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S&P 500: The perfect exit ramp ahead of a packed 2 weeks
- Nico DE BONY
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- Apr 19
- 3 min read
Updated: Apr 20
Note 1 (april 19th): I'm a bit under the weather this weekend, so there won't be a full analysis video. But I still wanted to give you a quick update to explain what happened, why it happened, and the probabilities going forward.
Timing-wise, I also wanted to remind you that this new high could offer a breakeven exit for those who regretted staying invested during the recent low. Especially when you consider that this spectacular bounce we just saw on the SP500 is a statistical anomaly, not a fundamental reversal with solid foundations.
Note 2 (April 20th): added missing elements in the calendar section.
We just witnessed a statistical anomaly not seen in decades (1928, 1929, 1950, or 2000 depending on the metric used). The price went up, that's a fact. But the momentum behind this move was incredibly weak. It was like watching a truck without an engine pick up speed going downhill.
With few advancing stocks, low volumes, an overbought RSI (momentum indicator), prices hitting major resistances (parallel channels, trendlines, etc.), an exhaustion gap, and much more... in short, everything points to a fakeout.
Yet, this bounce was enough to convince many investors to flip completely bullish again. This is the exact psychological setup needed for a trap or a crash.
The mechanics behind this "artificial" bounce
What we saw is not a sudden economic recovery. It's the perfect storm of three mechanical forces:
Trend Followers (CTAs): These are algorithms that follow strict rules. When the market dropped, they sold massively. As soon as the price bounced back, they were forced to buy back billions of dollars in stock all at once to follow the new trend.
Dealer Hedging (Gamma): Large banks act like insurers. During the drop, they shorted the market to protect themselves. When the drop stopped, these insurances lost their value, forcing the banks to cancel their bets by massively buying back shares.
Forced Buying (Short Squeeze): Many were betting on the crash continuing. The sudden reversal put them in the red, forcing them to panic-buy shares to limit the damage, which drove prices even higher.
What comes next
There might be a few more days of forced buying left, but after such a move (and especially after options expiration), a pullback is extremely likely, if only from a purely technical standpoint.
This pullback is necessary to confirm what's next: is this a fakeout before a real drop, or the start (less likely but possible) of a new leg higher? Gold, Silver, and Bitcoin (BTCUSD) are also all in a major decision zone and are likely to follow the broad market in the event of a correction.
The calendar for the next two weeks (Buckle up)
We will find out very soon. Even without the geopolitical tensions, the coming days are packed with catalysts capable of derailing this market:
Macroeconomic Data and Big Tech Earnings::
April 21:
USA: Retail Sales (is the consumer breaking?)
April 22:
Earnings for Tesla
April 24:
USA: University of Michigan Index (next Fed move)
April 27:
OpenAI vs. Musk trial begins Japan: Interest rate decision (BoJ)
April 29:
USA: Interest rate decision (FOMC)
Canada: Interest rate decision (BoC)
Earnings for Microsoft, Google, Meta, Amazon
April 30:
UK: Interest rate decision (BoE)
European Union: Interest rate decision (ECB)
USA: Core PCE for March (Inflation)
USA: Q1 GDP
Canada: Q1 GDP
Earnings for Apple
How I am positioned
This is not financial advice, simply sharing my approach.
Many have asked: yes, I bought put options (put spreads) on SPY. Even though I think the market can still go up a bit, it's almost impossible to pick the exact top. The advantage of this strategy is that I only need to be right by the expiration date, which gives me time.
For those interested in using options as true portfolio insurance (and not just for speculation), I teach the basics in my Level 1 course. The more advanced "spread" strategy I am currently using isn't in there yet, but I will add it in version 2 and it will be a 100% free upgrade for everyone who already has version 1. Here is the link for information about this course that you can try risk-free.
So stay cautious this week, beware of reactions tied to the news from Iran (too much noise and fog of war to see clearly), and don't let yourselves be blinded by artificial rallies!
Nico de Bony
If you found this briefing helpful, feel free to share it. For those ready to build a defensive process, the links to my training are below.
Watch my Free Masterclass to understand the 5 core hedging strategies.
Watch the Practical Demo to see me execute these trades live.
If you want to master this, check out my Self-Paced Course
or apply for one of the few remaining spots in my 1-on-1 Coaching.
