Traders called it a reflex rally—and AI agreed. The Adler Wave Model confirms for now what the Street suspects: Thursday’s bounce stopped exactly where it should have if nothing’s changed. The trend break still stands.
Wall Street Narrative
“The Trump Put is back—but no one trusts it to stick.” – Synthetic quote*
Markets ripped on Trump’s tariff suspension, but futures reversed as traders remembered previous walk-backs and whipsaws.
“Europe rallied 5% on the headline. That tells you how oversold we were.” – Bloomberg live update
Euro Stoxx 50 gained nearly 5% after EU counter-tariff pauses. Commentary framed it as positioning relief, not new conviction.
“China isn’t playing ball—they’re retaliating.” – Wall Street Journal
While the U.S. paused tariffs, China imposed new duties. The tone of coverage shifted to highlight asymmetric de-escalation.
“Yields dropped, but not because of safety bids—it’s position unwind.” – CNBC bond desk coverage
10-year Treasurys rallied, but desks cited fast-money cover flows, not fundamental demand for duration.
“The CPI number just got even more important—Trump’s tariffs were the distraction.” – *Synthetic quote
Traders now view inflation data as the deciding force on rates. Tariff noise is already being discounted as transitory.
“This is textbook whipsaw—emotional headlines with real consequences.” – Reuters
Major headlines used “whiplash” to describe market reaction. Traders flagged violent positioning reversals in thin conditions.
*Synthetic quotes are amalgamations of several similar views from different sources.
Just the Facts, Ma’am
AI applies its logic:
The rally on the Trump tariff walk-back is real—but meaningless. Relief from headline escalation doesn’t address the underlying problem: markets weren’t pricing tariffs in the first place. The selloff that preceded the reversal wasn’t about trade. It was about exhaustion, poor liquidity, and an overdue unwind of overconcentrated flows. That dynamic hasn’t changed.
Yes, Europe’s 5% pop confirms extreme short-term oversold conditions, but it does nothing to improve the structural setup. When markets lurch on a policy tweet and give it back overnight, it’s not signaling recovery—it’s diagnosing fragility. The bounce wasn’t confirmation of strength. It was a reflex.
The bond market’s response was textbook: yields dropped, not on safe-haven demand, but on flow rebalancing. There’s no evidence of new buying. And the fact that yields are drifting lower without any accompanying duration bid from foreign or institutional buyers tells you that this is not about confidence. It’s clearance.
Meanwhile, CPI remains the anchor. The market’s obsession with rate cuts has shifted to rate credibility. Implied volatility is elevated—especially in short-dated options—because traders are expecting movement, not stability. This isn’t a market ignoring risk. It’s a market anticipating that something breaks if the number comes in hot.
As for China’s retaliation, it’s noise on top of chaos. The real signal is in the policy coordination failure. One side de-escalates while the other sharpens. That doesn’t produce stability—it amplifies uncertainty. Markets don’t need clarity on tariffs. They need clarity on direction, and they’re not getting it.
What’s left? Liquidity. And right now, that’s what traders aren’t saying out loud. The setup isn’t just about whipsaw headlines—it’s about the complete absence of depth beneath them. You don’t get flash rallies like this unless the order book is hollow.
Verdict: Supports the sentiment, rejects the optimism. The narrative correctly captures the whipsaw and headline fatigue—but still overweights surface-level reversals. The facts show a market struggling to price in risk without a center. The bounce was real. The instability is more real.
Adler Wave Chart Analysis
This is Lee. The extreme move, and the government intervention, had the benefit of a short term wave predisposition. I wrote in this weekend’s Liquidity Trader, Technical Trader update:
Short Term Cycles – Cycle lows due between this week and early May. There’s still time for tremendous damage, even if the low comes early in the time window. Rebound is likely to be extremely sharp, but very short. The 4-week cycle projection is 5025. There’s no projection on the 6-8
week cycles, but they should be significantly lower.13-Week Cycle – The down phase resumed. The low is ideally due on April 13 at an updated projection of 4900-5000.
So, yes, the rally was extraordinary, but the setup was primed for it. Now what? It’s impressive that the rally reached and stopped at a key intermediate cycle wave boundary that it had just smashed. It did not quite make it to the centerline of the next shorter intermediate wave. Those two lines hold the key of whether this was just a one day wonder, or is more sustainable.
The CWC (TM) has a bullish divergence but not a clear buy signal. The burden of proof is still on the bullish case. A day of follow through, or even a holding action would probably lead to more upside. Without that, the norm would call for a pullback toward a test of the low, or worse.
AI’s Final Word
Market participants aren’t buying this rally—and neither is the Adler Wave Model, yet. Until buyers prove they can hold this rebound, the setup favors a retest or worse. The trend break remains unchallenged.
About Technical Trader
Liquidity Trader’s Technical Trader delivers weekly market timing and trade ideas for professional investors. The work is grounded in Lee Adler’s 55 years of experience applying wave analysis, derived from JM Hurst’s seminal work in 1970, enhanced and refined using today’s high tech tools. Request a complimentary copy of the latest Technical Trader Report (scroll down to form).
Each weekend, Lee outlines the active phase of short, intermediate, and long-term cycle waves using his proprietary Cycle Wave Composite™ and volatility-adjusted wave projection bands. Monday morning’s pre-market report turns that analysis into action with mechanically screened swing trade setups across 1,700+ institutional stocks.
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