Portfolio Risk Management: Avoiding Knee-Jerk Reactions to Tariff News and Letting Cycles Lead
- Apr 2
- 4 min read
The start of April has added a new layer of uncertainty to already fragile markets. Today’s headline — the White House’s scheduled announcement of new tariffs at 4 PM ET — has traders on edge. But for those who follow cycles, it’s not the headline that matters most; it’s how it fits within the broader trend already unfolding.
Markets are in a vulnerable state. Long-term cycles are in decline, intermediate-term cycles are pointing lower, and projected cycle forecasts show a meaningful bottom forming around May 5, 2025. Tariff-related headlines, while dramatic, are often the excuses the market uses to do what it was going to do anyway.
Let the Cycles Speak First
Steve’s philosophy is clear: news doesn’t lead markets — cycles do. Whether it’s inflation data, geopolitical shocks, or in this case, tariff announcements, these headlines often act as catalysts for moves that were already baked into the structure.
The long-term cycle began declining in February. Since then, each rally attempt has lost steam quickly, and price has respected the declining trend. The Visualizer clearly projects the next major low into early May. That means the next few weeks are likely to be dominated by downside pressure, regardless of what the news cycle throws at us.
So when the market gaps up or down based on a headline, we don’t react. We assess. We ask: is this move happening within the context of rising or falling cycles? Are we in alignment, or are we in conflict? That’s the difference between structured portfolio risk management and emotional trading.
Don’t Trade the Noise — Manage the Risk
It’s tempting to act when volatility spikes. News traders love to chase early momentum. But more often than not, those moves fade as quickly as they appear — especially in a market with declining trend structure.
This is where portfolio risk management becomes critical. Rather than reacting impulsively to tariff headlines, we manage exposure with:
Cash: Avoid forced trades and keep capital intact until better conditions emerge.
Inverse ETFs (if confirmed): Tools like SH or SQQQ can be deployed — but only after price confirms with a close above their 2/3 and 3/5 crossover averages.
Stops: Long positions should be protected with stops under those same averages to guard against headline-driven flushes.
Remember, risk management isn’t about predicting the next move — it’s about protecting capital while waiting for the next high-probability setup.
Check our post on Market Correction: Using Inverse ETFs and Cash to Stay Disciplined into the May Lows for more info.
Why This Bounce Isn’t a Green Light
There’s a short-term bounce projected into April 15, particularly visible in the S&P and Dow Visualizers. But given that the long- and intermediate-term cycles remain bearish, this bounce should be viewed with skepticism. It’s likely to be a counter-trend rally — an opportunity to reduce risk or add hedges, not to go aggressively long.
This is not the time to chase perceived value. It’s the time to let the market prove that it’s turning. That means waiting for the cycles to align to the upside — not fighting against their current direction. If the May 5 projected low holds, there will be time to get long with confirmation — and with much better risk-reward conditions.
People Also Ask About Portfolio Risk Management Through Market Volatility
How do I know if a news-driven move is real or just noise?
The key is to evaluate it in the context of cycle structure. If both long- and intermediate-term cycles are falling, even a strong bounce driven by news is likely to fade. Look for price confirmation — especially whether the market can reclaim key levels like the 2/3 and 3/5 crossover averages and hold above them. If not, it’s likely just noise.
What should I do ahead of a major news event like tariffs?
The most disciplined approach is to prepare, not predict. Identify your key risk levels, tighten your stops, and avoid entering new trades without cycle alignment. If you’re already long, make sure your positions are protected. If you’re short, don’t get greedy — manage the trade within the structure.
Is it better to be in cash or use inverse ETFs?
That depends on your level of experience and your trading objective. Cash is always a safe position during cycle declines, especially if you don’t have time to monitor the market closely. Inverse ETFs can be effective tools, but only when used with proper entry criteria and risk controls.
How does Steve’s cycle philosophy differ from reacting to technical signals?
Steve’s method prioritizes cycle direction first, then confirmation through crossover averages and price channels. This contrasts with conventional approaches that react to indicators like RSI or MACD without considering broader cycle context. It’s about being proactive rather than reactive.
When will it be safe to go long again?
Once both long- and intermediate-term cycles begin to bottom and turn higher — ideally in sync. That could come after the projected May 5 low. When that time comes, we’ll look for confirmation via upward crossover breakouts and rising price channels before entering with size.
Resolution to the Problem
Today’s market isn’t unpredictable — it’s structured. The problem is that most traders focus on headlines and ignore the underlying cycles that actually drive price action. The solution is to shift your lens. Let the cycles lead. Manage exposure according to trend structure, not fear or hope.
By staying defensive now — in cash or with well-timed inverse ETFs — you keep yourself in a strong position to capitalize when the next cycle turn comes. The best trades start with discipline.
Join Market Turning Points
Want to stay in sync with upcoming market cycles and avoid getting blindsided by noisy news days? At Market Turning Points, we provide real-time cycle forecasts, crossover alerts, and weekly trade setups — all based on Steve’s trusted system.
Visit Market Turning Points today and trade with clarity, not emotion.
Conclusion
Portfolio risk management isn’t about predicting every move — it’s about making sure you don’t get caught on the wrong side of a trend that’s already in motion. With cycles pointing to a May low and uncertainty growing around geopolitical headlines, now is the time to stay structured, focused, and patient.
Let others chase the noise. We’ll follow the cycles.
Author, Steve Swanson
