***Urgent Down Market Warning***

The major market averages experienced a sizeable drop across the board this morning – so I wanted to give you a tactical game-plan going into this bloodbath.

As traders, Karim and I both warned of this sort of volatility occurring as one of our main predictions of 2025. So, as you watch the major market indices fall today, I urge you to keep a level head.

Look for opportunity…

Don’t over-trade…

And add protection – so that you’re positioned to profit off any sort of market move.

This is the very essence of trading – which is something that all of us can do as an elite trading community – which the vast majority of other traders cannot do. So, we’ll all look to survive and prosper together.

As a refresher, here’s part of our 2025 strategy guide…

Let’s prepare for another upside bias – but at the same time – also be ready for a major market correction – which I believe is long overdue. In fact…

I Believe That A -10% Correction Is Coming: Since 1980, on average, the market has declined by -10% (or more) every 1.2 years. Looking at the current market, the S&P 500 hasn’t experienced a -10% correction in more than a year. The last -10% slide took place in October of 2023. So, this is something on my radar. According to history, we’re due for a pullback. As always, if this happens, we’ll be ready – and Karim and I will guide you through it every step of the way.

Looking specifically at the tariffs…

As I’m sure you’ve heard; President Donald Trump imposed a 25% tariff on Canada and Mexico and a 10% tariff on China. He also placed a lower tariff of 10% on Canadian energy resources.

The three largest trading partners with the US, as measured by imported goods (China, Mexico and Canada) supplied about $536 billion, $455 billion, and $437 billion of goods, respectively, to the U.S. (according to the Office of the U.S. Trade Representative).

According to nearly every economist I follow, these tariffs will result in higher prices for U.S. consumers, both directly and indirectly. After all, tariffs are a tax on foreign imports that are paid by the U.S. businesses importing those products. These businesses will then – most likely – pass those costs onto customers, which results in higher prices. According to a Tax Policy Center analysis, households’ income after taxes would fall by $930 – just under 1% – in 2026 because of a 25% tariff on Canada and Mexico.

According to a recent analysis by PIIE economists, China is the “dominant supplier” of toys and sports equipment to the U.S., and provides 40% of its footwear imports and 25% of its electronics and textiles. This could negatively impact names like Dicks Sporting Goods (DKS), Mattel (MAT) and Hasbro (HAS).

YOUR ACTION PLAN

No matter how this all plays out, it’s clear that tariffs create a lot of collateral damage. So, we’re most certainly entering into a period of extreme event-risk uncertainty. Due to this heightened level of event-risk uncertainty, it now might be time to move into a new hedge play on the VIX or VXX, which would look to protect you against any unforeseen volatility spikes.

**Dark Ticker: Of course, big down moves like this trigger one our strongest trading methodologies, which centers around The Dark Ticker.

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