Headlines Are Loud. The Chart Is Louder. Here's What I'm Actually Watching.

*Bob Iaccino, Chief Market Strategist and Co-Founder of Path Trading Partners, joins us live every Thursday from 11am ET, as our risk management educator. With 30 years' experience working as an active investor in equities, commodities, futures and FX there are few better to talk on the subject of risk management.

Bob has developed a method for breaking down his key fundamentals of risk management, in a way that he thinks retail traders can understand and use to get actionable insights to bring into their own trading. Below are some excerpts of Bob's thoughts from a recent live session. If you'd like to save your seat to watch and participate in the next session, register here.*

The rhetoric around geopolitical risk has gotten loud. Very loud. And yet, as I told Zunaid in my April 7th live session here at TradeZero, I was actually pleasantly surprised — as a finance guy — that markets weren't lower.

That's not me being dismissive of what's happening in the world. It's me doing my job, which is to separate the noise from the signal and find a framework for trading in whatever environment we're actually in — not the one the headlines are describing.

Here's what I walked through in that session, and the thinking behind it.

The Geopolitical Variable and What It Actually Means for Markets

Let me be direct about what I think the key risk is right now: it's not equities themselves. It's crude oil, and what sustained high crude prices could do to economic growth.

The concern I raised in our session was specific. If confidence in the geopolitical situation continues to erode — you could start to see selloffs that have been bought simply not get bought anymore. That's a meaningful shift, and it's the scenario I'm alert to.

What is on the table is a sustained period of energy market disruption — it will take time for the flow of energy to return to pre-war levels - and that's the variable that matters to me as a trader.

The Fed's Position — And Why a Rate Hike Would Be the Wrong Move

This session also gave us something interesting on the monetary policy side. We heard two Fed voices offering different views — one suggesting a path to rate hikes was possible, another indicating rates are currently right where they should be. In my opinion, the case for holding steady is the stronger one. Here's my reasoning:

• There is no Fed action that can push crude oil prices lower. That's not what monetary policy does.
• Raising rates into an energy price shock, in my view, risks slowing the economy more than the shock itself would.
• The more likely outcome, in my opinion, is a disruptive period that passes as energy prices normalise — not a structural inflation problem requiring policy action.

My personal view: the Fed is likely to characterize this as a transitory inflation pop driven by energy prices. That word has been used and walked back before — but this time, I think the conditions may actually support it. This is my opinion only and not a forecast.

One Underappreciated Tailwind: Tax Returns

There's a factor that, in my view, doesn't get enough attention right now. Tax returns this year are widely reported to be larger for many households. If that holds, it could give some consumers a buffer to absorb the gasoline price shock that's working its way through the system — a cushion that wasn't as readily available last year. This is my interpretation of current conditions and not a guarantee of any economic outcome.

The Russell 2000: Stuck Between Two Moving Averages

Let's start with the Russell 2000, which I track through the iShares ETF. Right now, it's trapped between the 200-day simple moving average and the 50-day exponential moving average. It has attempted to break above the 50-day four times. It succeeded once — and then immediately closed below it in what I'd call a shake-and-bake move.

That kind of price action — a close below a key level followed by a sharp recovery above it — is actually somewhat constructive when you see it. It suggests that the level is being defended. But the Russell hasn't broken decisively higher either. It's in a range, and I'm treating it as such.

The QQQ: A Weekly Double Top Has Triggered

This is the one I want people to pay close attention to. On the weekly chart, the QQQ has formed and triggered a double top pattern. Two peaks. A neckline. A confirmed breakdown below it.

The measured targets from this pattern — and I want to be very clear that these patterns succeed at a rate of roughly 55 to 65%, meaning they fail 35 to 45% of the time — would, based on my technical framework, suggest meaningful additional downside from the point of the session. I'm not publishing specific price targets here, as these are illustrative of a methodology, not a recommendation.

I'll be honest with you: I hope this is one of the times the pattern fails. A decline of that magnitude from the highs is real damage to a lot of portfolios. But I don't trade on hope — I trade on what the chart is telling me, and right now it's telling me to respect the potential downside.

The 200-Week Moving Average: The Line That Signals a Different Kind of Problem

Here's the bigger picture context that I want you to hold onto. We have only closed below the 50-week moving average once during this entire period. The 200-week moving average — a level that, historically, has been a generational buying opportunity — is still a long way away. Another 24.5% below current levels.

When you look back through history, the periods where we've spent any sustained amount of time below the 200-week average correspond to true economic catastrophes: deep recessions, stagflation, structural market breaks – for example 2008. 2022 was a brush with it.

If we got there — and I am not saying we will — it would tell me, we're in something much more serious than a war-driven correction. It would mean recession, stagflation, and a quagmire. We are a long way from that. Keep that in perspective when you're reading the headlines.

A US Retail Trading Platform: A Scalp Setup, Not a Long-Term Conviction Trade

Zunaid flagged a well-known US retail trading and investing platform, and I want to walk through my thinking on it because it illustrates something important about how I approach stocks with bearish longer-term charts.

The level that matters here is a specific price point that has been significant on my chart for a while — it was a breakout level, it's been tested as support, and it's the area where any long thesis would need to hold. Right now, we're retesting that level again.

The pattern that could set up a long trade would be a close above a key resistance level — which would also put price above the 21-day exponential in my rotation zone. If the rotation zone were angling downward and widening at that point, I'd be more cautious. But if price clears that level cleanly, there's a scalp setup targeting the 50-day moving average.

Here's what I told Zunaid directly, and I'll say it the same way here: it's a fairly good setup for a scalp — but it's not something I would personally trade. The daily chart is bearish. The weekly chart is bearish. There's a death cross in place on the daily.

A Note on Death Crosses — And Why I Don't Trade Them Directly

Since the death cross came up in our conversation, I want to address it clearly.

A death cross — the 50-day moving average crossing below the 200-day — gets a lot of attention. But in my experience, it is not a reliable standalone trade signal. What I've observed, repeatedly, is that by the time the cross actually occurs, most of the downward move has already happened. After the cross, price often goes sideways for a while — sometimes even bounces — before any continuation lower materializes.

The death cross tells me to look for short setups. It does not tell me to go short automatically. There's an important difference between those two things.

A Mid-Cap US Semiconductor Company: A Position I Used as an Educational Example

In the session, I walked through a double bottom pattern I had entered in a mid-cap US semiconductor company. I want to be clear: this is shared for educational purposes only — to illustrate how I structure a trade — and does not constitute a recommendation to buy, sell, or hold any security.

What I want to highlight isn't the specific entry — it's the structure around it. Even in a market that had been broadly weak, this stock had held up relatively well. That kind of relative strength is a signal I pay attention to.

The key point: before entering, every exit condition was defined. A close-based stop. A hard stop below that. Three targets above entry. Adjustment triggers at each level. That structure — entry, stop, targets, triggers — is what I mean when I talk about a managed position. It has nothing to do with conviction. It has everything to do with discipline.

A Major US E-Commerce and Cloud Computing Giant: A Weekly Double Bottom I'm Watching Closely

This is the setup I'm most interested in right now, and I want to explain why the weekly timeframe matters here.

A major US e-commerce and cloud computing company has a weekly double bottom forming. The trigger level — a weekly close above a specific price point — would also put price above my rotation zone and the 50-week exponential moving average simultaneously. That kind of confluence, where multiple resistance levels clear on the same move, is exactly what I want to see before entering a longer-term position.

As of the session, this stock was only about $11 away from that trigger. That could happen this week. It might not happen for several weeks. Or the pattern could fail entirely — and if price closes below the relevant stop levels before the trigger fires, the trade is off.

The fundamental backdrop, in my view, supports the thesis. The company recently reported a strong quarter. If tax returns are indeed larger for many households this year, that could represent a consumer spending tailwind. The energy price shock is real, but there may be more cash available in household budgets than at the same point last year. These are my interpretations — not projections of future performance.

One final point on weekly patterns: the percentage success rate on weekly double bottoms is higher than on daily double bottoms. The reason is straightforward — more price data is required to form the pattern, which means the signal carries more weight. One large institutional seller can distort a 15-minute chart or even a daily bar. It takes a lot more to distort a weekly close.

• Geopolitical headlines are real, but they are not a trading framework. The chart is a trading framework. Use it.
• The QQQ weekly double top pattern, if it plays out, suggests a meaningful downside based on my technical methodology. Patterns fail — but they deserve to be respected until they do.
• The 200-week moving average is a long way away. In my view, reaching it would signal something far more serious than a geopolitical correction.
• Death crosses are a signal to look for shorts. They are not a signal to go short automatically. There's an important difference.
• Weekly patterns carry more statistical weight than daily patterns, in my experience. If you're considering a longer-term position, let the weekly chart inform it.
• Your exit rules should be defined before you enter a position — not after. If they're not written down before entry, you're improvising.

Stay patient. Stay structured.

– Bob

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