The stock market hasn’t found a bottom yet, even as stocks have recouped some of the steep losses seen in the depths of the tariff-triggered sell-off, according to a top strategist at UBS. “The ultimate bottoming signal not here yet – 4/7 pre-open was only a local low, expect more pain to come,” Rebecca Cheong, head of Americas equity derivatives strategy at UBS, wrote in a note to clients. The latest slump in stocks is the fourth sell-off in the S & P 500 greater than 15% since 2018, this one sparked by President Donald Trump’s rollout of the the highest tariffs on imports in generations, followed by a 90-pause on much of the increase, exept for China. All three prior declines shared one characteristic not yet apparent in the current market turmoil: A large sell-off followed by sharp intraday recovery of at least 5% backed by “extreme excess” buying, according to Cheong. .SPX YTD mountain S & P 500 in 2025. “These bottoms were not triggered by news, rather it was driven by sell exhaustion by market participations. This is the so-called flush-out followed by multi-standard deviation volume buying,” Cheong said. “This is why I don’t think the +$537 billion buying on 4/9/25 post tariff delay news met the bottoming criteria.” Cheong, an 11-year veteran at UBS, believes the drastic rebound following news of Trump’s 90-day pause on tariffs “artificially” triggered speculative buying accompanied by low conviction, while a massive number of short sellers rushed to close out positions to cut their losses. The strategist also disputed the belief that the market hit a bottom on Monday, when the S & P 500 dropped another 2.4%. Unfortunately for bulls, there wasn’t much buying during the session and volume was “super light,” with stock index futures trading 20% below the recent average, she said. In other words, “not the typical capitulative buying at the bottom.” Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today’s dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You’ll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
Here’s why the market bottom isn’t in yet: No sign of washout selling
Apr 22, 2025
