Takeaway from the Latest Tariff Saga

As we have news about the successful initial negotiations between China and US envoys who met in Switzerland over the weekend, a promising, rosy path ahead is beginning to take shape. Instead of the negative bashing, we now have a positive outlook again. As the markets are now jumping upwards over three percent on the day. It’s a good time to reflect on some lessons from the past few months and gain clarity on where we currently stand market-wise.

With all the tremendous uncertainty that we have had with markets dropping 20% in a short period of time, from the highs of late February to the lows of early April, it’s fascinating to see that, in hindsight, the technical charts were extremely predictable.

First, let's take a big picture look with this daily candle chart of the S&P500. We line up the bottoms of the market swings over the last five years since March 2020, the early covid era, when the markets dropped about 35% in one month. This creates the upward-trending purple line spanning over five years.

We can see that the last time we touched this trend line was in October 2023. Since that touch, we began a steeper incline that culminated in February 2025. We can follow this steep incline with the orange line, and we can observe how this line was violated in late February. 

By zooming in on the next daily candle chart, we can see that once the orange trend line was breached, it made sense that we were heading down to the long-term purple trend line below. This purple trend line had been established and tested several times before. Sure enough, as soon as it reached the trend line, it bounced up and began a new upward rebound pattern.

Although this may seem predictable in hindsight, the problem is that during the days when the market was crashing, from April 3rd to April 8th, it dropped so rapidly and with such overwhelming negative sentiment that the average investor was likely spooked and deterred from making a significant buy. 

My clients who had cash available in high-interest savings and money market funds were advised that it was a good time to allocate 33-50% of that cash to the equity markets. But here’s the thing: when there’s such strong momentum driving the markets down, there’s a high likelihood that the trendline may not hold. It looks like a tsunami that will overcome any barrier. This makes it extremely difficult to have high conviction at such a time when we were at the purple trendline. And that was precisely the best time to buy as markets hit a level last seen in January 2024, over 15 months prior. 

"The time to buy is when there's blood in the streets."~ Baron Rothschild

If you play it safe and wait till all the stars are lined up in perfect formation, you are paying a much higher price, as Warren Buffett warned: "You pay a very high price in the stock market for a cheery consensus."

Buy, Sell, or Hold?

So here we are, as the markets have climbed 19% off their recent low, and the question is, what do you do now? Buy, Sell, or Hold?

For the US markets as a whole, there will likely be a lot of positivity as trade deals are woven over the coming months, so my advice is not to sell. Specific holdings that may be poised for a pullback need their own analysis and are a different story.

But based on the two quotes above from Rothschild and Buffett it's also not the ideal time to buy. Again, specific holdings are a different story, but the market as a whole is now in a positive consensus or “cheery consensus” as Buffett put it, which means you're paying an expensive price.

However, it’s also difficult to be on the sidelines with cash when there is currently an optimistic view and many would say “better late than never” which may apply here as well. So, as we are 5% off the recent February high, we should be looking for a pullback entry point.

So if you’re buying now, just know you’re paying a higher price. That means you should be more cautious in your purchases. 

I suppose it’s reasonable to be a cautious buyer at this time.

Dov Marshall is an agent of Aligned Capital Partners Inc. ACPI is regulated by the Investment Industry Regulatory Organization of Canada

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