The BULL trap: We just witnessed the biggest bull trap of 2025 with...
The Kobeissi Letter@KobeissiLetter
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Apr 09, 2025
~3 min read
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1
The BULL trap:
We just witnessed the biggest bull trap of 2025 with the S&P 500 erasing a ~4.5% rally in ~3 hours.
Between 10:30 AM ET and 3:15 PM ET, the S&P 500 erased -$2.3 TRILLION of market cap.
Bull traps are TEXTBOOK signs of a bear market.
(a thread)
We just witnessed the biggest bull trap of 2025 with the S&P 500 erasing a ~4.5% rally in ~3 hours.
Between 10:30 AM ET and 3:15 PM ET, the S&P 500 erased -$2.3 TRILLION of market cap.
Bull traps are TEXTBOOK signs of a bear market.
(a thread)
2
The day began with an ALL GREEN heat map pushing the S&P 500 toward 5300.
This put the index nearly +450 points ABOVE levels seen at yesterday's low.
However, we continued to reiterate that it simply did NOT make sense.
The trade war only got worse, but stocks were rising.
This put the index nearly +450 points ABOVE levels seen at yesterday's low.
However, we continued to reiterate that it simply did NOT make sense.
The trade war only got worse, but stocks were rising.
3
The bull trap really began yesterday, at around 10:15 AM ET.
This is when rumors emerged of a 90-day tariff delay which CNBC then reported.
After the White House called it "fake news", the S&P 500 still closed the day 230+ points above its lows.
It did not make sense.
This is when rumors emerged of a 90-day tariff delay which CNBC then reported.
After the White House called it "fake news", the S&P 500 still closed the day 230+ points above its lows.
It did not make sense.
4
It especially did not make sense because the trade war only got WORSE yesterday.
Trump announced perhaps the biggest news of the trade war so far.
He is imposing another 50% tariff on China IF they do not cancel their 34% tariff by April 8th.
Today is indeed April 8th.
Trump announced perhaps the biggest news of the trade war so far.
He is imposing another 50% tariff on China IF they do not cancel their 34% tariff by April 8th.
Today is indeed April 8th.
5
Later that night, China announced that they "will fight to the end" if the US insists on tariffs.
China said it vows necessary actions to defend its rights.
The US is now set to impose a total tariff of 104% (20% + 34% + 50%).
This is perhaps the most major escalation so far.
China said it vows necessary actions to defend its rights.
The US is now set to impose a total tariff of 104% (20% + 34% + 50%).
This is perhaps the most major escalation so far.
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Heading into the open today, stocks were deep green and we were skeptical.
At 7:25 AM ET, we posted the below update for our premium members.
We called price action "very strange" and believed markets misread Trump.
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At 7:25 AM ET, we posted the below update for our premium members.
We called price action "very strange" and believed markets misread Trump.
Subscribe to access our alerts:
thekobeissiletter.com/subscribe
7
An hour after the rally began to fade, the below headline came out.
The White House said the 104% tariff on China already "went into effect" and collection begins at 12:01 AM ET.
This is when the bull trap accelerated with the S&P 500 going from +4.5% to -2.0% in hours.
The White House said the 104% tariff on China already "went into effect" and collection begins at 12:01 AM ET.
This is when the bull trap accelerated with the S&P 500 going from +4.5% to -2.0% in hours.
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We initially took shorts yesterday, which were down at the open.
We then posted the below for premium members at 9:45 AM ET taking MORE shorts at 5230.
Our 5000 target was met less than 6 hours later.
Subscribe to access our alerts below:
thekobeissiletter.com/subscribe
We then posted the below for premium members at 9:45 AM ET taking MORE shorts at 5230.
Our 5000 target was met less than 6 hours later.
Subscribe to access our alerts below:
thekobeissiletter.com/subscribe
9
Here's where it got even worse:
The White House said it believes that Apple, $AAPL, can fully produce iPhones in the US.
Conservative estimates say this would TRIPLE the cost of an iPhone, at least.
The Trump Administration is truly all-in on this trade war.
The White House said it believes that Apple, $AAPL, can fully produce iPhones in the US.
Conservative estimates say this would TRIPLE the cost of an iPhone, at least.
The Trump Administration is truly all-in on this trade war.
10
Heading into the close and at the open today, retail capital rushed back into equities.
Trading volume on all US exchanges reached another record of 29 billion shares on Monday alone.
The bull trap materialized in under 5 hours with close to $2.5 trillion of market cap undone.
Trading volume on all US exchanges reached another record of 29 billion shares on Monday alone.
The bull trap materialized in under 5 hours with close to $2.5 trillion of market cap undone.
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As we have been saying all year, this market is entirely a game of sentiment.
Capital is moving as a "herd" with investors increasingly on edge about potential headlines.
If you can stay ahead of the shifts in sentiment, this market is one of the most profitable of all time.
Capital is moving as a "herd" with investors increasingly on edge about potential headlines.
If you can stay ahead of the shifts in sentiment, this market is one of the most profitable of all time.
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Sentiment is polarized and fear is at March 2020 levels which means more volatility is ahead.
Our subscribers are capitalizing on these swings.
Want to see how we are trading it?
Subscribe at the link below to access our latest analysis and alerts:
thekobeissiletter.com/subscribe
Our subscribers are capitalizing on these swings.
Want to see how we are trading it?
Subscribe at the link below to access our latest analysis and alerts:
thekobeissiletter.com/subscribe
13
Lastly, we continue to watch bond markets which are acting historically strange right now.
The 10-year note yield now pushing above 4.25% while the S&P 500 falls -6% in 5 hours.
More volatility is ahead.
Follow us @KobeissiLetter for real time analysis as this develops.
The 10-year note yield now pushing above 4.25% while the S&P 500 falls -6% in 5 hours.
More volatility is ahead.
Follow us @KobeissiLetter for real time analysis as this develops.