Insights 
VT 
Technically Bearish Stock Market Trends
President Trump expressed support for reducing tariffs on China to 80%, down from as high as 145%, ahead of trade talks. Despite typically positive implications for the economy, this news elicited a muted response from the stock market, which saw a slight decline.
Several factors might explain this reaction: doubts about the potential economic benefit of reduced tariffs and prevailing market trends indicating a downturn. The bond market’s unchanged Treasury yields suggest scepticism about long-term economic improvements due to tariff adjustments.
Technically, the stock market seems predisposed towards a decline, irrespective of positive news. The USD Index has surged, prompting a modest drop in gold prices, which signals a potential bearish trend in precious metals.
The comeback of gold’s price above its 2024 low and declining resistance line did little to sustain its upward trajectory. Recent performances suggest the previous bullish pattern is broken. With the USD Index confirming a breakout, gold, silver, and mining stocks may face further declines.
Reducing tariffs lowers the charm of gold as a hedge against uncertainty. However, tariffs might still be at a level that perpetuates global economic challenges, impacting stock and commodity prices.
Risk On Instrument Observations
We are seeing a situation unfold where positive headlines—specifically from Trump about easing tariffs—are failing to spark enthusiasm among market participants. Although lower tariffs generally encourage trade and could reduce input costs for manufacturers, the broader sentiment appears too entrenched in caution. Market players seem unconvinced that this gesture alone will breathe life into economic momentum, particularly with multiple indicators suggesting a pause, if not a reversal, in risk appetite.
On the equities side, despite what would normally be considered a bullish development, the indexes pulled back. That tells us something more than just surface-level reaction. It points to positioning; odds are, portfolios had already shifted to incorporate narrowing expectations for growth and earnings. When positive headline risk emerges, and the market shrugs, it reflects a deeper hesitation—maybe from corporate outlooks, perhaps from geopolitical tensions—or, more practically, hesitation due to the lack of follow-through in hard data.
Treasuries didn’t flinch. The stable nature of yields ties closely to how the bond market is viewing forward-looking inflation and growth. If investors believed a tariff change would drive demand and raise prices over time, we would have seen a move—a steepening curve or lifted longer-dated yields. Neither materialised. So, we interpret that as no real change in expectations for the economy—or monetary policy. Risk-free instruments still appear to be where the money feels safest; that usually doesn’t happen unless a soft spell is looming, or we’re already in it.
As for the currency markets, dollar strength is leading. That alone reshapes the short-term dynamics across commodities. When the greenback is gaining ground, gold and silver tend to come under pressure. It’s not simply about dollar-denominated valuation—it signals a risk-off message tucked in. This time is no different. The deportment of gold, hovering close to support and yet failing to assert a meaningful breakout, has broken its earlier bullish rhythm. Silver and mining names have tagged along, struggling to gain footing even with occasional spikes in volume. That’s not an impulsive retreat—it’s a calculated exhale.
Added to this, we’ve noticed that even though gold made a short-lived push above both its January lows and a minor resistance line, that move proved fleeting. The technical setup, which once looked constructive, has softened. Compressing volatility across the metals points to a lack of momentum. That, paired with dollar strength, nudges us to wonder whether support levels face a delayed retest.
Meanwhile, tariffs remaining above 80%—although down from extremes—still impose drag on certain trade routes and pricing systems. They’re lower, yes, but not low. This indirectly sustains the global unease around manufacturing output and shipping flows. The costs attached linger, and with that, so does the friction affecting broader corporate activity.
In derivative markets, when we strip out the noise and retrace chart developments over the past fortnight, we see very little indication that volatility compression leads to upward breakouts. Options pricing reflects tightening bands, suggesting that the markets are bracing for contained moves, but preparing in case sentiment flips hard. We’ve been watching risk demand through rate-adjusted carry trades, and there’s no robust return. Risk-on positioning hasn’t returned in a meaningful way.
Traders should be eyeing pairs and spreads rather than direct calls. With gold softening and volatility remaining muted, there’s opportunity in playing short-dated premium fades. Entry should be based on the break of last week’s intraday range, not on a daily close. And in FX-vol markets, implieds remain misaligned relative to realised, especially in short-duration dollar calls. Mistiming direction here still carries low cost, which lends itself to staggered entries rather than broad exposure.
As we continue observing risk-on instruments, keep watching the USD’s strength into next week. The firmness in the greenback isn’t just a temporary safe-haven play—it’s increasingly feeding into algorithmic asset correlation models. Should that continue, it adds pressure on already unstable asset classes such as silver and small-cap miners. We remain sceptical that support levels can hold through another leg up in the dollar without substantial macro catalysts on the fiscal side.
