dramatic rotation of institutional capital out of U.S. equities in recent years.
Now, retail investors have joined the sell-off, accelerating the markets decline.
The market has digested a lot of negative news
We have yet to see any “breathing bounce” during the recent 15% drop in the SP 500.
Any short-term news regarding a trade deal with a major trading partner or a delay in tariffs could spark a rally of more than 5%.
The balance of risk and reward is shifting.
Summarize the current market situation:
The SP 500 plummeted in 32 trading days;
Crypto markets also joined the sell-off after a flat week;
Gold fell sharply as investors rushed out;
The Volatility Index ($VIX) broke through the August 2024 high;
Both retail and institutional capital pulled out;
The market has already factored in a lot of negative news.
While this is not a prediction of a long-term bottom, we emphasize that the market needs a breather rebound.
Even the worst bear markets can see rebounds of more than 5%.
A healthy bear market requires a breather rally to continue the market rhythm.
We have been shorting the market for weeks, but it has become an overcrowded trading strategy.
Market sentiment is currently polarized, with panic levels approaching March 2020 levels, which means more volatility is to come.
Our subscribers are taking advantage of these fluctuations to realize gains.
Ultimately, it all comes down to one core question: Will Trumps tariff policy stick around for the long term?
If the answer is yes, then the United States will inevitably face a severe economic recession .
If the answer is no , then the current market will be a historic opportunity to buy at the bottom .
Follow us @KobeissiLetter for real-time analysis and to follow the developments!
