Good afternoon: |
My wife and daughter are traveling to Orlando for three days… so I'm at the house with the dogs reading. This has been an interesting week after the Federal Reserve delivered nothing of importance, and yesterday's Triple Witching took the S&P 500 right to the brink of key moving averages. |
 | Finviz |
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Pay close attention to the SPY (S&P 500 ETF). If there's weakness, I would anticipate a retest of the 50-day moving average - especially with so much focus on July and questions about tariffs. |
As always, I've got a few charts for you to help navigate this market. Let's dive in… |
Chart 1 – Cross-Asset Returns |
While everyone was watching the Fed play interest rate charades, something far more important happened in Europe: the ECB fired up its money printer like it was 2012 again. |
This chart comparing cross-asset returns in H1 2025 tells a much bigger story. |
 | Edward Jones |
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U.S. assets stalled out. |
Commodities chopped sideways. |
But international equities? Quietly crushed it. |
Why? Policy. The ECB and other central banks have re-entered the chat. They're monetizing deficits, stimulating demand, and laying the groundwork for more liquidity. |
In other words, global capital isn't chasing growth. |
It's chasing policy accommodation. |
We're seeing a classic rotation out of U.S. dollar-denominated risk and into anything with a dovish central banker and a half-decent yield curve. |
Don't let the headlines fool you. This isn't about optimism. |
It's about finding the next money spigot. |
Chart 2 – SPX & 200-Week Moving Average |
The 200-week moving average isn't technical support , it's emotional therapy for central bankers. |
 | Trend Spotter |
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Every time SPX grazes that line, it's not just a chart pattern. |
It's a signal to D.C. that the market needs a new story. |
Once that line is breached, policy pivots become reflexive, whether it's monetary easing, fiscal "injections," or trade de-escalation. |
Look at the pattern: test the 200-week, and watch the Fed mumble something dovish while Congress drafts another bill nobody reads. |
You know what else spikes during these moments? Insider buying. When the suits who read the footnotes start snapping up shares, maybe you should pay attention too. |
This isn't a market… |
It's a video game with unlimited lives if the central bank controller isn't unplugged. |
The 200-week is less about value and more about narrative. |
Bounce here, and the Street cheers. Break it, and Powell hits Ctrl+P. |
Chart 3 – 0DTE Options Volume |
Everyone has a take on 0DTE options; most of them sound like your dad yelling about crypto in 2017. |
Here's the truth: 0DTE isn't the problem. It's the symptom… a symptom of a market that no longer trusts fundamentals, policy communication, or 13F filings. On key event days, especially Fed meetings, the 0DTE crowd isn't gambling. |
 | Bank of America |
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They're arbitraging volatility and exploiting structural liquidity gaps. You know how? VWAP. Standard deviations. Volume pressure points. |
I've been consistently trading SPX reversals off the fourth deviation of VWAP on Fed days. One of our TheoTrade members made $1,500 just last week doing exactly that. This isn't chaos, it's an opportunity for those who get it. |
So… join us for $7… and take advantage of the trade. |
I'll walk you through the trade on Monday. |
The next time someone says "0DTE is going to crash the market," remember: it's not the option's fault you can't read flow. |
It's like blaming the scalpel for the surgery. |
Chart 4 – Hedge Funds Buying Energy |
When hedge funds start piling into energy like frat bros chasing the last pizza slice, pay attention — especially when the trend coincides with a technical breakout. |
 | Markets and Mayhem |
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The data shows a major surge in long positioning across energy names. Goldman's prime desk confirms it: this isn't nibbling. |
It's conviction-level flow. |
And if you overlay this positioning with technical momentum (OILU, anyone?) and macro inputs like SPR refills or Middle East shipping risks, you start to see the same setup we had in late 2020… and early 2022. |
But here's the trade secret. Energy names don't grind. They rip or collapse. |
When the MicroSectors Oil & Gas Exp And Prod 3x Leveraged ETN (OILU) breaks below the 20/50-day EMA, it's lights out. |
But if RSI and MFI flash oversold together (sub-30/sub-20), you buy the short-covering. |
These aren't value trades… they're volatility plays. |
It's not about loving oil. |
It's about loving asymmetric risk. |
Hedge funds do. So should you. |
Chart 5 – Dollar Underweighting |
This chart tells you everything you need to know about confidence in U.S. monetary leadership: global fund managers are the most underweight the U.S. dollar they've been in two decades. |
Why? Because they've seen this movie before and know how it ends. |
 | Bank of America |
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Sticky inflation. Policy gaslighting. Trillion-dollar deficits wrapped in trillion-dollar justifications. |
The Fed says they're "data dependent." |
The market hears: "we don't know what we're doing, but we might cut anyway." |
Meanwhile, the dollar's purchasing power is quietly vaporized at 6–8% per year. Sovereign funds are reallocating. |
Even central banks are flipping into gold (more on that in a moment). |
This isn't sentiment. It's a macro hedge. |
It's a slow, deliberate protest against policy inconsistency and currency dilution. |
In other words: the dollar is still the reserve currency — but nobody's reserving judgment anymore. |
Chart 6 – Fed Forecast Accuracy |
Imagine a weatherman who gets the forecast wrong 70% of the time… |
Yet, he still gets a press conference every quarter. |
Welcome to the Federal Reserve and its dot plot economy. |
 | Fed Open Market Committee, Edward Jones |
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This chart shows the Fed's growth, unemployment, and inflation projections over time. It's a visual timeline of overconfidence and underperformance. |
You could set your clock to how wrong these projections have been: |
2022: Forecasted <1% rates. We hit 4.5%. 2023: Claimed "peak hikes." More hikes came. 2024: Promised two cuts. Got one — late.
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According to research from Josh Brown and Ritholtz: |
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Yet the market still treats dot plots like sacred scrolls. The truth? They're political artifacts disguised as policy guidance. |
A shrug in spreadsheet form. |
You want clarity? |
Watch positioning, not projections. |
Watch what they do… not what they say. |
Chart 7 – Central Banks Buying Gold, Ditching USD |
Yahoo shows that 95% of central banks expect gold reserves to rise next year. |
Forty-three percent plan to increase holdings directly. |
Seventy-three percent expect dollar reserves to decline over the next five years. |
 | Yahoo Finance |
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This isn't some Reddit forum. |
It's the World Gold Council's central bank survey. |
It confirms what many of us have suspected… |
The world's monetary authorities don't trust the dollar long-term. |
Not because they hate America, but because they can read balance sheets. |
With the U.S. on track for $59 trillion in debt and deficits above 6% of GDP in peacetime, what exactly should central banks do? |
Hold Treasuries yielding below inflation and hope for Powell's redemption arc? |
No thanks. They're buying gold because it has no counterparty risk, and because it's the only asset D.C. can't "stimulate" into oblivion. |
The question isn't "Why are they buying?" |
It's "Why aren't you?" |
That's the question you must ask. And be ready to answer it Monday at 8:45 am ET. |
Stay positive, |
Garrett Baldwin |
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