Good morning, traders. 

You could feel it building all last week — that tension between FOMO and fear. 

Monday opened hot, with the bulls rushing in like it was the first day of summer break. 

But just as fast, the rally hit a wall. 

By Thursday, the S&P 500 gave back nearly half of its early-week gains. The Nasdaq looked even worse for wear, slipping after some brutal earnings reactions.

If you’re new to trading, you might think a few red candles mean the world’s ending. 

It’s not. 

This was just the market taking a breather after running a marathon in April.

The big question now: Was this dip a buyable pullback or the start of something bigger?

Let’s break it down. 

PMI Numbers Tell the Real Story

Early in the week, we got a fresh look at the Purchasing Managers’ Index (PMI). And it came in … mixed.

U.S. Manufacturing PMI clocked in at 50.7, just a tick over the expansion line (50). Services PMI came in at 51.4, less than its forecast of 52.8 but still in expansion territory.

This tells you everything you need to know about where we are right now. 

Manufacturing is sluggish and services are carrying the load. 

Consumers are still spending, but factories are feeling the pinch from higher rates, sticky inflation, and tighter margins.

The market wanted a reason to keep pushing higher. 

Instead, the PMI report gave it an excuse to pull back and reassess. 

Add in some sloppy tech earnings, and boom — you get a classic midweek fade.

This Week: Earnings, Fed Jitters, and Tariffs

This week? It’s shaping up to be a heavyweight fight.

More big-name earnings are on deck. Think Meta, Apple, Google, and more.

Plus, traders are starting to front-run the next Fed meeting set for May 6–7 — and chatter’s bubbling about potential tariff changes.

Which brings me to the next point …

China’s Rally Looks Overdone — and I’m Eyeing a Short

While everyone’s been glued to AI stocks, I’ve been keeping a close eye on China — and frankly, I’m not buying the hype.

Yes, Chinese stocks have ripped higher over the past few weeks. No question about that:

• The iShares China Large-Cap ETF (FXI) is up about 16% off its lows.
  
• The KraneShares CSI China Internet ETF (KWEB) has surged more than 20% from the bottom.

But here’s the truth nobody’s talking about: This rally smells overdone, not like the start of a real recovery.

A lot of this bounce is built on hope — hope for tariff rollbacks, hope for stimulus from Beijing, hope that growth magically picks up. 

Meanwhile, the real fundamentals in China still look shaky: weak consumer spending, sluggish exports, rising youth unemployment … you name it.

In my view, this run has gotten way ahead of itself.

If tariff negotiations stall or disappoint — and they easily could — this house of cards could come down fast.

I’m not chasing it higher. I’m doing the opposite: I’m scouting for short setups in Chinese names and ETFs.

Shorting momentum like this isn’t about being early — it’s about waiting for the herd to run out of steam … and then stepping in with a plan.

How I’m Thinking About It

The big money isn’t made chasing extended rallies. 

It’s made waiting for the crowd to overcommit — and then hitting the other side of the trade when the cracks start to show.

Stay patient. Stay ruthless. Opportunity’s coming.

Stay Street Smart,
Jeff Zananiri

Want to figure out how to play your trades off the U.S.-China showdown — and come out on top? 

Register now to hear from Aaron Hunziker Wednesday at 10 a.m. ET about how to lock in crazy overnight gains, even when the market looks crazier. 

*Past performance does not indicate future results.