As I mentioned before, Trump cares about only four things: 1) stock market performance; 2) Treasury yields; 3) inflation expectations; and 4) his approval ratings. If you look at past TACOs, the majority of them happened precisely when either Treasury yields hit an intolerable level or SPX dropped to a key support that had to be defended. As the greatest market manipulator of all time, he understands the significance of key levels just like we do.

SPX broke below the key 6.55K level last Friday, and futures tanked further before the market opened on Monday. To fix this, Trump extended the strike deadline on Iran by 5 days before Monday’s open, and NQ gained 1,000 handles in just minutes. More interestingly, abnormal buying in equity futures and selling in oil futures were spotted minutes before the announcement. This was, without a doubt, insider trading that generated hundreds of millions in profit in just 20 minutes. The beauty of technical analysis is that we don’t need insider information to know where the money is flowing. After Monday’s open, I posted a desk note on Trump’s TACO move and stayed bearish on equities despite the headlines. The gist was that the price action from that TACO, despite its intimidating magnitude, did not bring about any structural change to our outlook. On Thursday and Friday, the market accelerated to the downside.

Momentum remains to the downside unless SPX reclaims 6.55K.

“I may have been early, but I’m not wrong.” — The Big Short

As expected, NDX extended to the downside after posting a clean break below the key support around 24.2K last week. Despite Trump’s efforts to pump the market, NDX was rejected at 24.2K from below from Monday through Wednesday.