Friday, 4 April 2025

What Friday's Historic Selloff Means for Monday

Don Kaufman here.

I've been in this business since the fall of Long-Term Capital Management in 1998, and what we saw on April 4th, 2025 was something truly remarkable - the S&P down 5%, the NASDAQ officially entering bear market territory (down over 20% from its high), and volatility exploding in ways we haven't seen since the COVID crash.

Here's what you need to know right now:

WARNING: Redemption selling could hammer markets Monday - Retail investors panicking out of mutual funds could trigger a cascade of institutional selling to start the week
The statistical significance of Friday's move - We witnessed a rare "three sigma" event, putting the worst of the volatility shock in the rearview mirror (but not necessarily the bottom)
What the Dollar surge is telling us - When global panic hits, there's only one currency everyone runs to (hint: it's not the Euro or Yuan)
The financial sector is flashing RED ALERT signals - Why this market crisis could rapidly evolve into something more dangerous for major institutions
The hidden message in energy's collapse - It's not just about tariffs anymore; we're seeing signs of a fundamental economic disruption that markets are struggling to price

I'm seeing correlation levels and fear metrics that typically only appear near market bottoms, but the financial sector weakness is particularly concerning.

When clearing firms start getting nervous about counterparty risk, things can spiral quickly.

CLICK HERE to watch my full analysis of Friday's market action and what to expect Monday

The volatility statistics for next week are staggering - we're looking at a projected $300 expected move in the SPX over the next 7 days.

That's DOUBLE what was expected for this past week (and we tripled even that projection).

In this environment, P&L potential is enormous - but you need the right strategies, not just bearish bets.

Inefficient markets create incredible opportunities if you know where to look.

To your success,

Don Kaufman

P.S. Given the crazy volatility we've seen in the market lately, TheoTrade Market Masters Live Trading Room, is available Monday thru Friday, and it's absolutely free. Click here to sign up.

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