Caruso Weekend Report: April 20, 2025

Weekend Summary 

We’ve been using the 2018 bear market as our guide for several weeks, and it has been incredibly prescient for the current market. After much weakness, we have finally reached a point where, if the market continues on a similar path, we should see significant and persistent strength build from here. A push above the April 9th short covering day high will be critical for the market. 

Although we await strength in stock indexes, bond traders seem much more confident that the worst may be behind us. The JNK ETF is attempting to break above its April 9th high while stock indices lag. Bond traders tend to be less emotional and more numbers-driven, often providing a leading view ahead of stocks.  

Lastly, it appears that positioning has finally started to align with the very negative sentiment. The National Association of Active Investment Managers (NAAIM) had been reluctant to reduce exposure throughout much of this market decline, but has now demonstrated a significant decrease in exposure to less than 40.  

As markets remain under pressure, individual stocks have begun to improve. A broad market move higher would be required for strong gains, but it appears that, should some trade negotiation progress be made, we have plenty of fuel for a major rally. PLTR, SRAD, and TTWO are just a few stocks that have already begun a strong push higher.  

Mindset Matters: Manage Risk, Stay Objective, Stay Ready 

Yes, risk management is essential in an environment like this. But so is preparation, objectivity, and optimism. Markets can turn quickly, and the best opportunities often emerge before sentiment catches up. 

“Don’t be thrown off by the swarm of gloom and doomers. In the long run, they have seldom made anyone any money or provided any real happiness. I have also never met a successful pessimist.” – William J. O’Neil 

 This report is a small part of the Caruso Insights membership and serves as an excerpt from the full weekend report. It is provided to members as a quick takeaway document for the upcoming week.