Tariffs Didnโt Cause the Correction โ It Was Coming Anyway๐ฉ Intro: Markets Correct โ They Donโt Need Permission
Every time the market drops hard, the headlines rush in to explain it. This time, it was President Trumpโs dramatic tariff announcement on April 2nd. The media called it a shock.
I didnโt.
Iโve been calling for S&P 500 to drop to 5,200, and NASDAQ-100 to 17,500, since early January.
Not because I predicted tariffs. But because the charts told the story.
The market didnโt fall because of politics โ it fell because it had to.
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๐ฅ The Spark: Trumpโs โLiberation Dayโ Tariffs
On April 2, 2025, Trump rolled out an aggressive trade agenda:
โข 10% blanket tariff on all imports
โข Up to 54% tariffs on Chinese goods
โข 25% tariffs on imported cars and parts
โข With limited exemptions for USMCA-aligned countries
Markets reacted instantly:
โข S&P 500 dropped 4.8% โ worst day since 2020
โข NASDAQ-100 plunged over 6%
โข Tech mega caps lost 5โ14% in a day
Sounds like cause and effect, right?
Wrong.
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๐ง The Real Cause: A Market That Was Ready to Fall
Letโs talk technicals:
โข S&P 500 had printed a textbook double top at the 6100โ6150 zone
โข NASDAQ-100 had formed a rising wedge, with volume divergence and momentum fading
โข RSI divergence was in place since February
โข MACD had crossed bearish and also deverging
โข Breadth was weakening while indices were still pushing highs
โข Sentiment was euphoric, volatility crushed โ a classic setup
You didnโt need to guess the news. The structure was screaming reversal.
SP500 CHART:
NASDAQ CHART:
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๐งฉ Why Tariffs Made a Convenient Narrative
Markets love clean stories. And Trumpโs tariffs offered everything:
โข Emotional trigger
โข Economic fear factor
โข Political drama
โข Global implications
But smart traders know better: markets correct based on positioning, not politics.
As soon as the wedge broke on NAS100 and SPX broke the double top's neck line the path was clear โ risk off.
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๐ I Was Calling This Since Q1
The targets were public:
SPX = 5,200. NAS100 = 17,500.
And the logic was simple:
โข Overextension in AI-led tech
โข Complacent VIX environment
โข Crowded long positioning
โข Bearish divergences and fading momentum
Double Top and Rising Wedge on SPX and Nas100
We didnโt need a reason to drop. The market had been levitating without support. All we needed was a trigger โ and we got one.
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๐งญ Lesson: Trade the Structure, Not the Story
Hereโs what I hope you take away:
โ
Setups come first. News comes later.
โ
If it wasnโt tariffs, it wouldโve been CPI, earnings, Fed minutes, or a bird on a wire
โ
Donโt chase headlines. Anticipate setups.
The best trades arenโt reactive. Theyโre built on structure, sentiment, and timing โ not waiting for CNBC to tell them whatโs happening.
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๐ Conclusion: It Was Never About Tariffs
Tariffs were the match.
But the market was already soaked in gasoline.
This correction was technical, predictable, and clean.
๐ Post Scriptum โ The Setup Shapes the Narrative
Let me be clear:
Iโm not a Trump fan. Hoho โ not by far.
But Iโll swear this on any chart:
If the setup had been the opposite โ double bottom, falling wedge, positive divergences, and improving momentum โ these exact same tariffs wouldโve been interpreted as โbold leadership,โ โpro-growth protectionism,โ or โmarkets pricing in a stronger America.โ
Thatโs how it works.
Price action leads. Narrative follows.
When structure is bullish, traders celebrate even bad news.
When structure is bearish, even good news becomes a reason to sell.
So no โ it wasnโt about Trump. It never is. Itโs about where the market wants to go. The rest is storytelling.
Disclosure: I am part of Trade Nation's Influencer program and receive a monthly fee for using their TradingView charts in my analyses and educational articles.