I am going to try to speak as plainly as possible. I know there’s some excitement with today’s move and I know there’s some anxiety, I feel it myself especially when it comes to trade tariff related issues.
Remember that the ABI signals were telling us that the market was in a fragile place in which a normal modest correction can turn into something much uglier. The positive correlation in volatility was telling us that investors had gotten way over their skis in frothy optimism. It’s a bad combination, it always happens at all time new highs and it takes a lot of trust and patience to wait it out, but historical probabilities have shown over and over again it is one of the strongest set of signals that I’ve come across in the market in 25+ years.
As part of my approach, I share my planned moves before executing them. I’m not trading at a scale that influences markets or trying to front-run my subscribers (I’m not trading anywhere near that size anyway)—it’s simply what I believe is the right thing to do.
I don’t tell subscribers how to trade or invest like I’m some guru. That’s a deeply personal process unique to each person. With years of experience, I’ve learned there’s no single correct approach. What’s crucial to discover the approach that works for you. My information and updates are designed to help you confidently embrace your own strategy.
If you’re feeling overly anxious about a position, it might be a sign that your position size is too large. Consider scaling it back to a level where you feel more at ease. Markets are inherently uncertain, and you don’t need the added emotional stress of oversized trades, chasing home runs to recover losses, or impulsive moves. Opportunities come frequently—like buses every 15 minutes—so there’s no need to force it. Long-term success comes from discipline, a consistent process, and emotional resilience. Trust your strategy, stay patient, and prioritize mental clarity.
While there’s no sure thing in markets, I myself –having had many, many years of experience with these signals– feel at ease. I haven’t even looked at my positions today. This extreme set of signals tells me that a 1-day correction is very likely just the tip of the iceberg.
Markets don’t travel in straight lines. Expect oversold conditions (like today), corrections, and consolidations along the way. Nothing remains static. We’re navigating the collective psychology of tens of millions of investors, which is ever-shifting. I read that shifting information. I don’t fortune-tell. That said, with present circumstances, I’m more likely to use oversold bounces or consolidations to add to my market short/volatility long position, no be run out of it. This is why I shared the Falling Three Methods pattern in an earlier update.
As I’m writing this before the close, we’re back at the area after initial ABI signals, “Creaks & Cracks.”
SPX (10m) -Where I “started” building my position. I’ve added to it on the market bounce off the oversold low of Sept, 25th.
My suspicion is that we will reach short term oversold readings and get some kind of correction or consolidation near the $6550 level that has been on my chart for quite a while. So long as nothing major changes my plans will be to add to my position on a correction consolidation of those short-term oversold conditions.
Nasdaq-100 is in the same area too…
(daily) – before the close
Things are starting to go as expected. For instance, Small Caps breaking the key resistance (recent support) on heavy volume.
(daily)
Remember noting the volatility in Semis was not indicative of bullish consolidation?
SOX (current daily before the close) – Traders chasing the “AI” narrative over the last week are at a loss. I expect there will be more selling to come.
Credit looked “ify” earlier this week, then downright ugly yesterday. Today… even more so.
SPX/HYG – This has long been one of my favorite market-based leading indicators, giving us a window into what institutional money is doing.
In addition to renewed trade tensions, the White house announced that substantial government layoffs have begun, while the market and Fed have very limited visibility into the state of the Jobs market.
The Dollar lost ground as the safe-haven Japanese Yen was bid (futures +1%) as well as a euro bid (+0.55%) as the EU is not exposed to the bubbling trade tensions between the U.S. & China.
Gold futures settled up +0.8% at $4,000.40/oz, as investors sought safety amid trade tensions, supported y a weaker dollar and lower yields, but around the $4,000 consolidation area.
In short, we may see some more follow-through to the downside Monday. I haven’t seen the close yet. We will be short term oversold and there almost certainly will be a correction/consolidation. Again, see the Falling Three Methods example in my earlier post today as that’s a likely consolidation path from here- it is bearish. As things stand now, I have every intention of using a bearish consolidation like that, which works off oversold conditions as I hate shorting an oversold market, to add to my market short, maybe add some more volatility on a pull back.
I’m going to get this post out now, as I’m sure there’s some anxiety and uncertainty.
All indications are that this move is just starting.
(daily) – before the close
(daily)
SOX (current daily before the close) – Traders chasing the “AI” narrative over the last week are at a loss. I expect there will be more selling to come.