Good morning: |
Hello from my vacation spot… at the top of a Tahoe mountain… |
We've had another week. |
Now it's time for another set of charts that tell the story Wall Street might ignore… |
While everyone's celebrating new highs and talking about "healthy breadth," I'm looking at the data that matters. |
The positioning. The leverage. The technical extremes that historically don't end well. |
Let's dive into what the charts are really saying... |
Chart 1: Bollinger Bands Are Screaming |
The S&P 500 has been riding above its upper Bollinger Band for eight straight sessions. |
Eight consecutive days in the euphoria zone. |
 | Barchart |
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The last time we saw this kind of extended stretch was July 2024... |
What happened next? |
A swift 10% correction that reminded everyone that gravity still exists. |
This isn't about predicting crashes. It's about understanding context. |
When you see a market this technically overextended, driven more by algorithmic momentum and passive fund flows than actual conviction buying, you're witnessing what I call "borrowed momentum." |
The rubber band is stretched. |
And stretched rubber bands? They snap. |
If you're long here, just know what you're riding. |
It's mechanical buying feeding on itself. |
The question isn't whether this ends, but who's left holding the bag. |
Chart 2: Breadth Rally or Final Act? |
62% of S&P 500 stocks are trading above their 200-day moving averages. |
That's the highest since January. |
On the surface, this looks healthy. |
 | Barchart |
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Broad participation, right? |
But here's what the textbooks don't tell you: late-cycle breadth improvements often signal the final inning, not the first. |
We've seen this movie before. |
Just when everyone starts celebrating widespread participation, macro headwinds return with a vengeance. |
Pair this breadth expansion with our Bollinger Band stretch and record margin levels, and you start to see the picture. |
Remember, when passive flows are driving everything, they work beautifully... until they don't. |
Chart 3: Leverage Addiction at Historic Highs |
Margin debt has reached levels never seen before in history. |
This chart is wild. |
Not because of what it means today, but because of what it means tomorrow. |
 | Barchart |
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Everyone's trying to beat inflation, chase retirement dreams, and cure FOMO by borrowing money to buy stocks. This isn't optimism… |
It's desperation wrapped in leverage. |
And leverage works beautifully... until margin calls show up like repo men in the night. |
We've seen this before. |
January 2021. |
Late 1999. |
The pattern is always the same: explosive melt-ups fueled by debt, followed by violent unwinds when volatility spikes or liquidity tightens. |
Use this as your temperature check. |
If you're playing with leverage, make sure you're not the dumb money when the music stops. |
Chart 4: The Dollar's Moment of Truth |
The DXY is testing the bottom of a multi-decade ascending channel. |
This is a zone that has historically triggered sharp reversals. |
 | Barchart |
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We're at a critical inflection point. |
Either we see one of the most violent dollar reversals in recent memory (which would crush commodities and emerging market risk)... or we break down, confirming a long-term regime shift toward de-dollarization and unchecked inflation. |
The implications are massive. |
Oil, gold, crypto, global bonds… everything moves when the dollar moves. |
And right now, we're sitting on the edge... |
Chart 5: Precious Metals Rotation in Motion |
Palladium spiked while platinum finally paused after five straight weeks of gains. |
This divergence might seem minor, but it's telling a bigger story about positioning shifts in precious metals markets. |
 | ZeroHedge |
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Palladium's surge could be short-covering or automotive catalyst bets, while platinum's pause suggests the easy money in that trade might be done. |
Precious metals tend to rotate leadership, and this chart suggests we're nearing one of those shifts. |
If you're looking for asymmetric trades, the spread between these metals often speaks louder than gold itself. |
Follow the rotations. I remain long Palladium. |
Chart 6: Oil's Technical Ceiling |
WTI keeps getting rejected by its 200-day moving average despite geopolitical tailwinds. |
 | ZeroHedge |
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Oil pushed higher on Trump's teased "major statement" about Russia, but it still can't break through its key technical resistance. That's telling you something important. |
If crude can't break out despite geopolitical support, what happens when those headlines fade? |
The market wants to believe in a second-half supply crunch, but price action is Saying something else. |
The longer we stay under the 200-day moving average, the more likely we see a flush lower. |
This matters for inflation trades, energy equities, and the Fed's entire reaction function. |
Chart 7: Bitcoin at $118,000 |
Bitcoin hit a new all-time high of $118,000. |
But this isn't just a crypto story. It's a dollar story. |
 | Source: Spencer Hakimian |
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Ignore the maximalists and influencers for a moment. |
Look at what's really happening here. |
As confidence in fiat currency erodes and money supply hits record after record, assets like Bitcoin are reasserting themselves as liquidity barometers. |
This breakout amid falling VIX, rising debt, and soaring margin usage isn't about technology or speculation. It's a scream for help from the financial system itself. |
If this rally holds or accelerates, it won't be about adoption or innovation. |
It'll be about trust… or the lack thereof. |
These charts are painting a picture of a market running on fumes, driven by leverage, mechanical flows, and the desperate search for yield in a world drowning in liquidity. |
We're living through: |
Technical extremes Record leverage masquerading as confidence Currency instability at critical inflection points Global power concentration is creating new chokepoints Alternative assets are screaming warnings about fiat decay
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The strategy? |
Trade the momentum. Follow the positioning. Watch for the shifts. |
We'll continue to cover this world - live each day at 8:45 ET. |
Stay positive, |
Garrett Baldwin |
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