Proflex Market Update - Wk 19

Market Rally, Momentum Test & What’s Next for May 2025

A Historic Rally: Markets Rebound with Force​
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Last week, markets delivered one of the strongest rallies in nearly a century, with the S&P 500 completing 9 straight winning sessions—a streak that now ranks among the best 100-year runs for percentage gains and best 20-years runs for number of winning days.

At Proflex, we had been calling this rebound weeks in advance, noting how “worst was priced in” as panic around trade wars, tech earnings, and macro uncertainty reached extreme levels. That conviction paid off.

👉 Our All-Access Subscribers and Managed Portfolios booked significant profits as we tactically entered trades and exited in this rally.

But now, the challenge begins.

Technical Resistance & Reality Check​
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Markets have rallied back to the critical 200-day moving average (DMA)—a major technical level. Until now, the rally was a classic mean reversion trade after excessive pessimism.

Now we must ask:

📉 Is this the start of a sustained uptrend—or just a dead-cat bounce?

We discussed this in detail during our Friday Community Call—you can watch the recording to see the core drivers we’re monitoring.

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Tech Earnings Confirm the Strength​
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Q1 earnings from big tech reaffirmed what we’ve been telling subscribers:

💡 It’s not the fundamentals—it’s sentiment.

Revenue growth, cost management, and forward guidance were broadly strong. Yet the market continues to wrestle with psychological overhangs, especially around tariffs and consumer resilience.

The biggest risk now is that sentiment may get worse—not better. Let us dig into this.

Tariff Lag: The Clock is Ticking​
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While trade headlines have calmed, the real impact of tariffs is just beginning.

🔄 Most retailers front-ran tariff exposure by pulling forward shipments. But that only delays—not eliminates—impact.

🛳️ It takes 30–45 days for goods from China to reach U.S. ports.

We are now entering the “impact window” for April’s trade blockade.

There are growing reports (some speculative, some data-backed) of:

• Empty shipping containers
• Slower port activity
• Supply chain bottlenecks

We expect these themes to dominate market discourse by late May and early June.

Student Loans & the Spending Squeeze

While inflation may be cooling, consumer sentiment is not. And now comes another drag:

🎓 Millions of Americans are being hit with student loan payments that were paused under Biden Administration.

This could result in:

• Reduced discretionary spending
• Weaker retail and service-sector numbers
• Growing strain on household budgets

For the first time in 2025, we may start to see “hard data” catch down to soft sentiment.

Market at a Crossroads

Markets now sit at a fairly valued equilibrium. Here’s the balance:

👉 Whichever direction hits first—good news on tax reform, or bad data from tariffs—will determine whether we break out or break down from here.

🏛️ What to Expect from the Fed

📆 The upcoming FOMC meeting will be crucial.

• Rate cut? ❌ Unlikely in May.
• Guidance on future cuts? 🔍 Very possible.

With:

• Bond yields down
• 3 rate cuts still priced into futures for 2025
• No signs of systemic slowdown in GDP or labor

The Fed is likely to stay on pause, but any dovish language or references to trade war impact could support risk assets.

📌 Proflex Positioning & Your Next Steps

✅ We are booked profits on multiple tech trades over the last 2 weeks

✅ We reduced exposure to de-risk as we enter the zone of uncertainty

✅ We are watching key macro events for reentry and new trades

📌 Stay focused. Stay nimble. Market volatility will continue—but volatility breeds opportunity.

📢 Join the Discussion in Our Macro WhatsApp Group!​
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Proflex Subscribers – Staying Ahead of the Curve 📈

Separating Noise from Signal: In volatile markets, we help subscribers stay disciplined and focus on strategic long-term opportunities.

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Team Proflex

Trusted Macro Insights. Calm Investing. Tactical Trades.

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