You Are Here Let me start by giving you some context. In the three days following Trump's "Liberation Day," the S&P 500 fell 10.7%. There have only been three periods since 1952 that there has been a three-day drop worse than this: - October 1987
- October 2008
- March 2020
In two out of three of these examples, it was the bottom; the market zoomed straight up afterwards. Only in 2008 did the market experience another month of chop and a bit more downside before it finally flipped to the upside. There are five years that, historically, have a 95% or higher correlation to this year's price action on the S&P 500 index (SPX): 1962, 1965, 1994, 2018, and 2022. Looking at each one, we see that there has been choppy price action into the same period: June 26. But correlations can change. So, I wanted to look at post-election years to which the current year's price action has been trading very similarly. As you can see below, the correlation is remarkable. On April 4, we entered a bullish seasonal window lasting until May 9, when there have been gains 94.4% of the time and an average return of 3.7%. So knowing that there is always uncertainty in mind – what should you be doing right now? Let me walk you through my top three tips now. 1. Don't Get Buried in a Hole Over the past month, stocks have been taking the elevator down after a two-year escalator ride up. It's a matter of "sell first, ask questions later," especially if you're a large investor who's trading on margin and needs to get out of a hole. And that's what I want to talk about: margin. Most investors have the ability to borrow money from their broker and trade with it. During bull markets, this can be great if you're in a position where that makes sense and you're managing your risk properly. But when conditions have rapidly deteriorated, you do not want any margin balance whatsoever. You don't want to get margin called and be forced to sell your high-quality stocks. If you owe any money to your broker, find your weakest holdings and sell them immediately to pay that money back. 2. 5 Stocks to Consider Today Yes, markets have corrected severely and are in a new bear market, but we've also seen massive whipsawing with the news of a pause on tariffs. However, as I said up top, we can't predict the future. What we do know is that every bear market in history was eventually followed by a bull market that took prices to new heights. Smart buys during bust times are what fortunes are made of in the boom times. So, what's smart to buy in a bear market? That is exactly what our newest Seasonal Edge tool was built to find. I ran a screener to find some of the best stocks in the S&P 500, Nasdaq 100, and Dow Jones Industrial Average with an upcoming "green zone" in the next 30 days based on the last 18 post-election years. There were 25 results; here is a list of the top five by market cap. These are the names the big money will be flowing to in this rout. These are proving to be the safest home for your money as the market digests the tariff news. Add them to your watchlist, and if you're in a position to, dive a little deeper to see if they have a place in your portfolio. But – and this is important – whatever you do, remember that this is still a volatile market and we cannot know for certain which way things will go next. If you decide to buy the dip and pick up some of your favorite stocks on sale, make sure you are using position sizing, risk management, and a solid exit plan before you buy to mitigate whatever might happen next. 3. Take a Deep Breath Now for some guidance that you'll need to apply outside of our system. Financial stuff is extremely stressful. Never mind the stock market – for lots of people, just getting your bills paid is enough stress. Every day our lives become easier or more difficult based on numbers on a screen. It's our responsibility to take care of these things. But we cannot ever let it consume us. I urge you to take some time this week, after you've settled what you need to do with your portfolio, to take a deep breath and do something that doesn't involve knowing where the Nasdaq 100 is trading. Spend some time with your friends or family and leave your phone turned off. Take a hike in the woods or a swim in the ocean. Go for a drive, and instead of the usual finance podcast, put on your favorite album by your favorite artist. The market will be there when you come back. And eventually, it will get back to doing what it normally does – which is slowly go up. But you have to understand that you have no control over that. Try to find comfort in that fact. Mental health is a big part of risk management, believe it or not. If you're emotional, you're not thinking straight. And that means you're not going to make the moves you should in a difficult period. Take some time to step away from the screens. Follow these three tips today, and I promise you'll be better for it. YOUR ACTION PLANAs you can see, if you're not subscribed to our latest Seasonal Edge technology, you're missing critical info about your positions, your portfolio, and the market. You're flying blind. That's a dangerous spot to be in. If you want to learn more about how our seasonal tools work, click here to learn more in my 2025 Breakthrough Emergency Summit. A great way to stay in touch is to follow me on X. I posted some exclusive insights there on Thursday that are required reading for anyone trying to make the most of this correction. Check them out here, and then follow my account for more. All the best, Keith Kaplan
CEO, TradeSmith
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