To The Moon

$S&P 500(.SPX)$ $NVIDIA(NVDA)$ $CME Bitcoin - main 2510(BTCmain)$ I’ve spent the weekend dissecting the wreckage from Friday’s rout, and what stands out isn’t the chaos but the clarity emerging from it. As a trader who’s navigated more whipsaws than I care to count, I see this not as a death knell for the bull market, but as a textbook overreaction to geopolitical posturing.

China’s rare earth controls, announced on 9Oct, barely registered until Trump’s Truth Social post 26 hours later amplified it into a perceived apocalypse. The result? A $2.5 trillion evaporation in S&P 500 market cap, the largest single-day wipeout since April’s tariff scare, and a record $19 billion in crypto liquidations that trapped whales and retail alike.

Beijing’s clarification flipped the script. This smells like April all over again: threats, panic, negotiation, rebound. I’m positioning accordingly, and I’ll walk you through why this asymmetry screams opportunity.

China’s Export Engine

I’m tracking China’s trade flows obsessively because they reveal the real economy beneath the headlines. The numbers paint a picture of resilience, not retreat.

Through August 2025, China’s exports to the U.S. dipped 15.5% year on year amid existing tensions, but that’s a blip against the broader surge. Shipments to ASEAN exploded 14.6%, Africa rocketed 24.6%, Latin America climbed nearly 6%, the EU grew 7.7%, and India hit record volumes, surpassing pandemic peaks. Overall, exports still grew 4.4% in August, down from July’s 7.2% but defying slowdown fears.

This diversification isn’t accidental; it’s Beijing’s masterstroke. Rare earths, where China processes 90% of global supply, remain its ace, but tariffs haven’t dented the engine; they’ve rerouted it. Take automobiles: exports to Africa jumped 67% in the first five months of 2025, with May alone doubling prior records.

I’m convinced this underpins why cyclicals like industrials and materials could lead any snapback. Global demand is absorbing the redirected supply, and the market still hasn’t priced this structural shift.

Timeline of the Misunderstanding

At 8:30 a.m. ET on 9Oct, China’s Ministry of Commerce released Announcement No. 61, expanding export controls on five rare earth elements (holmium, erbium, thulium, europium, ytterbium) and adding scrutiny for semiconductor and defence uses, effective 1Dec. Markets barely reacted; there was no ban, just licence requirements for compliant applications.

Fast-forward 26 hours to Trump’s 10Oct post: “China has taken an extraordinarily aggressive position… the United States will impose a Tariff of 100% on China.” Futures immediately tanked: S&P down 3.9% pre-market, Nasdaq 4.7%, Dow 2.7%. By the close, the S&P shed 2.71% to 5,824, the Nasdaq plunged 3.56% to 18,512, and the Dow cratered 879 points or 1.9% to 45,718.

Crypto was obliterated. Bitcoin sliced from $122,000 to $102,000 within the hour, Ethereum from $4,300 to $3,778. Total liquidations hit $19.13 billion, dwarfing the $1.2 billion COVID wipeout in March 2020. One whale’s $160 million 10× BTC short flipped into a $200 million windfall on the reversal alone.

Then Beijing clarified: the controls are “legitimate” but not a ban; compliant trade will be approved. Trump followed with “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment.” Traders quickly dubbed this the “Taco trade” moment after his light-hearted “Taco time!! 🌮🌮🌮🌮” post, which became the ironic bookend to a panic-driven selloff. This wasn’t policy. It was poker.

Trump TACO Trades Framing

Let’s talk about Trump TACO trades. Every so often, Trump drops a Truth or soundbite that rips through the tape: tariffs, rare earths, AI, crypto, energy. They’re fast, messy, and they move sectors. Index vol looks calm, but under the hood single-stock dispersion is explosive, and these moments become catalysts for rotation and repricing.

Political Theatre

I’m convinced Trump’s 100% levy threat, layered atop the existing 30% baseline for a potential 130% total, is vintage brinkmanship: posture hard, extract concessions, pivot to praise.

With U.S. midterms looming in 2026, he can’t afford a recession. Polling shows tariffs already cost U.S. households an average of US$2,400 annually, and farm states like Iowa and Michigan, key battlegrounds with open Senate seats, are tariff flashpoints.

Notably, Taiwan’s economy ministry clarified that the new rare earth controls won’t materially affect its semiconductor sector, since the metals differ from those used in chip production. The market panic wasn’t about fundamentals; it was about perception.

It’s striking that the Trump administration clearly knows tariffing intermediate goods is damaging. They’ve chosen to apply this knowledge selectively to AI and semiconductors, the very sector driving the stock market, while leaving broader manufacturing exposed on the altar of political posturing.

Vice President Vance echoed this on Fox: “It depends on how China responds… we’ll respond in kind.” Beijing’s measured reply blamed U.S. “hypocrisy” but stopped short of retaliation. This aligns with April’s playbook: controls as leverage ahead of the late-October Trump–Xi summit in South Korea.

The macro backdrop amplifies the bluff. The Fed has paused at 4.75–5% amid sticky 2.5% core PCE. Q3 GDP came in at 2.8%, unemployment at 4.1%, and corporate earnings up 7% year on year. Trump’s first-term tariffs spiked inflation 0.3% but yielded Phase One concessions; here, the Pentagon’s US$1 billion critical minerals purchase signals stockpiling, not surrender.

I’m betting on de-escalation: a “deal” by November that trades licence approvals for tariff carve-outs, much like the August truce that slashed duties from 145% to 30% and ignited a 10% S&P rally.

Crypto: The Canary in the Coal Mine

I’m glued to crypto because it telegraphs risk faster than any index. Friday’s carnage was a masterclass in forced unwinds. Bitcoin cratered from $122,000 to $102,000, Ethereum from $4,300 to $3,778, with $17 billion in long liquidations across 1.6 million positions. The single biggest hit was a $200 million loss on an ETH–USDT pair via Hyperliquid.

By Sunday, BTC clawed its way to $114,000 and ETH to $3,900, Bollinger Bands widening on short-covering volume. Options flow skewed bullish before the crash, with $1.2 billion in BTC calls at $120,000 strikes. Post-dip, put/call ratios hit 1.2, signalling capitulation bottoms.

Fundamentals held firm. ETF inflows hit $18 billion year to date, with Bitcoin’s dominance at 58.1%. Ethereum’s L2 activity surged 47% to $33.9 billion in weekly DEX volume. Short interest remains elevated at 12% of open interest, ripe for squeezes if de-escalation hits.

I’m scaling into BTC above $114,000 (200-day EMA support) and ETH over $4,000, targeting $126,000 and $4,700 by month-end on historical October rebounds averaging 79% for BTC.

👉 Part 2 will cover volatility, correlations, gold and metals, breadth, negative gamma, my tactical playbook, and the forward watchlist.

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Trade like a boss! Happy trading ahead, Cheers, BC 📈🚀🍀🍀🍀

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