Market wrap: Plenty of triggers, plenty of traps

Catalysts abound, but many roadblocks exist

We just witnessed a textbook squeeze on the tape — but before anyone gets carried away thinking this is a green light to go all in, let’s stay sharp. This market may have generated some severe heat, but a few critical pieces still need to fall into place before we can lean in aggressively.

Over the past month, the S&P has put us through the wringer. On April 3, we opened at 5,462, only to get dragged down to a one-year low at 4,835 four trading sessions later. It was an ugly, emotional washout — one of the most violent de-risking episodes across the hedge fund complex that I can remember. Nets collapsed into the mid-40th percentile, while gross exposures stayed stupidly high — a lethal setup that gave us the kindling for a 10% rally once sellers finally burned themselves out. Fast forward to Friday: four straight green sessions later, and the S&P closed at 5,525. It wasn’t a grind — it was a snap-back slingshot.

What made it even more impressive — and more dangerous — was the background. Long-only funds entered Q2 sitting on barely 1.4% cash. Sovereign wealth funds were slashing U.S. exposure. Foreign allocators were dumping U.S. assets across the board—equities, bonds, and foreign exchange. Rough estimates put global outflows at over $60 billion just since March. The US capital markets weren’t trading like the center of global stability — we were trading like an emerging market having a bad week. It didn’t help that safe havens tied to the dollar were hit hard, turning the whole landscape into a distorted, jittery mess.

Then, almost imperceptibly, the green shoots started to surface. Heavy selling supply in the mega-cap tech names dried up. You could feel the shift — the tape stopped absorbing and started finding bid sniffers on solid earnings. Intel and Google prints weren’t just shrugged off — they got quietly bought. Then, April 23 hit one of the largest net buying days of the year. Not just short-covering — fresh long buying. That's the stuff you want to see if you’re hunting for a real foundation to build on. At the same time, the old floors around 4,600 shifted higher, with dip-buyers migrating up toward the 5,000 baseline.

But as much as I love the action, this is still not a time for blind aggression. Two serious issues still have to be respected. First is breadth — it remains paper-thin. This rally is concentrated, and until more sectors start carrying their weight, every move higher feels fragile. Second is liquidity — it’s simply not there. Top-of-book E-mini depth, which used to run north of $13 million, has been gapped down to under $1 million at times. That’s a powder keg situation where even small flows can send the tape flying in either direction.

That said, you can’t ignore the positive undercurrents. Earnings have been broadly better than expected, but crucially, stocks aren’t spiking on good numbers. That leaves the upside path underappreciated. Main Street — the retail bid — is still standing tall. They haven’t flinched, even with tariff fears and political noise buzzing around. And corporate buybacks reopened April 25, just in time to reload the tape’s biggest natural buyer. With $1.45 trillion authorized and over $1 trillion ready to be fired, plus pension and CTA demand building, the liquidity backstop is quietly thickening underneath the surface.

Catalysts are starting to pile up too. Softer White House rhetoric toward both the Fed and China has given traders breathing room. Earnings have come in much better than feared. And with the early-July tariff "pause" deadline creeping closer, there’s real incentive to get detailed trade deals moving. No more vague term sheets — we need real ink hitting paper.

Bottom line: the structure is improving, but it’s not fully healed yet. I want to see real breadth kick in. I want liquidity to normalize. I want ETF volumes to cool down. Get those three in place, and we’re not just renting rallies anymore — we’re buying them for keeps. Until then, it’s fast hands, tight stops, and deep breaths.

This isn't the old world of grinding melt-ups — it's a twitchy, headline-driven tape where opportunity flashes and disappears in a heartbeat. Trade it smart, or don’t trade it at all.

Asia isn’t sitting idle, but Europe hesitates

The good news out of Asia? They’re not just sitting around waiting for the tariff hammer to drop — they’re sprinting to cut deals. Export-driven economies like South Korea, Japan, India, and even Vietnam are moving fast, racing each other to lock in interim agreements with the Trump administration before the brutal “reciprocal” tariffs kick in come early July. We're talking tariffs heading toward 25% on Korean shipments, 46% on Vietnam, and 36% on Thailand — levels that would gut their trade flows if left unchecked.

What’s taking shape isn’t some grand, world-resetting trade pact — it’s survival mode. These countries are eyeing smaller, fast-track deals aimed purely at staving off the worst of the tariff snapback. Trump, for his part, is more than happy to chalk up any handshake agreement as a political win, touting “quick success” without having to dive deep into the hard negotiations that usually drag on for years.

Treasury Secretary Scott Bessent all but confirmed it this weekend: 18 key U.S. trading partners are in the crosshairs, and while China is going through its own “special” high-stakes negotiation, the other 17 are already in the ring. According to Bessent, talks with the Asian bloc are moving along "very well" — a clear tell that Washington is angling for quick optics wins in the region, rather than slugging it out in the trenches.

South Korea looks closest to a deal, with murmurs that a memorandum of understanding — the diplomatic version of a handshake and a nod — could land as soon as this week. Korean officials are already working against a hard July clock to carve out tariff exemptions, knowing full well that getting anything more substantial would be wishful thinking. History backs them up: the original U.S.–Korea FTA took years to nail down and even longer to get through Congress — and that was in far friendlier times.

Meanwhile, North America and Europe are dragging their feet, still trying to map out the rules of engagement. They’re not sprinting toward quick deals — they’re sizing up risks, worried that jumping too soon could leave them boxed into tougher terms later. After recent rounds of talks, European officials came away convinced that the 10% tariff wall isn't going anywhere — and that if they stall, the U.S. could easily double it under the "reciprocal" banner.

For Brussels, that’s a red line. Counter-tariffs are already on the table if the U.S. doubles down — including blowback against Trump’s existing steel and aluminum tariffs, and maybe even fresh restrictions on exports heading across the Atlantic.

Bottom line: Asia is running ahead, trying to dodge the worst hits, while Europe is still stuck studying the playbook. Fast movers might get to breathe easier through the summer. The laggards? They better be ready for a knife fight if the 90-day clock runs out.