Is the capital market's free fall continuing, and is now a good opportunity to buy the dip?
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Is the capital market's free fall continuing, and is now a good opportunity to buy the dip?
Market sentiment has reached one of the most pessimistic levels in history.
Navigating Web3 tides with focused insightsAuthor: The Kobeissi Letter
Compiled by: TechFlow
U.S. stock futures are falling again today, with S&P 500 futures down -22%, officially entering bear market territory.
Over the past 32 trading sessions, U.S. equities have erased an average of $40 billion in market value per day.
Is it time to "buy the dip"?
Just 32 trading days ago, the S&P 500 hit a record high of 6,147 points.
In the timeline below, we'll explain how the S&P 500 lost over 1,300 points in just 32 trading days.
This is a crash comparable to March 2020, with market sentiment reaching one of the most pessimistic levels in history.
Key Timeline:
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12:00 PM Eastern Time: The crypto market begins to decline.
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5:00 PM: The sell-off accelerates sharply, wiping out approximately $200 billion in market value. We view this as a clear signal that risk-off trading has intensified again.
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6:00 PM: U.S. futures open down 6%.
So what has changed since Friday?
More accurately, what has not changed since Friday—President Trump doubling down on his trade war stance.
Right before Friday’s close, investors still held hopes for signs of a potential trade deal over the weekend.
Instead, there was complete silence—and the market reacted extremely negatively.
President Trump has just responded to the stock market plunge:
The S&P 500 is expected to fall 15% within three days—one of the largest three-day drops in modern history.
His response: "Sometimes you have to take your medicine."
In other words, short-term pain for long-term gain.
The latest AAII Investor Sentiment Survey further reveals deep pessimism:
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Only 21.8% of investors are bullish.
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61.9% of investors are bearish, the third-highest reading in history.
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Only March 2009 and October 1990 recorded higher bearish readings.
Note: These survey results were collected mostly prior to April 2.
Market Watch Today: Panic surges, markets enter extreme conditions.
Today, VIX futures ($VIX) surged to above August 2024's peak.
We've been shorting the S&P 500 for weeks and previously described the index's decline as an "orderly correction."
But now, this downturn no longer looks orderly—panic has reached extreme levels.
The market may be nearing a rebound.
A notable bottoming signal?
Even safe-haven assets like gold are seeing sharp sell-offs.
Prior to Friday, gold had risen significantly due to tariff uncertainty.
But today, gold prices have fallen back below $3,000 per ounce, indicating investors are accelerating their exit from markets.
Panic intensifies once again.
Between 9:30 AM and 12:00 PM Eastern Time on Friday, retail investors sold off $1.5 billion worth of stocks.
This marks the largest 2.5-hour retail sell-off in history.
Retail investors have consistently bought the dip since 2022, but this trend appears to be rapidly reversing.
Massive institutional capital outflows combined with large-scale cash movements to the sidelines have further accelerated the market's sharp decline.
March 2025 marked the most aggressive rotation of institutional capital out of U.S. equities in recent years.
Now, retail investors are joining the selling wave, accelerating the downward momentum.
The market has already priced in significant negative news.
In the recent 15% drop of the S&P 500, we haven't seen any "relief rally" yet.
Any short-term news about a trade deal with major partners or tariff delays could trigger a rally of more than 5%.
The risk-reward balance is shifting.
Summary of current market conditions:
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S&P 500 has plunged straight down over 32 trading days;
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Crypto markets, after a calm week, have joined the sell-off;
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Gold has dropped sharply as investors rush for the exits;
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VIX (Volatility Index) has broken above August 2024 highs;
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Both retail and institutional capital are exiting;
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The market has already priced in substantial bad news.
This isn’t a call for a long-term bottom—but we emphasize that the market needs a relief rally.
Even the most brutal bear markets see rallies of more than 5%.
"Healthy" bear markets require relief rallies to sustain their rhythm.
We’ve been shorting the market for several weeks, but this has now become an overcrowded trade.
Market sentiment is polarized, and panic is approaching March 2020 levels, implying greater volatility ahead.
Our subscribers are capitalizing on this volatility for gains.
In the end, everything comes down to one core question: Will Trump's tariff policies persist in the long term?
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If the answer is yes, then the U.S. will inevitably face a severe economic recession.
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If the answer is no, then the current market presents a historic buying opportunity.
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