Jeff Clark says we’re in a bear market … how he plans to profit… how low we’ll go and when we’ll bottom … a powerful AI tool that predicts upcoming prices
Three new headlines out this morning…
First, on the tariff front, China has hit back, raising its tariff on U.S. goods to 125% from 84% yesterday.
The increase came with a jab from the Chinese Finance Ministry:
Even if the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy.
With tariff rates at the current level, there is no longer a market for U.S. goods imported into China.
It’s a reasonable point. With both countries now implementing 100%+ tariffs, most of the bilateral trade will grind to a halt.
Second, inflation continues to fall. Following yesterday’s cool Consumer Price Index (CPI) report, this morning brought a similarly cool Producer Price Index (PPI) report.
Wholesale prices unexpectedly dropped 0.4% in March. Economists had been looking for an increase of 0.2%.
Core PPI, which strips our volatile food and energy prices, also dropped. It fell 0.1% against the estimate for a 0.3% climb.
This good inflation news needs to be taken with a grain of salt. It reflects the period before President Trump’s “Liberation Day” tariffs, so higher prices are on the way unless something changes.
Third, consumer sentiment continues to slide. According to the University of Michigan’s April survey, consumer sentiment has fallen to 50.8, down from 57.0 last month.
Additionally, inflation expectations have reached their highest level since 1981.
Putting it altogether, there are two broad takeaways – one good, one bad.
The “good” is that the data increases the likelihood that the Federal Reserve cuts interest rates this year. The “bad” is that said cutting may be needed to stave off economic pain resulting from the trade war, pessimistic consumers who are closing up their wallets, and disoriented corporate planners who have stopped investing/hiring because they aren’t sure where the economy is headed.
On that note, this morning, BlackRock’s CEO Larry Fink said the U.S. is either “very close, if not in, a recession now.”
So, what does all this mean for stocks?
Are we now in a prolonged a bear market?
I think we’re going to have a generational buying opportunity this year, not unlike what we saw back in 2008, where stocks traded just so unbelievably low that you had some incredible opportunities to buy.
I’m looking forward to that.
But in the meantime, you have to be willing to resist the emotion of selling based on fear and panic, and buying based on the fear of missing out.
That comes from master trader Jeff Clark.
While many investors are bullish after President Trump’s 90-day tariff pause on Wednesday, Jeff believes much lower prices are ahead. This would mean that the meteoric gains we saw two days ago, that are continuing Friday afternoon as I write, are a classic “bear market rally.”
Now, this is not a reason to panic.
In fact, Jeff writes that there’s plenty to look forward to – massive rallies (within a broader decline) that we can trade for fast, double-digit profits, followed by that “generational buying opportunity” at the ultimate bottom.
Today, we’ll look at three angles on this:
- Jeff’s roadmap for how this bear market will play out
- How to trade it as it falls using Jeff’s preferred “divergence” pattern
- A second way to trade it using a powerful artificial intelligence system from our corporate partner TradeSmith that predicts upcoming price movements
How big a bear this might be
For newer Digest readers, Jeff is a legendary trader with more than four decades of experience. In his service, Jeff Clark Trader, he uses a suite of indicators and charting techniques to profitably trade the markets regardless of direction – up, down, or sideways.
Today, Jeff believes we’re headed “down” as we’ve entered a bear market and have already hit the high of the year.
So, where might the bottom be?
Here’s Jeff:
Ultimately, I think where we’re headed, if this is truly a bear market as I think it is, is the same level as late-2023 when we were somewhere around the 4,150 level or 4,100 level (for the S&P).
That’s about 23% lower than where the S&P trades as I write Friday afternoon.
Jeff plans to play this in two ways: 1) trading oversold rips higher (even as the broader trend is “down”), which will give him the dry powder to, 2) take advantage of that “generational buying opportunity” when the dust settles.
Here’s Jeff with the timing of that eventual buy-and-hold moment:
The real opportunity to buy I think is probably going to wind up sometime in October, November.
We can trade between now and then, but…like oftentimes happens, you get that final washout in October or November, and that’ll give us a really good opportunity to jump in and put some capital to work at super depressed prices.
What to expect, and how to trade it
On Wednesday, stocks posted historic gains. With the market roaring, I reached out to Jeff to ask him if his bear market prediction remained.
From Jeff:
I’m sticking to my forecast for a relief rally – which we’re getting [on Wednesday] – that makes a lower low, followed by another move lower to below Monday’s low of 4,835.
To be clear, this isn’t likely to happen all at once. Here’s Jeff’s latest thinking from his Morning Update about the short-term ups and downs:
The stock market did the bare minimum needed yesterday in order to keep the short-term momentum in the bullish camp…
The daily technical indicators remain in oversold territory. Indeed, in some cases they are “extremely oversold.” There is lots of energy available to fuel a bounce. Though, it’s going to take a positive “China-trade” headline to get that going.
Ultimately, I expect any rally will peak at a lower high – which is technically below 6150. Though, I’m struggling to see any argument where the S&P can get above 5800, or more likely 5600.
As long as the S&P can hold above 5200, the bulls get the nod. But the closer we get to 5600, and as the technical conditions move towards neutral, traders should be looking to lighten up on their long exposure.
How Jeff is looking to play this
In a bear market, many traders look to short the market and “ride the slide.” Jeff prefers a different angle.
Here he is explaining:
One of the greatest things that I found trading in a bear market environment is not trying to make money as stocks fall. You can certainly do that by shorting and buying puts and that sort of stuff.
But really, it’s those rip-your-face-off rallies that are developed out of deeply oversold conditions where you can make 10%, 15%, 20% on a stock in a matter of days.
To find these rippers, Jeff uses a multifaceted approach to stock trading that involves various technical indicators to help with market timing.
At the heart of his methodology is the use of divergence analysis, particularly through indicators like the Moving Average Convergence Divergence (MACD), Relative Strength Index (RSI), and Commodity Channel Index (CCI).
If you’re less familiar with divergence trading, this strategy profits from particular “divergences,” such as when the price of a stock is moving in one direction, but a technical indicator (like RSI, MACD, or CCI) is moving in the opposite direction.
Think of it like this:
- Price says: “I’m going up!”
- Indicator says: “Hmm… I don’t believe you.”
Jeff views this “disagreement” between price and momentum as a clue that price is about to change.
His plan is to track and trade such divergences all the way down to the bear-market bottom, generating cash along the way, then plow all that money into great stocks at the bottom.
As noted earlier, Jeff expects that bottom (in the S&P) will be around the 4,150 level or 4,100 level sometime in late-Fall.
Here’s his overall suggestion/roadmap for traders today:
If you’re holding stocks long all the way through that, that could spell a little bit of trouble.
But if you take advantage of opportunities where you get deeply oversold conditions, where you can get into a good bounce – play that bounce.
But be quick to take your profits off the table and then allow the market to come back down again and give you another opportunity…
Bottom line is, I think there’s going to be an awful lot of opportunity to trade.
To learn more about joining Jeff, and trading divergence patterns alongside him, click here.
How AI can help manage your trading
For another way to play this volatile market – whether it turns into a bear or returns to a raging bull – let’s turn to our corporate partner TradeSmith.
They’re one of the investment industry’s leaders in quantitative/algorithmic trading, having spent over $19 million and over 11,000 man-hours developing their market analysis algorithms.
Years ago, they saw the writing on the wall and began developing a predictive AI algorithm. It uses millions of data points to forecast upcoming price points, helping traders plan their entries and exits.
Let’s go to TradeSmith’s CEO, Keith Kaplan:
What we’ve created can help you thrive even in the worst market conditions.
And that means recognizing opportunities, yes, but also sidestepping danger. That’s where TradeSmith’s proprietary AI trading algorithm – An-E, short for analytical engine – comes in.
What sets An-E apart from the crowd is that it can forecast stock prices one month into the future… and many of these forecasts are incredibly accurate.
And it’s not just useful for stocks that are set to go up… An-E also zeroes in on the losers, too.
Because as we’ve well learned, playing defense in today’s volatile market can be just as valuable as offense – and An-E does both.
Keith points toward one of Warren Buffett’s positions, Occidental (OXY) as an example.
(Disclaimer: I own Occidental.)
On March 3, An-E projected that OXY would jump from $46.21 to $49.23 within 21 trading days. That was a projected gain of 6.53%, backed by a 70% confidence level.
The result?
About two weeks ago, on April 1, OXY nearly hit that target, climbing to $49.19. That registered as a gain of 6.44% in only 20 trading days.
If that return doesn’t get you excited, remember, this played out in just 20 days. Also, let’s recall Jeff’s advice above: “Be quick to take your profits off the table.”
This isn’t necessarily the market in which you want to have long-term exposure.
Perhaps more in line with recent market conditions is An-E’s ability to forecast drawdowns
Here’s Keith:
On March 4, 2025, An-E projected that Light & Wonder Inc. (LNW) would fall from $106.60 to $92.52 in 21 trading days – a projected drop of 13.20%. That confidence gauge came in at a 63%.
And as projected, by April 2, 2025, LNW dropped to $91.95 for an actual loss of 13.74%.
Think about it. If you’d seen that one of the stocks you were thinking about buying had a 63% chance of dropping in the next month, would you still buy it? I don’t think so.
And in market conditions like these, avoiding the losers can be just as valuable than finding the winners – if not more.
Whether you’re more interested in An-E’s ability to help you trade rips higher or sidestep dips lower, you can learn more next Wednesday at 8:00 PM Eastern. This is when Keith is hosting The AI Predictive Power Event to show you exactly how An-E works.
He’ll walk you through how this powerful AI tool forecasts stock prices one month in advance with remarkable accuracy – and how you can use it to find high-probability trades that unlock short-term profits.
Hopefully, the rally that’s building as I write Friday signals a return to smoother buy-and-hold conditions
But if not, we need to prepare for a bear market at worst, and exaggerated volatility at best.
If you want a powerful AI platform, rooted in historical data, to help guide you through this unpredictability, tune in to learn more with Keith next Wednesday. You can register for the event by clicking here.
I’ll let him take us out today:
Whether you’re boosting your upside or guarding against drawdowns, An-E isn’t just another tool – it’s a paradigm shift.
As markets grow more unpredictable, it delivers the precision and foresight needed to adapt, just like we did in past market crises.
The future of trading is here, and An-E is leading the way.
Have a good evening,
Jeff Remsburg
