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As lame as this feels saying this, starting to think equities are topped, broadly speaking, more so than what we've seen since at least 2022.
There's still some time for an Iran deal + the rest of the heavy hitters earning's to provide some momemtum. The classic EOY/midterm year rally. But, after that game of positioning/chasing is over I think we see a pause/chopsolidation at best, or a considerably deep pullback that takes months to sort out.
The R/R has shifted quite a bit over the past 3 years of up only.
Stock pickers are in pain, but those metrics, albeit in many ways are historically significant, does not mean we've seen a formal washout.
For crypto ppl think about it like this:
Imagine your basket of altcoins are down 50% but BTC is just 7% off the highs. We've seen this many times before BTC corrects 30% or more.
Topping is a process, bottoms are an event.
Saturday thoughts:
Positioning is very light right now for US equities. This is rocket fuel if we do get a peace deal. We all know this and have PTSD from Trump-Bessent engineered lockout rallies after tariff and Initial Iran war downtrend.
People are not optimistic for many reasons other than "never fade Trump bro".
Meaning, even if you do get this post midterm rally, which is not that unlikely, smart people sell into it. Maybe SPX hits 8000-8200, which is a great opportunity.
Regardless, this doesn't change issues with AI spending/debt/revenue. It doesnt introduce any sustainable narrative other than "price looks good", which isn't something to be quickly faded, but rather it should be viewed as having a short half life.
I see the coming correction turning out in one of two ways:
1) path is a fast dramatic move lower, maybe we see private equity issues, or something else that has the potential to break shit. The tradeoff is we get it over with somewhat quickly cause the gov comes in with a bailout (BTC loves this path).
2) path is slow, choppy, and boring. Your puts get eat up by theta and most ppl give up from time capitulation. An unremarkable process that doesn't require a bailout.
Sky retweeted
Rats that went through a stress they couldn't escape stopped trying to escape, even after a way out opened up. Seligman called it learned helplessness in 1967.
What is often overlooked, blood T3 fell, and giving thyroid hormone before the stress prevented it. Ray Peat also noted the rats could be "immunized" by first letting them succeed at a similar task.
Helplessness shows up in the body's chemistry, and small victories guard against it.
Reach out, lot of people just need a small push or win.
Full article below.
If you're a knife catcher (admittedly me), better to catch them after your brothers hands have been sliced off. patience.
The gcs are treating this dip like a normal little pullback. no fear yet. You always have a few friends who panic at the lows. not seeing it.
Lord please give me the strength to not make the fatal error of seeing BTC temporary relative strength vs qqq,spx as reliable. For it has a long consistent history of getting the move over all at once, often times during the weekend/illiquid trading hours.
Think about it like this. If IBKR is hacked, what's the worst that could happen? Maybe the app is down and you cant make any trades. Any sort of wire transfer out of IBKR would be rejected. Hackers will prioritize crypto exchanges and apps cause they can make money and get away with it...
The real risk with the Binance hack is not insolvency but the chilling effect it will have on the asset class.
Past hacks were viewed as isolated incidents. But in this case, the market will (imo correctly) assume that this is the first of many LLM-enabled exploits.
My non-crypto friends are already talking about Binance - it’s the biggest mainstream news coverage we've gotten in months. I don't see how instis will be able to justify additional investments into crypto under these conditions.