After a dismal first quarter, Wall Street "wants to bottom fish but it's not the right time yet," traders say "it would have been better to liquidate on January 22."

U.S. stocks recorded their worst relative quarterly performance in decades! Wall Street's willingness to buy the dip is strong, but finding the right entry point is difficult—Trump's tariff policy poses the biggest risk.

Overnight, U.S. stocks experienced significant volatility, with the S&P 500 index dropping 1.7% at one point during the morning session, but rebounding 0.6% by the close. Despite this, the index still recorded its worst monthly and quarterly performance since 2022.

As the first quarter comes to a close, the S&P 500 index has fallen 5.1% this year, while the MSCI All Country World Index excluding the U.S. has risen 6.5%, creating the largest quarterly gap since 1988. This astonishing contrast is primarily due to the collapse of once-mighty tech giants, which were the market leaders during the AI boom over the past two years.

Most on Wall Street are eager to know when it will be safe to enter the market, but currently, the market consensus seems to be "now is not the time to buy the dip," with Trump's upcoming announcement of "reciprocal tariffs" on April 2 being the focal point of market attention.

Mary Ann Bartels, Chief Investment Strategist at Sanctuary Wealth, commented:

“We are mired in uncertainty, and until we have a clear understanding of the tariff details and their impact on corporate earnings, it will be difficult for U.S. stocks to recover significantly.”

Will Wednesday be the "Trump Bottom"?

Some Wall Street professionals hope that Wednesday could mark the so-called "Trump Bottom," where Trump sends a victory signal to alleviate some pressure on the stock market.

Rhys Williams of Wayve Capital Management stated:

“Most politicians do not want to self-destruct, and that’s what I see happening. I doubt he will completely change his attitude, but Wednesday may turn out better than people fear.”

Of course, the impact of tariffs could be more far-reaching—the ongoing pressure on U.S. businesses and consumers may affect earnings reports in the second half of this year, weakening the primary drivers of stock market momentum. According to Bloomberg's analysis, the large tech stocks that performed best in previous years may face greater pressure.

Gina Martin Adams, Head of U.S. Equity Strategy at Bloomberg Intelligence, noted in a report on Monday:

“Large U.S. tech stocks may face considerable risks, as they are highly valued and assume their profit moat will remain intact.” Currently, large tech stocks have fallen for six consecutive weeks, marking the longest losing streak since 2022 and the "worst performing" quarter since the fourth quarter of 2022.

In the past, the so-called Mag 7 was seen as a safe haven, capable of driving returns and delivering strong performance regardless of what was happening around it. However, this combination has now recorded a cumulative decline of 17% year-to-date, and investors are concerned that entering the market at this time is akin to "catching a knife."

Williams stated:

“Do I wish I had sold all my stocks on January 22 (after the S&P rose post-inauguration)? The answer is definitely yes.”

Technical Indicators Warn That Risks Are Not Yet Exhausted

Technical indicators show that U.S. stocks have not yet triggered a bottoming signal.

Deutsche Bank data indicates that to bring U.S. stock positions down to historical low ranges, the S&P 500 index needs to drop to 5250 points, which is still over 6% lower than last Friday's closing price of 5580 points.

Meanwhile, market volatility returned last Friday after a brief calm. The "fear index" VIX climbed back above 20, indicating that traders are beginning to feel anxious. The VIX implied volatility index (VVIX) has seen its largest jump this year after hovering at a six-month low.

Although uncertainty may continue to spread, Wall Street may gain clearer trend signals in the coming period: This Friday, the U.S. will release the non-farm payroll report; on April 11, the earnings season for U.S. stocks will kick off; and on May 7, the Federal Reserve will hold an FOMC meeting to announce the latest interest rate decision.

Senior strategist Jim Paulsen believes that while the pain is intensifying, the current decline is unlikely to escalate into a full-blown crash:

“When there is bear market rhetoric everywhere, it may be a good time to return to the market.”

“A ‘fatal question’ is, who will be the next market leaders?”

Trump Continues to Create "Uncertainty," Traders Are Exhausted

When Trump won the election, investors expected him to talk extensively about trade issues, but they also anticipated that he would temper his approach as he did during his first term, after all, he had used the S&P 500 index as his "report card."

However, it now seems that this situation has changed. Trump now claims he is no longer focused on the market and appears indifferent to the short-term pain, even if it pushes the U.S. economy toward recession.

Moreover, the chaotic messaging from the Trump administration regarding tariff policies has left stock traders in a bind, with many unable to determine how to position themselves against the biggest risks faced in years.

Joe Gilbert, portfolio manager at Integrity Asset Management, stated:

“The best way to describe the current trading environment is frustration and exhaustion; we lack clear strategic guidance on how to move forward.”Frank Monkam, the macro trading director at Buffalo Bayou Commodities, stated:

"Clearly, traders are exhausted, and for risk-takers, the more difficult aspect is that this uncertainty is fundamentally different from risk because you cannot price it."

Carley Garner, senior strategist and founder of DeCarley Trading, said:

"We have shifted from a mindset focused on greed and how much money we can make to one of fear and how much money we might lose. This is definitely an emotional shift for traders; our clients are not yet feeling panic, but if the stock market rebounds and then crashes to new lows in the coming weeks, panic could spread."