S&P500 E-mini Levels For 4/14/2025

$ES_F Analysis & Game Plan

Big Picture: Bias is Bearish, Market In Downward Channel From February 2025 High, $VIX Above 30 (extreme volatility)

• Today´s Pivot is 5338

Market bottoms typically unfold in stages, reflecting shifts in sentiment, investor behavior, and broader economic signals. In the Sunday Post, I shared an image of all major market bottoms since 1929 — most of which were “V”-shaped, contrary to the popular expectation of long, drawn-out recoveries. While no two bottoms are identical, the following stages often emerge. They may not occur in a linear sequence and can overlap, but together they capture the emotional and structural evolution of a bottoming process:

1. Pessimism and Capitulation: Sentiment hits extreme negativity — think front-page headlines filled with fear. There are significantly more Bears than Bulls. Panic sets in as investors rush for the exits. Mutual funds, ETFs, and retail portfolios see heavy outflows. Margin calls, forced liquidations, and distressed selling dominate the tape. This is often the "max pain" point, where valuations disconnect from fundamentals.

2. Uncertainty and Exhaustion: Selling pressure begins to ease as most “weak hands” have already exited. Volatility remains elevated, but downside momentum slows. Price action becomes choppy and directionless. Investors are confused — unsure if it's the bottom or just a pause. Sentiment is fragile, and participation is thin. Economic data might still be deteriorating, adding to the uncertainty.

3. Stabilization: Prices stop falling sharply. Volume may decline, and some buying interest begins to emerge from contrarian investors and deep-value seekers. The market starts to “feel” less panicked. While most investors remain cautious, the all-out despair begins to fade. Technical indicators may start to show Bullish divergences. Macro conditions might still look weak, but forward-looking indicators (like credit spreads or small-cap leadership) begin to stabilize.

4. Base-Building: The market begins to form a bottoming pattern — this could be a double bottom, inverse head-and-shoulders, or a prolonged range. Selling pressure continues to dry up. Positive news is largely ignored or met with skepticism, but the reaction to bad news becomes muted — an important psychological shift. Bulls slowly start regaining control, and breadth improves beneath the surface.

5. Early Recovery: Confidence gradually returns. Institutional buying increases, and leadership begins to emerge in certain sectors. Technical indicators (like moving averages or breadth thrusts) turn positive. Sentiment shifts from fear to cautious optimism. Often, macro data is still weak, but the market starts to look past it — a hallmark of forward-looking behavior.

To be clear, I am not calling a bottom here — the purpose of this post is preparation, not prediction. If we do enter a true Bear Market (as defined by a prolonged fundamental and technical downturn), then the bottoming process could take much longer. However, these are the times when it pays to be mentally ready and to begin assembling your “buy list” for long-term opportunities. History favors those who prepare during uncertainty.

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