Trading Through Tariff Turbulence: We Are Entering Phase 5
Get ready for a big market open to start the week
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Navigating The Tariff Storm
As predicted, the past three weeks have indeed witnessed extraordinary market volatility following sweeping tariff announcements.
The S&P 500 dropped 9.1% for the week ending April 4, 2025, marking its worst week since the COVID-19 pandemic onset in March 2020. On that same day, the Dow experienced a massive one-day decline of 2,231 points (-5.50%). This was its third-largest point drop on record and its largest since March 2020.
The subsequent rebound was also remarkable. On Wednesday, April 9, 2025, markets experienced a historic surge where the S&P 500 soared +9.52%. This was indeed its third-largest single-day percentage gain since the beginning of October 2008.
Intraday volatility also reached extreme levels. During one particularly volatile session (April 7), the Dow swung more than 2,500 points between its low and high points of the day.
What began as speculation transformed into reality. The implementation, the partial reversal announced on April 9 (which paused many tariffs but excluded those on China), and the ongoing uncertainty surrounding these tariffs created distinct market phases, each presenting unique trading opportunities and challenges. The fifth market phase starts today.
Tariff Market Phases: A New Market Taxonomy
In the eye of the tariff hurricane, don't mistake calm for safety.
The tariff announcements created distinct market phases, each requiring different trading approaches. I’m going to review each phase and then tell you where I think we’re going in Phase 5.
Phase 1: "The Panic Plunge" (April 2-3)
Initial shock reaction following sweeping tariff announcements
Major indices dropped 4-6% in a single day (pure, unbridled panic)
Best ATS Strategy: All shorts
Notable ATS Strategy: “The Precision Sniper” maintained profitability despite extreme volatility. Volatility actually fuels this strategy. (Scroll to the bottom of the page for a chart that matches the Strategy nickname with the Strategy # for reference.)
Pattern Alert: The first 30 minutes after tariff announcements created the largest price dislocations
Phase 2: "The Aftershock Slide" (April 4-5)
Follow-through selling as implications became clearer (the hangover).
Sector rotation with industrial stocks hit hardest.
Hair of the Dog (Best ATS Strategy): “The Safe Harbor” showed strength as investors sought Treasury protection.
Pattern Alert: Each morning gap down was followed by a failed bounce attempt
Phase 3: "The False Dawn" (April 7-8)
Attempted stabilization with morning strength repeatedly failing
Choppy, volatile trading with decreasing volume
Best ATS Strategy: “The Trend Surfer” (identified potential bounce)
Notable ATS Strategy: “The Contrarian Commander” struggled with whipsaw conditions
Pattern Alert: Lower highs and higher lows created compression patterns before next move
Phase 4: "The Relief Roller Coaster" (April 9-11)
Dramatic 9.5% rally following tariff pause announcement.
Quick reversal as China-specific tariffs increased.
Best ATS Strategy: “The Momentum Whisperer” (captured massive intraday moves)
Notable ATS Strategy: “The Precision Sniper” executed flawlessly through extreme volatility
Pattern Alert: Volume spike on initial relief rally was 3.2x normal—a clear exhaustion signal
Phase 5: The "Diplomatic Dance"
As we enter Week 4, expect to transition into a new market phase characterized by wild pirouettes of volatility as countries negotiate their tariff destinies. Based on analysis of the 2019 tariff implementation and the patterns established over the last two weeks, here's what I think we can expect: