Market Bottoms
The S&P 500 is looking to start in a positive position for the second day in a row, but the market’s biggest problem remains the same: investors are using energy to limit positions.
Trump News That Influenced the Future
This morning’s hope is due to a Wall Street Journal report that President Trump has told aides that he intends to end the military campaign against Iran while leaving the Strait of Hormuz largely closed. Trump is worried that trying to fully open the Strait could take four to six weeks, which is too long.
The revised plan is to achieve the goals of destroying Iran’s navy and missiles, defuse current hostilities, and then pressure Tehran through negotiations to begin free trade. If that fails, Trump would pressure European and Gulf allies to take the lead in reopening the Strait.
This change in status is another TACO move and has a bright future, but like other TACO moves there are still significant challenges to overcome. Cross-Strait shipments are down nearly 95%, pushing US gasoline prices above $4 a gallon. Keeping the Strait closed while declaring victory does not solve the oil crisis, and the market knows it.
Secretary of State Marco Rubio also appeared to contradict the report, saying in an interview with Al Jazeera that the Strait would remain open “one way or another” and that war plans could be achieved “in weeks, not months.” Meanwhile, Iran’s Ministry of Foreign Affairs said that no direct talks had taken place, while confirming that the representatives had made proposals to Tehran.
This is the latest trend where headlines give the market momentum until the next one contradicts it.
How Bottoms Are Made
Market players are eager to get ahead of the curve, which is why you see strength in open positions. But after experiencing the pain of a painful loss, there is a tendency to move aside at a slightly higher price. That power creates the most dangerous feature of repairs like this: the failed bounce.
Investors are always trying to find a change, but they are quickly shaken when positive action fails to build. The main reason this is happening is that they are more focused on nailing the bottom than waiting for better conditions to develop.
At the bottom of the market is a process, not a moment. It requires several steps, and it rarely looks like a V-shaped movement where stocks suddenly go higher.
The first thing needed to show bottom is strong results. The power we have now is strong open and weak close. Positive markets have very different behavior, with strong intraday gains and closes near highs.
A big profit with a strong finish can be the first step to the bottom, but even that is not enough. One-day bounces can change quickly. The next step is for the backlash to last for several days, followed by a strong follow-up action. Following is what ensures that there can be a new change.
At this point, we don’t have the first step, however we have regular sellers who are expecting to try to call time.
Since the bottom is a multi-step process, the only logical approach is to be patient and wait for the steps to proceed. If you have a short time frame, you can do volatility trading. My call that the opening strength will not hold for the trade ended on Monday.
What to Watch Tuesday
We’ll see if the market does a better job of holding on to the momentum on Tuesday. Locking down the good sound may be one step away from the current misery, but it will take more than that before we can be confident that a new trend is underway.
Work through that shopping list and make sure you know what to buy. It’s too early to hit the buy button, but be prepared.
Is this a bounce or a down, and how should we play it? pic.twitter.com/EaX64uvQm1
– James DePorre (@RevShark) March 31, 2026
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At the time of publication, Rev Shark did not hold positions in any of the institutions mentioned.
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