How to Boost Win Rate in a Volatile Market?

A friend called me a "jinx"—I wrote about the market lacking beta yesterday, and boom, Nasdaq tanked overnight...

Market Performance Recap:

• $NASDAQ(.IXIC)$ : -2.04%

• $S&P 500(.SPX)$ : -1.12%

• Russell 2000: -1.03%

• Dow Jones: -0.31%

Why Did the Market Drop?

1. Auto Tariffs & Trade Tensions
Starting next week, Trump is imposing a 25% tariff on imported cars, affecting both fully assembled vehicles and key components like engines, transmissions, and electronics.

Winners? Tesla. Since all its U.S. sales come from domestic factories, it's shielded from the tariff impact. $Ford(F)$ also has a partial advantage, as 80% of its U.S. sales come from locally built vehicles.

Losers? Automakers like $General Motors(GM)$, Ford, Stellantis, and Toyota, which saw post-market declines.

Ironically, despite the protectionist boost, Tesla still plunged over 5%, showing how fragile market sentiment is.

2. AI Bubble Concerns
Alibaba’s Joe Tsai raised concerns about overlapping investments and premature AI spending, noting that Amazon, Meta, and others are funding projects without real customer commitments.

Meanwhile, Nvidia took a hit amid mounting headwinds:

• China discouraging local firms from buying Nvidia’s H20 chips, raising regulatory uncertainty.

• Analysts flagging declining AI hype, with Monness Crespi Hardt warning of fading generative AI enthusiasm.

• TD Cowen reported Microsoft is canceling new data center projects, citing an oversupply of AI computing clusters.

• Vertiv Holdings ( $Vertiv Holdings LLC(VRT)$ ), a key Nvidia cooling supplier, crashed 10.88%, signaling potential trouble ahead for Nvidia’s Q1 results.

What’s Next? My Strategy

🔻 Lowering exposure (<50% allocation)

Key reasons:

1️⃣ Technical shifts:

• Tesla hit strong resistance at its descending channel.

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• Nvidia has now formed a Death Cross, a bearish signal.

  

2️⃣ Retail investors still buying the dip:

• Despite 25 down days this year, retail flows into U.S. stocks remain high (~$670B net inflows).

• Yet institutions are aggressively cutting exposure, per Bank of America’s largest-ever Q1 equity reduction.

• Retail traders keep piling into Tesla and Nvidia, which may signal a crowded trade nearing exhaustion.

3️⃣ Traders remain cautious:

• Major investment banks’ trading desks see no consensus bullish view on this dip.

• External factors like AI skepticism, quarter-end portfolio rebalancing, and macro concerns continue to weigh on sentiment.

• Some macro traders believe the market needs one more volatility flush before stabilizing.

My Moves

• Cleared out $Richtech Robotics(RR)$, $NVIDIA(NVDA)$, $Direxion Daily TSLA Bull 2X Shares(TSLL)$ and $Tempus AI(TEM)$ (50% offloaded).

• Minimal U.S. stock exposure for now.

• Took a quick trade on $HSI(HSI)$ (QDII T+0), capitalizing on volatility.

• Watching for further tariff impacts on chips & timber, as Trump’s new trade policies unfold.

Final Thoughts

When beta is too hard to play, sometimes reducing exposure is the best trade.
Valuation resets can punish both alpha and beta, so protecting gains and managing drawdowns take priority.