NDR: Rare territory for sentiment

The recent 23.8-point surge in the S&P 500 Volatility Index (VIX) over just two days places the “Trump Tariff Tantrum” among some of the most significant short-term panic events in market history. These include the 1987 “Black Monday” crash, the 2015 “China Black Monday” and yuan devaluation, the 2018 “Volmageddon” and XIV low-vol ETF collapse, and the 2020 Covid-driven volatility. Each of these spikes reflected moments of intense fear, yet history shows that the market typically rebounded within 12 months. Similarly, the NDR Daily Trading Sentiment Composite recently experienced a sharp decline, dropping 25 points in six days—from an already low reading of 33.3 to just 7.8. This marks the only instance since 1984 of such a large drop from a starting point below 34, with sentiment reaching a record-tying low of 4.4 on April 7, highlighting extreme pessimism. While sharp downturns may trigger a reflex to exit the market, historical patterns suggest that caution—rather than panic—is the wiser course.

Although markets often see a relief rally following periods of deep negativity, such oversold conditions rarely offset the broader impact of an early-stage recession. On average, cyclical bear markets for the Dow Jones Industrial Average last 353 market days with a 34.6% decline.

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