Trading in Turbulence: Surviving 2025’s Stock Market With AI and Inverse ETFs
The recent downturn in global stock markets has sparked significant concern among investors, with the S&P 500 (^GSPC) experiencing its worst week since the early days of the COVID-19 pandemic. From March 31 to April 4, the index saw a dramatic 9% decline, reminiscent of the sharp drop in 2020 when the pandemic first disrupted the global economy. Despite the similarities, experts caution that this time the recovery will likely look very different. The economic conditions and factors driving the current market instability have shifted considerably from the circumstances surrounding the pandemic crash.
In this article, we explore the nuances of the current stock market correction, compare it to the crisis of 2020, and analyze the potential recovery path going forward.
The Impact of Missing Key Trading Days
A powerful illustration of this concept is found in the chart titled "Missing the Best vs. Worst Days," which tracks the performance of an initial investment in the S&P 500 from 1998 to 2025 under three scenarios: staying fully invested, missing the 10 best trading days, and missing the 10 worst trading days.
The results are eye-opening:
For Traders:
When the 10 worst trading days are excluded from the performance data, the results significantly outperform a traditional buy-and-hold strategy. This suggests that active traders who focus on avoiding the market’s sharpest declines, through hedging strategies and risk management, can achieve superior returns compared to the broader market.
For Investors:
On the other hand, missing the 10 best trading days results in considerably worse outcomes. This serves as a stark reminder for long-term investors: the market’s largest gains typically occur on just a few exceptional days, and missing them can drastically affect overall performance. For investors, staying fully invested is crucial for capturing the market's long-term growth, despite its inherent volatility.
These findings highlight the distinct strategies that traders and investors must adopt. Investors need to maintain full market exposure to capture significant upswings, while active traders have the chance to improve their returns by strategically managing risks and avoiding the market's most severe downturns.
Example: AI Trading Double Agent – Outperforming NASDAQ-100 (QQQ)
QQQ is an exchange-traded fund based on the Nasdaq-100 Index®. The Fund will, under most circumstances, consist of all of the stocks in the Index. The Index includes 100 of the largest domestic and international nonfinancial companies listed on the Nasdaq Stock Market based on market capitalization.
QID. The ProShares UltraShort QQQ (QID) is an exchange-traded fund that is based on the NASDAQ-100 index.
The modern trading landscape demands speed and precision, and Agentic AI is revolutionizing the field with multi-agent architectures. One such innovation is the Double Agent Trading Bot, a cutting-edge system designed to capitalize on both bullish and bearish market conditions. By combining advanced pattern recognition with strategic hedging, particularly through inverse ETFs, this bot provides an intelligent and adaptive approach to autotrading. Its dual-strategy framework enables traders to navigate volatile markets more efficiently, making it a powerful tool for both seasoned and novice investors.
Inverse ETFs play a crucial role in this strategy by offering a means to profit from declining markets. These funds are engineered to move inversely to a specific index, allowing traders to hedge against downturns without short-selling. For instance, if the S&P 500 drops by 2%, an inverse ETF tracking the index is expected to gain roughly 2%. Such ETFs are commonly used for short-term hedging due to their susceptibility to compounding effects and tracking errors over extended periods. The ProShares UltraShort QQQ (QID), for example, is one such inverse ETF based on the NASDAQ-100 index, making it a viable hedge against tech-sector volatility.
The Role of Inverse ETFs in Navigating Market Declines
In these turbulent times, investors are increasingly turning to inverse Exchange Traded Funds (ETFs) as a way to hedge against potential losses in the broader market. Inverse ETFs are designed to perform in the opposite direction of a specific index, allowing investors to profit from market declines. These tools have become essential for active traders who need to protect their portfolios from further downside.
Inverse ETFs offer a straightforward way to take short positions on indexes without the need for a margin account. However, they come with certain risks, including higher expense ratios and potential tracking errors. As such, they are best used as part of a broader risk management strategy, particularly in volatile and uncertain market conditions.
Anti-correlated Dual-Strategy: Two Masters for QQQ and QID
BUY LONG: QQQ
QQQ is an exchange-traded fund (ETF) designed to track the performance of the Nasdaq-100 Index®, which includes 100 of the largest non-financial companies listed on the Nasdaq Stock Market. The index is heavily weighted toward technology and growth companies, offering investors exposure to leading names in sectors such as software, hardware, and biotechnology. As a result, the QQQ ETF provides a diversified portfolio of these top-performing companies, allowing investors to capitalize on the potential growth of the tech-heavy Nasdaq market. This fund is ideal for those looking to gain long-term exposure to a broad range of dominant firms in innovative industries.
BUY LONG AS A HEDGE: QID
For those seeking to hedge their position in QQQ or bet against the Nasdaq-100 index, the ProShares UltraShort QQQ (QID) ETF is a compelling option. This fund seeks to provide double the inverse return of the Nasdaq-100 Index on a daily basis, effectively making it a tool for investors who believe the market may decline. By buying QID, investors can potentially profit from a downturn in the tech-heavy sector, offering a protective counterbalance to a bullish position in QQQ. However, due to the leveraged nature of QID, it is best suited for short-term strategies or sophisticated investors who understand the risks associated with inverse and leveraged ETFs.
The Growing Influence of Artificial Intelligence in Trading
In a volatile market environment, technical analysis has become even more important for traders seeking to navigate market fluctuations. AI-powered platforms, such as those developed by Tickeron, provide real-time insights that help traders make more informed decisions. Sergey Savastiouk, Ph.D., CEO of Tickeron, highlights how Financial Learning Models (FLMs) can improve the accuracy of market predictions by integrating AI with traditional technical analysis.
Tickeron’s AI-driven tools allow both beginner and seasoned traders to access high-liquidity stock robots, which ensure efficient trade execution even in fast-moving markets. By incorporating machine learning into trading strategies, these innovations have made AI-driven trading a crucial tool for those seeking to adapt to the current market volatility.
Conclusion: A Slower and More Uncertain Recovery
As the stock market faces its most significant decline since the pandemic-induced crash of 2020, the recovery this time around is expected to be more gradual and uncertain. Tariff-induced market shocks, combined with the Fed's cautious approach to interest rates, have created an environment that will require time for investor confidence to rebuild. The ongoing uncertainty surrounding trade policies and the economy means that the market's path forward is likely to be bumpy.
For traders, inverse ETFs and AI-driven tools can help manage risk and navigate the current volatility. But overall, the path to recovery is likely to take longer and will depend on a variety of economic and geopolitical factors that remain fluid.
While some investors may have expected a swift rebound, this time, the recovery will likely be more drawn-out and dependent on resolving the underlying issues, chief among them, the trade policy uncertainties that have clouded the market’s outlook.
QQQ's Indicator enters downward trend
The Aroon Indicator for QQQ entered a downward trend on April 10, 2025. Tickeron's A.I.dvisor identified a pattern where the AroonDown red line was above 70 while the AroonUp green line was below 30 for three straight days. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options. A.I.dvisor looked at 119 similar instances where the Aroon Indicator formed such a pattern. In of the 119 cases the stock moved lower. This puts the odds of a downward move at .
Technical Analysis (Indicators)
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on March 28, 2025. You may want to consider selling the stock, shorting the stock, or exploring put options on QQQ as a result. In of 81 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .
The Moving Average Convergence Divergence Histogram (MACD) for QQQ turned negative on April 03, 2025. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where QQQ declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The RSI Oscillator points to a transition from a downward trend to an upward trend -- in cases where QQQ's RSI Oscillator exited the oversold zone, of 24 resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 48 cases where QQQ's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where QQQ advanced for three days, in of 386 cases, the price rose further within the following month. The odds of a continued upward trend are .
QQQ may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
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