Postmortem: TECS Trade (April 8–16, 2026)

I entered the TECS position on April 8, expecting that a breakdown in U.S.–Iran negotiations would crack the market and send it further into negative territory. The geopolitical thesis itself was correct: the Islamabad talks collapsed over the April 11–12 weekend, with both sides publicly acknowledging failure by April 15, but the market didn’t care. What’s even more striking is that after this weekend’s activities in the Strait of Hormuz and the aggressive posturing by both Iran and the U.S., Mr. Market is still yawning. As I type, the major indexes are basically flat.

The Nasdaq100 and S&P 500 have both seen 12%+ moves from their lows at the end of March. The indices are pushing deeper into euphoric territory. Investors' gaze has shifted from the Middle East tensions back to the more fundamental concerns of the U.S. economy and earnings. With the market clearly choosing to ignore the geopolitical backdrop, I exited the trade on April 16 with a 4% loss. The catalyst occurred, but the reaction I expected simply didn’t materialize. Exiting was the right call as the market continues its run-up. It will retrace some of its gains most certainly. It isn’t a matter of if but when. 

A Market in Euphoria and What Comes Next

Earnings Season & the Dispersion Trade

Earnings season kicked off stronger than expected (FactSet’s April 17 update confirms this) with 8 of 10 sectors seeing 80% of the companies surprise to date. In the midst of this, I find Michael Kramer’s observation about the dispersion trade interesting as it explains what is driving the price action. He highlights how single‑stock implied volatility has been rising alongside prices leading into earnings - all while index volatility falls. (Dispersion trade = traders bidding up individual‑name IV into earnings while index‑level risk is suppressed). 

The pre-run-up spike followed by post‑earnings IV collapse is something to investigate as it is likely creating opportunities.

Liquidity, the TGA, and the Missing April Weakness

Kramer also recently posted concerns regarding a $300 billion liquidity drain driven by tax revenue inflows into the TGA. Historically, when the TGA rises sharply bank reserves fall and equities weaken. The pattern in the latter half of April has been consistently down every year since 2022. This year looks like it might be an exception, albeit we still have nine trading days left in the month. It could be that we’ll see more pressure this week as liquidity pressures often show up with a lag. 

I am bearish on U.S. equities in the near term, but I’m less certain about the timing. Earnings strength and dispersion flows are tailwinds. The TGA liquidity conditions present a headwind and I am certain there are other factors I am not considering. Another point: I have an APEX algorithm (posting soon) that times the Nasdaq. The signal there has been in cash since March 23.