Alix Pasquet III, who runs the boutique hedge fund Prime Macaya Capital Management, spent part of an AMA this week promoting massage guns, cold plunges, and a foam roller shaped—in his words—like a torture device. A casual attendee would have interpreted it as a wellness tangent. It wasn’t.

His point: physical tension amplifies emotional tension. Emotional tension amplifies mental tension. A tight jaw dominoes into a tight read on the market. He’s watched hedge funds go through periods so tense they lose the ability to think beyond the next hour, pinned to their screens, unable to hold a position long enough for the original thesis to pay out.

He learned this lesson personally. After shutting down his first fund in 2008, he hired a coach and spent six months reviewing every email, every trade, every decision from the stretch between ’06 and ’08. The finding had nothing to do with managing positions. It had everything to do with managing stress. He’d been running tense the entire time and never noticed the cost until someone reflected the transcripts of his own behavior back to him.

Prolonged tension, as Pasquet views it, is the enemy of career longevity. But he then turned right around to complicate the clean version of his own point: a debate between a bull and a bear—tense enough to turn heated—forges alpha. The resolution of this acute tension, not its absence, births insight.

So not all tension is created equal. There’s the tension you carry unresolved into tomorrow’s session, because you never decompressed after today’s close. And there’s the tension generated on purpose, between smart people with divergent viewpoints, that exists to be spent productively right there in the room.

The first type compounds against you. The second type fuels breakthroughs.

A leader’s job, he said, is knowing how to create productive tension and how to dissipate negative tension. Most of us are adept at manufacturing pressure: the hard question, the devil’s advocate, the position size that unmasks true conviction. Few of us are as skilled at the release—at decompressing before the next session starts, rather than carrying Tuesday’s debate, unresolved, into Wednesday’s open.

Ask which tension you’re holding right now. Then book it: the conference room, or the steam room.

Energy with the Baton

Agricultural commodities dominated the end of August into the turn of the month. Corn futures reached the 548.75 1x measured move target of their 3-month head-and-shoulders continuation on Wednesday.

November rice futures inched higher following last week’s successful retest of the breakout boundary.

Soybean meal futures remained pinned to the upper boundary of their 10-month ascending channel on the weekly chart.

Other areas of the ag complex weakened, including December KC wheat, which spent much of this week retracing its initial breakout from a 3.5-month cup-and-handle.

December cocoa also sold off back toward the boundary of its 1.5-month cup-and-handle-like consolidation.

As did December oats, following last week’s breakout from its 3-month multi-point trendline.

Meanwhile, December crude oil broke out on Tuesday from a 3.5-month head-and-shoulders continuation, and is now hovering just above the breakout level.

The continuation chart displays a 5-month multi-point trendline dating back to this past April.

And November RBOB gasoline completed a 3-month cup-and-handle on Monday and is also hovering just above its breakout level. Energy has the baton. Let’s see if it will be the next to fly—or to fail.

Copper continuous futures are still consolidating below the upper boundary of a 3.5-month cup-and-handle on the daily.

In currency markets, EUR/AUD is at an inflection point for what has become a 5.5-month descending triangle.

EUR/GBP completed its 1-month head-and-shoulders continuation on Wednesday and is now pushing into the support levels from earlier this year that may act as resistance.

The Pauses That Refresh

Here are the equity names that caught my attention in this week’s screen:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Agriculture remains our focus. This El Niño is arriving faster than almost all comparable events on record, while global temperatures continue to provide a strong 12-month lead on food prices. The Bloomberg Agriculture Index posted a strong monthly close in August, and history suggests this trend may only be getting started. Finally, we lay out the long setup in Brent crude.

***The MO port is currently up +50.37% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of group, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio fell -53 basis points last week, leaving us +50.37% on the year, below our ytd high-water mark of +61%. We’re very long Ags, PM miners, a little ETH. Long biotech, healthcare, defense, and natty producers. Short Dow and copper.

2. The week ahead in data: Payrolls arrive Friday. ISM, ADP, and Challenger data come first, so Friday is more likely to confirm an already positioned market than deliver a major surprise. Warsh’s Jackson Hole remarks lifted the odds of a Sep hike to roughly 50%. Consensus expects 45,000 payroll gains and unemployment to rise to 4.2%

3. The end of August gives us a new set of monthly charts to review and assess what the tape — bar by bar — is telling us. The SPX monthly chart is below. Aug delivered a new all-time closing high and a breakout from its outside-inside-inside wedge compression. The month also closed just above the midpoint of its range, leaving a decent-sized upper wick

What does that tell us?

New all-time monthly closing highs are bullish: a trend in motion tends to remain in motion roughly 80% of the time. At the same time, the small body and large upper wick signal some indecision and a reluctance among bulls to press here. That suggests volatility and indecision may persist through September before the market retests or breaks above its August highs.

4. SPX is trading within a Bull Volatile SQN regime, within a sideways consolidation on the daily. While the path of least resistance remains higher on the primary trend, the current data read suggests a small washout below its current range is likely before the next leg up.

5. This aligns with the cycle composite for the SPX, where seasonality is quite bearish over the next month. The market, of course, doesn’t have to follow this pattern, and while I don’t expect a severe selloff, the rest of the data is telling me that we should expect some downside over the next few weeks.

6. Our preferred short-term measures of breadth momentum are the McClellan Oscillator and Summation indices below in red. Both are currently rolling over.

7. Which is what we’re also seeing in the % of members above their 200 and 50-day moving averages. Again, this isn’t the breadth profile of a terminally ill market. Just one that is losing some steam and likely needs a small flush to build up energy for the next leg higher.

8. Some highlights from the latest prime broker sentiment and positioning reports from GS and DB:

• Defensive shift: Hedge funds moved to the fastest U.S.-equity net selling since Liberation Day, taking net leverage to a one-year low; selling hit tech, cyclicals, utilities, and real estate.

• Systematic positioning is still stretched: DB puts it at the 82nd percentile since 2010, with vol-control exposure at a 100th-percentile historical maximum—limiting further buying and raising downside flow risk if volatility rises.

• Calm index, fragile internals: SPX/VIX remains contained, but high-beta momentum and TMT/AI baskets have sold off sharply, exposing crowding and factor-volatility risk.

Overall, the picture is pretty mixed, positioning-wise. Q3 buyback blackout window begins on 9/15 for roughly 40% of the SPX’s market cap, pulling an important layer of support for this market during its worst two-week period of the year, according to GS.

9. But SPX call/puts suggest some complacency.

10. SPX 30-Day ATM IV at 11.7 is near the lowest levels of the past two years — only the Dec 2024 low vol period was cheaper, briefly touching ~9.7. So not a bad time to buy a little protection for your long book.

11. We remain primarily focused on the Ags trade. The El Niño temperature-anomaly index (red line) has historically led global food prices by roughly 12 months, and it is now accelerating sharply (h/t Variant Perception). The second chart shows that this El Niño is arriving faster than almost any prior event on record.

12. The BBG Agriculture Spot Index put in a large monthly bar which closed on its highs, following a breakout from a major multi-year compression regime. This is a very bullish chart.

13. My teammate Dean Christians shows (link here) that when Ags get moving, they can really move. And on a 2yr rolling basis, this move has a long way to go to match previous bulls.

14. Someone sent me Papic’s latest slide deck, and I strongly agree with his Brent view in the slide below. Global inventories will need to be rebuilt, while Chinese crude imports have likely bottomed — removing a key headwind that has helped cap prices since the war began.

Meanwhile, the conflict appears to be entering another escalatory phase, as Iran increases its use of kinetic leverage in an effort to pressure Trump ahead of the midterms. Positioning remains heavily short, the December contract is nearing a breakout to new highs, and we are entering a seasonally strong period. And calls are cheap.

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Thanks for reading.

Your Macro Operator,

Alex

Which is easier to change: who you are, or how you trade?

I met a trader this summer who had never thought to ask.

His strategy had a proven edge. Yet his execution kept breaking. So he concluded: I am the problem. And he set about repairing himself: a journal, a meditation app, a trade checklist taped to his monitor.

But all this work on the man had left the strategy unexamined.

The strategy demanded snap decisions. His temperament was measured and introspective.

The strategy carried risk overnight. His children needed him present at dusk and dawn.

The strategy financed seven losers with three winners. Those seven once added up to his rent; they now add up to months of mortgage payments.

This trader did not have a discipline problem. His repairs kept failing for a different reason: he wasn’t broken. His strategy was written for someone else. Someone else’s temperament, someone else’s hours, someone else’s life.

No amount of journaling alters a strategy cut for someone else. And even a true fit today carries an expiration date. The strategy that matched 14 hours of unbroken screen time at twenty-eight collides with career, children, sleep at thirty-eight.

I have refit my own trading more than once: new work, new priorities, a growing family, fuller days. Each time, the temptation was to grip the old playbook tightly, and double down on my discipline. Each time, fighting who I had become, I began to fray.

Before declaring yourself the problem, audit your strategy’s fit—the direction it requires you to move, and the direction your life wants to move.

For me, the fraying resolved the same way: I stopped believing I needed to become someone else.

It was the strategy that needed to change.

All One Trade

The rally in agricultural commodities powered ahead this week. Advancing past 70% of their 1x measured move target at 548.75, corn futures pushed further out of a 3-month head-and-shoulders continuation pattern.

On the weekly timeframe, corn futures are now halfway to the 1x measured move target of the 2-year symmetrical triangle featured in last week’s issue. We are long the December contract in the Macro Ops portfolio.

KC wheat futures broke out midweek from a 3.5-month cup-and-handle. A 1x measured move target sits at 897.5. The Macro Ops portfolio holds a long position.

Oat futures also broke out midweek from their 3-month multi-point trendline.

November rough rice retested last Friday’s breakout to start the week before pushing higher.

December cocoa futures, featured in the last issue, broke out on Thursday from their 1.5-month cup-and-handle-like consolidation. We are long in the Macro Ops portfolio and added on confirmation of strength.

Since May, we have monitored the primary trend shift in soybean meal futures in search of a clean daily entry pattern. Although no daily setup has developed, price action has returned to the upper line of its 10-month ascending channel on the weekly chart.

Still rangebound, soybean oil futures reversed off the lower boundary of their 2.5-month symmetrical triangle after forming three long lower wicks at support.

Coffee futures continue to consolidate midrange following a false breakdown this past spring and a range reclaim to start the summer.

Copper has been a choppy and challenging market this year. Continuous futures have formed a 3.5-month cup-and-handle on the daily.

And October RBOB gasoline continues to flirt with completing a 3-month cup-and-handle.

Cross Currencies

The double bottom in EUR/AUD, first featured in the May 16, 2026, issue, is returning to test the 1.61328 level in what may have morphed into a 5.5-month descending triangle.

Strength in the Australian dollar also has AUD/JPY on the verge of breaking out from a 5.5-month rectangle.

EUR/GBP has formed a 1-month head-and-shoulders continuation on the daily.

And EUR/CAD continues to consolidate inside a 4-month ascending triangle.

The Pauses That Refresh

Demonstrating continued relative strength despite weakness across the Nasdaq, featured breakout Roper Technologies (ROP) pushed higher out of the pennant structure noted in the last issue. ROP price is now two-thirds of the distance to its 1x measured move target of 447.05.

Here are the names that caught my eye in this week’s equity screen:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

But we’ve entered a period of weak seasonality that runs through mid-October. Short-term breadth deteriorated last week, and rotation is picking up under the surface. Trend continues. Chop and vol come with it.

Ags broke out from their tightest monthly compression in 30-plus years. We’re long and buying, for reasons outlined below. The DXY triggered a significant sell signal — historically a precursor to poor returns. The pound is setting up for a major breakout amid bearish positioning. Natural gas producers are showing constructive tapes. And that’s just the start.

***The MO port is currently up +51.43% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio rose +680 basis points last week, leaving us +51.43% on the year, below our ytd high-water mark of +61%. We’re very long PMs and miners, EUR, MXN, and ETH. Long biotech, healthcare and defense. Long corn and KC wheat. Short dow.

2. The week ahead in data: Wednesday’s a big day — PCE in the morning, NVDA earnings after the close. Friday brings Warsh’s keynote at Jackson Hole.

3. We closed our ultra bond short last week for a small gain. We don’t care to fight the administration. Bessent’s announcement mattered less for the mechanism than for the signal: Treasury doesn’t want a higher long end, and it’s willing to act.

We may re-engage down the road. For now we’re shifting focus to other ops — Ags chief among them. The Bloomberg Ags index just broke out of its tightest monthly compression since ‘95, which preceded a significant bull trend. Also, this setup looks nearly identical to the one we play in the BBG BCOM Index last year (link here).

Last week I interviewed a former MO teammate, now a SpaceX meteorologist, on the inbound Super El Niño. He’s an extremely sober guy, not prone to hyperbole. When he tells me the data points to the most significant El Niño since 1877 — an event that killed roughly 4% of the world’s population through drought and famine — I listen.

Markets are horrible at pricing extreme, anomalous events beforehand. Ags are set up for a major bull market. We’re long and buying.

The interview transcript is available for Collective members in the Slack and Research area.

4. Even without the El Niño tailwind, Ags were already setting up for a bull market — they’re simply following the Commodity Relay, a concept I first saw from Martin Pring. Precious metals kick off a commodities bull market, then industrial metals, then energy. Ags pull up the rear.

5. Positioning has shifted recently, but on an aggregate basis it’s still neutral.

6. Our lead technical analyst, Mike G, broke down the classical charting setups we’re seeing across the space in his latest weekly (link here). Below is corn — we’re long.

7. Cocoa’s another name on our target list for an entry. It’s coiling within a broader uptrend.

8. My teammate Dean Christians flagged this in a recent note: his Trend Composite just flipped negative on the DXY, triggering a sell signal. Similar signals have historically preceded poor forward returns for the dollar.

9. We’re long EUR and MXN, and looking to add GBP. The pound’s been compressing for 12-plus months in a rectangle regime, with price nearing the upper bound of that consolidation.

10. 3-Year Spec positioning is coming off the 0th percentile — past instances have tended to mark major bottoms.

11. Speaking of the pound: the FTSE 100 futures are giving us a pullback reversal off the lower daily band within a Bull Quiet regime. Clean technical inflection point to add size with little risk.

12. We remain bullish the broader trend in risk assets — that’s what the weight of the evidence suggests. Dean’s TCTM Risk-Off model recently fell back to zero. Not bearish.

A few measures of short-term breadth did weaken last week, and we’re heading into a period of weak seasonality through mid-October. Things likely hinge on whether bonds take out Bessent’s line or reverse here. Positioning in VIX futures is also stretched, which historically precedes higher vol. Base case: trend up, vol up, rotation continues.

13. Summary notes from GS’s latest Prime Services positioning report:

Positioning turned defensive fast: hedge funds shifted from buying to the fastest US-equity net selling since Liberation Day, cutting net leverage to a one-year low; selling was broad and concentrated in tech, cyclicals, utilities, and real estate.

• Index calm understates fragility: SPX/VIX remained relatively contained, but high-beta momentum and TMT/AI factor baskets suffered sharp drawdowns, signaling elevated under-the-hood crowding and factor-volatility risk

• Rates and growth are the key macro risks: rising long-end yields, curve steepening, policy uncertainty, and weakening signals from major consumer companies are pressuring duration-sensitive equities and raising concern over the consumer backdrop.

• Sentiment is cautious, not panicked: flows are described as broadly benign and positioning cleaner after de-grossing, while investors are adding gold/index hedges and chasing crypto; a bond rally could trigger meaningful CTA short-covering.

14. First Trust Natural Gas ETF (FCG) broke out from a major compression regime — its tightest since ‘13, which preceded a significant 12-plus month bull rally. We’re long and buying here.

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Thanks for reading.

Your Macro Operator,

Alex

My wife has a skill I envy. Through a closed bedroom door, she can tell one of our daughter’s cries from another. Tired. Hungry. Hurt.

And because her recognition arrives instantly, her response can be total: she sprints for the cry that means hurt; she settles back into her chair, with no more than a glance at the monitor, for the cry that means tired.

I struggle with this recognition. So I decide in advance: today, I will heed every cry to ensure our daughter is safe. The next: I will wait and watch, reminding myself that our daughter’s crying is normal.

No course taught my wife her ear. Seven months of unremarkable hours did. And now, the same woman responds with total conviction one moment, and patient flexibility the next.

Conviction and flexibility, I now see, are not in opposition. They rise together, both rooted in intimacy.

We imagine that to hold a market view with conviction means to grip it tightly, while to hold it with flexibility means to keep our distance.

But conviction without intimacy is stubbornness.

Flexibility without intimacy is ambivalence.

You can only hold a view when you trust yourself to recognize—within a few cries, or a few bars—what you are hearing. Absent that trust, you are forced to decide in advance.

How intimately do you know what you are holding? The market is on the other side of the bedroom door. Its cries will, at times, require a sprint. At others: no more than a glance.

Log the unremarkable hours. I am.

May we each learn to recognize which cry is which.

Commodity Supercycle

Earlier this week, Macro Ops Team Lead Alex issued a report on the developing Super El Niño—the most significant climate event in 150 years. In an interview with a Collective member and SpaceX meteorologist, they detailed how this climate shock will disrupt agricultural commodity markets, especially sugar, rice, cocoa, coffee, and citrus. This essential reading aligns with many of the strategic positions currently in our book.

White sugar futures came within spitting distance of the 2x measured move target of 567.1.

Corn futures broke out from a 3-month head-and-shoulders continuation on Monday. We are long the December contract in the Macro Ops portfolio.

Price is now testing the upper boundary of a 2-year symmetrical triangle, threatening a breakout.

November rough rice capped off the week by breaking out from a compact, 1-month ascending triangle.

Coffee futures continue to consolidate midrange following a false breakdown this past spring and a range reclaim to start the summer.

December soybean oil continues to coil inside a 2.5-month symmetrical triangle following the strong uptrend that opened the year.

December cocoa is testing an established trendline of a cup-and-handle-like consolidation.

Outside of agricultural commodities, October RBOB gasoline is nearing completion of a 3-month cup-and-handle.

After pausing last week, gold futures extended the trendline breakout featured in the August 8, 2026, issue, recapturing roughly half the decline that occurred across the first five months of the year. We continue to hold our Micro Gold futures long in the Macro Ops portfolio, which we initiated on the initial August 5 breakout.

In last week’s issue, we featured the laggard metal, platinum, and the 1798.3 level that served as a key pivot for potential upside continuation. Price closed above that level on Wednesday, and has thus far followed through.

September Mexican peso futures continued to climb following their breakout from a 6-month cup-and-handle. We remain long in the Macro Ops portfolio.

British pound futures are pressed right up against the upper boundary of a 1-year symmetrical triangle.

The U.S. Treasury announced on Wednesday plans to double its buyback operations for longer-dated bonds in the upcoming quarter. Following a brief consolidation below resistance, U.S. dollar futures dropped sharply in response. The move carried price about two-thirds of the way to the 97.95 range midpoint—the initial target highlighted in our August 1, 2026, issue.

Analogues in Action

On Tuesday evening, I shared on X an analogue that had struck me: Ethereum on the weekly timeframe was coiling directly along the bottom boundary of its 2-year ascending triangle, following a breakdown in June that had failed to follow through.

In recent issues, we have been tracking the range reclaim of a similar false breakdown from a massive weekly range in coffee.

As I stated in the post, the first target of a range reclaim is the range midpoint, where coffee sits now. The second: the range’s opposite boundary.

My expectation was for Ethereum to close the week above the last swing high at roughly 1,980, confirming the reclaim.

I did not expect Ethereum to run over 30% into Friday’s close, colliding with its 365-day EMA. Fortunately, we’ve been long Ethereum in the Macro Ops portfolio since mid-July, and took this week’s surge as an opportunity to peel off partial profits.

As with coffee, a consolidation here would not be uncommon. Should one appear, the next target becomes the upper boundary at roughly 4,800.

The Pauses That Refresh

Featured on the July 25, 2026, active watchlist, Roper Technologies has demonstrated notable resilience after breaking out of a rectangle bottom, consolidating into a tight flag above both the upper boundary and its 200-day EMA.

Here are the additional names that caught my attention in this week’s equity screen:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Long bonds are dancing on a significant level. Momentum’s cheap now (relatively) and looks to have put in a durable low. This El Nino is shaping up to be a once-in-200-year+ weather event, and the market isn’t pricing it right. We look at a few Ags as a way to play it. Then we close with a bonus chart on gold miners showing a 100% 6-month hit rate, plus more.

***The MO port is currently up +44.6% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio rose +147 basis points last week, leaving us +44.63% on the year, below our ytd high-water mark of +61%. We’re long PMs, EUR and MXN, short long bonds, short dow, long ETH and short BTC, long tech, semis, robotics, biotech, and defense.

2. The week ahead in data: quiet until Jackson Hole.

3. Ultras are dancing on their ‘23 swing low. Next week or two should tell us if this breakout holds. We’re short, waiting on further confirmation to add.

4. SPX is in a strong uptrend off its compression breakout. Flipped into a Bull Volatile SQN regime last week — these produce some of the sharpest rallies, and some of the bigger tops. Stay on your toes.

5. Our preferred short-term breadth measure, the McClellan Summation Index and Oscillator, isn’t blowing the doors off, but it’s positive and moving the right direction. For now.

6. S&P 500 / 1500 advance-decline lines keep leading price. This is not bearish.

7. From GS: “Overall book Gross leverage -0.2 pts to 299.5% (44th percentile 1-year) and Net leverage +0.7 pts to 78.2% (45th percentile 1-year). Overall book L/S ratio +0.6% to 1.707 (45th percentile 1-year).”

Short-term positioning and sentiment still support risk assets. Longer-term measures — BofA Bull-Bear below, NYSE Margin YoY — show froth.

8. Momentum’s come off its historically crowded levels — still elevated, though — while relative valuation has fallen to the 4th %tile. Same picture as positioning: short-term bullish on momentum and risk assets, but the intermediate-term and out keeps getting tougher.

What to do?

Keep it tactical. Read: nimble and light.

9. Memory ETF DRAM looks to have put in a durable bottom. We’ve got a small long and will add above this recent horizontal level. Tactical position, nothing more.

10. Historically, I’ve been dismissive of grave weather warnings and their market impact. That’s served me well — most of the time it’s just doomers talking their book. But we’ve got a genuinely no-BS meteorologist in the Collective, Steve, and hyperbole isn’t his style. So when he posted in Slack that “Latest observations and models have have gone bonkers - now forecast to be the strongest EL-Nino in 200 years,” my ears perked up.

If you’re not caught up on what’s coming weather-wise and what it means for markets, here’s a recent video presentation from Hacket, plus the slide deck.

I’ll be interviewing Steve later today and sharing my notes with the Collective.

11. Sugar looks like one of the markets most poised to benefit from this multi-generational weather event. Mike G called the setup in his latest weekly (link here): “In the August 1, 2026, issue, we highlighted White Sugar futures’ retest of the 50-DMA. This week, price hit the 3-month symmetrical triangle’s 1x measured move target at 514.3.”

We’ll be buying on any pullbacks.

12. Maybe it’s the unending war, the SoH that keeps not opening, DM fiscal largesse, or now El Nino — but Ags and commodities broadly have great long-term charts. Here’s the setup in KC hard wheat: price breaking out of a multi-year inverted H&S bottom.

Also, the BCOM Index (BCI etf) is bull flagging on the monthly. May be time to get long for the second leg up.

13. Bonus chart from our new teammate Dean Christians of TPMR. I’m no stats guy, but a 100% hit rate on miners, 6 months out — that’s bullish, no?

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Thanks for reading.

Your Macro Operator,

Alex

Last month, a Collective member sent me a conversation with Emily Haisley, the psychologist who leads behavioral finance at BlackRock. Her mandate, in part: keep the firm’s portfolio managers in a state of mind and body worth trusting with risk.

Her team’s instrument is a consumer wellness gadget: the Oura ring. Managers wear them day and night; Haisley overlays what the body reports on what the portfolio does. In lab studies, a week of elevated cortisol measurably tilts preferences toward risk aversion. Stress does not simply feel bad; it silently repositions portfolios. And her data shows it live: a drawdown arrives, stress accumulates above baseline, and the body starts steering the risk decisions—while the manager insists the losses are not affecting him.

The instinct is familiar: when losing, work harder. More hours. More vigilance. More screens. Haisley presses the opposite: “It’s not just their job to work hard, it’s also their job to rest hard.“

Our bodies, like financial markets, are complex systems. And complex systems that endure move in cycles. Fields lie fallow. Aspens drop their leaves. Even price rests: every strong trend is born from a base. Only the relentless speculator believes he is exempt.

What is it to rest hard? My answer begins with telling deep rest from shallow.

Deep rest is stillness. A walk through groves of coast redwoods with no podcast. An afternoon at the lake with children who ask nothing of our PnL. Shallow rest is the bottomless scroll. The queue of episodes. The third refresh of a portfolio we swore we would let idle until September.

From the outside, both look like rest. Inside, only one is. Because shallow rest keeps our nervous system running: we have taken our hands off the work, but we continue to loop, to scenario plan, to indulge the inner voice. None of it purges the elevated cortisol Haisley’s team guards against. Deep rest replenishes. Shallow rest flips the channel until the allotted time expires.

August has already cleared the calendar. An industry that measures everything in basis points takes its one sanctioned pause. How much of it will you give to deep rest?

Every strong trend is born from a base.

Break, Retest, Resume

In the August 1, 2026, issue, we highlighted white sugar futures’ retest of the 50-DMA. This week, price hit the 3-month symmetrical triangle’s 1x measured move target at 514.3.

In the same issue, we also featured EUR/CHF’s 3.5-month head-and-shoulders continuation. The retest of its neckline held successfully, sending price upward to clear over 70% of the 1x measured move target at 0.94281.

Currency Watch

The 4-month ascending triangle in EUR/CAD remains in development. We hold a risk-defined long position in Euro FX futures in the Macro Ops portfolio.

GBP/AUD volatility has contracted significantly as price progresses through the right shoulder of a 5.5-month head-and-shoulders bottom. While volatility contractions themselves are directionally neutral, a bullish breakout may provide an advantageous early entry point if the broader bottoming structure resolves higher.

Mexican peso futures followed through on last Friday’s breakout from a 6-month cup-and-handle in the September contract. A risk-defined long position remains active in the Macro Ops portfolio.

The yen remains under sustained pressure, as seen in AUD/JPY, which is consolidating near its highs within a 5-month rectangle.

EUR/JPY is consolidating in a similar 6-month rectangle continuation.

Commodity Complex

October platinum futures remained in a tight, post-breakout consolidation, with the 1798.3 level serving as the key pivot for potential upside continuation.

Soybean oil futures are developing a 2-month symmetrical triangle on the December contract.

Following a false breakdown on the weekly chart, coffee futures continue to consolidate midrange on the continuation contract. While the daily descending triangle currently leans bearish, a potential dip to new lows followed by a sharp reversal higher would transform the pattern into a bull flag, pointing toward the top of the trading range as the primary upside target.

The Pauses That Refresh

In equities, the S&P 500 Equal Weight reached its 1x measured move target of 222.44 this week. This follows its breakout from the 3-month cup-and-handle we have been tracking since spring as a prime example of healthy rotation away from earlier AI market leadership into broader sectors and industries.

This week’s equity screen returned an intriguing mix of long and short setups, as well as notable continuations and reversal patterns.

Here are the key setups that caught my attention:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Not all is rosy — credit continues its multi-month negative divergence. These divergences can persist for some time before equities catch down, so nothing to do at the moment, especially with breadth still supportive. But it’s worth watching.

We make the case for software, a crypto miner turned AI compute play, and platinum, which has bearish positioning and an inflecting tape. Plus more…

***The MO port is currently up +43% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio rose +309 basis points last week, leaving us +43.09% on the year, below our ytd high-water mark of +61%. We’re long PMs, EUR and MXN, short long bonds, long tech, semis, robotics, biotech, and defense.

2. We have the setup bar for a short on the monthly chart of Ultras, but we need a confirmatory signal before pressing it. I’m looking for a weekly close below the Oct ‘23 pivot low as that signal.

3. As we’ve been expecting, the SPX broke out last week from its multi-month compression. This is within a Bull Quiet regime. Odds are decent here that equities move into a runaway parabolic.

4. Our Trend Fragility indicator, a composite of short-term sentiment and positioning indicators, sits at 78% and rising. That confirms the bull trend — a cautionary signal doesn’t trigger until it clears 90%.

5. Not all is sunshine and roses though. One of the more troubling aspects of this rally: it’s coming on the back of a multi-month negative divergence in credit.

6. And credit tends to lead… Here are the past large divergences preceding the ‘22 and ‘20 market tops. That’s not an immediate cause for alarm — these divergences can persist for months before stocks “catch down.”

7. Outside of credit though, the broader backdrop looks good, if not great. Breadth remains strongly supportive. Below you can see the % of members above their 50 and 200 day moving averages. Both are rising in the current regime, unlike the previous two larger selloffs in ‘25 and ‘22.

8. Most investors remain underpositioned in the broader market, with semis the exception. There are also indications that much of this rally is being driven by short-covering. The charts below from BBG’s Simon White show short interest — especially in tech and software — remains elevated.

9. The below from StateStreet confirms. According to them, investors remain historically underweight tech/software.

10. I’m quite bullish on crypto miners turned AI compute plays. IREN is one of my favorites in the space. They own 5GW of secured, grid-connected power and have already converted that scarcity into $15.9bn of signed, largely prepaid offtake with Microsoft and NVIDIA. It’s the only name in the miner-to-AI cohort with a trailing GAAP profit, yet it trades at a fraction of peer EV/EBITDA (12x vs. TeraWulf/Hut 8 in the 50s). NVIDIA’s warrant and Microsoft’s prepayments fund the buildout, so the equity carries less dilution risk than the tape implies.

11. 6m Net Spec positioning is turning up from the floor.

12. While price has broken out from its two month rectangle bottom following a 47% peak-to-trough correction. One could put buy stops right above its multiday range to see if it can pull you in for a long.

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Thanks for reading.

Your Macro Operator,

Alex

A trade stops working at 10:02. The trader stops working against it at 11:42. What fills the hundred minutes in between?

The market received new information, adjusted, and moved on. It did so without ceremony. Price trades only in the present tense.

The mind does not. It stays behind to negotiate: with the entry that looked so clean, with the profit that was on the screen twenty minutes ago, with the outcome that was supposed to arrive by now. The chart updates itself. The story does not.

We file what happens next under emotion: emotions took over, discipline collapsed. But the trouble starts earlier, in what births the emotion: resistance.

Resistance to the fact that the setup changed. Resistance to open profits now gone. Resistance to closing the trade—because closing it would kill the possibility of it still becoming what we need it to. So long as the trade stays open, so does the possibility.

There is an exchange rate no ticker quotes: acceptance costs a few seconds of sharp discomfort, paid once; resistance offers to finance it, with interest.

Decline the planned loss and hold a larger one. Decline admitting conditions changed and spend the afternoon glued to every tick. Keep declining and one loss becomes a drawdown, the drawdown becomes pressure, and the pressure leans on every decision that follows.

Acceptance is not just taking the loss, but acknowledging that it stings. That you wanted this to work. That it didn’t. That the disappointment is real. And then facing the only question price ever asks: what is true now?

This is not an emotional skill. It is a decision skill: the decision to stop resisting what has already happened.

The market needed one tick to move on.

Your resistance financed the remaining hundred minutes.

Sugar High

Last week, we highlighted White Sugar futures attempting to hold the 50-DMA after an impulsive breakout from a three-month Symmetrical Triangle. Price rocketed toward the pattern’s 1x measured move target of 514.3 this week.

On Monday, our Macro Ops team debated the setup in Sugar No. 11 futures. The October contract met all criteria for my commodity playbook’s multi-point trendline break.

However, the breakout itself was not decisive, instead closing with long upper wicks both Tuesday and Wednesday. We waited for more clarity, only to watch buyers completely overwhelm sellers into the week’s end.

One of our Collective members recently shared his antidote to FOMO: LOMO—the Love of Moving On. Sugar No. 11. gives our team a wonderful opportunity to put this motto into practice.

In metals, Gold futures staged a trendline breakout that converged with a brief, six-week consolidation phase.

Platinum is attempting the same, but encountering overhead supply.

That said, see Sugar No. 11 for what can happen should these three reversal bars have their wick highs taken out next week.

And in equities, the S&P 500 Equal Weight is now a hair’s breadth from the 222.44 1x measured move target of its three-month Cup & Handle Continuation.

Forex in Focus

In the currency markets, the Euro / Franc successfully retested the three-and-a-half-month Head & Shoulders Continuation pattern that we noted in last week’s update. This successful retest drove price action upward, approaching the 1x measured move target sitting at 0.94281.

Through the right shoulder of a five-and-a-half-month Head & Shoulders Bottom pattern, the Pound / Aussie is closely tracking its 50-DMA.

Following a v-shaped move this past spring, the Euro / Canadian Dollar has developed a four-month Ascending Triangle.

And in currency futures, the Mexican Peso broke out from a six-month Cup & Handle Continuation pattern on the September contract.

Muddying the picture somewhat is the continuation chart, which has price revisiting highs from the start of the year.

We hold a risk-defined long position in the Macro Ops Portfolio.

The Pauses That Refresh

Recent issues have noted relative strength in financials, and the sector’s increased presence in my equity screens.

This week, the active watchlist section saw its two featured bottom reversals successfully break out and reclaim their 200-EMAs.

This week’s equity screen once again reveals a compelling blend of long and short setups, alongside continuations and reversals.

The following names in particular stood out to me:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Our bias remains for an eventual breakout to the upside in SPX as the backdrop points to rotation out of the crowded momentum/semi trade than the lead up to a broader correction. But until we get a catalyst, a real improvement in credit and internals, or a proper washout in sentiment and positioning, we’re not interested in aggressively trading these markets.

Good thing we’ve got other pools to swim in. Long bonds are breaking out of the major compression regime we’ve been tracking for months. We’re in a new secular regime for yields, and term premium is simply reverting to its historical average.

We also look at natty producers, some short-dollar trades, and a mystery in inventories…

***The MO port is currently up +40% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio fell 200 basis points last week, leaving us +40% on the year, below our high-water mark of +61%. We continue to hold high levels of cash. We took profits Friday on our NQ short, and now just hold small positions in oil and gas equities.

2. Ultra bonds put in their lowest monthly close on record, taking out their Oct 23’ pivot low. We’ve been tracking this setup for months now, making the point that it’s essentially the lagged inverse trade to the BCOM Index compression setup that kicked off in the Fall of last year. There are a number of macro drivers behind this one, but they all really center around term premium rising back towards its historical average (see charts below), as investors demand more pickup to compensate for the changing landscape. The primary reasons here being (1) large US deficits (2) JPY intervention (3) rising geopol/policy uncertainty (4) high inflation and rising inflation vol (5) Warsh-induced uncertainty at the Fed, and the list goes on (we are short).

I laid out the case for higher rates back in June, which you can read here.

3. The term premium on the 30yr has broken out of the top range of its 25yr average, indicating we’re in a new secular regime in rates.

4. Term premiums across developed markets are rising, and leading the US higher. Current UST 10yr term prem is at 0.68. Its 50yr average is 1.64 or roughly 100bps higher.

5. Another way to look at this is the UST 10yr term premium-to-yield ratio which currently sits at 0.17. Well below its historical average of 0.31.

6. We have entered a more uncertain world on many fronts and steeper curves are starting to reflect that. The chart below shows the 10yr term prem in white and the US Economic Policy Uncertainty Index in blue.

7. We got a bull trap in the DXY. Thankfully, we exited our long dollar position right after the Fed meeting last week, before Japan’s intervention in the yen. We’re now looking for short USD setups to play this breakout failure (chart is a monthly pulled from Mike G’s latest, link here).

8. Here’s our dashboard showing the latest CoT positioning across all FX pairs. EUR, CAD, and JPY are all crowded short.

9. Here’s the 3yr percentile of Net Specs in EURUSD, the most heavily shorted of the bunch at the moment. Spec positioning is currently in the 2nd percentile. Green highlights mark prior instances where positioning crossed below 15%.

10. According to StateStreet real money has been buying this dip in tech.

11. We’re mostly sitting on the sidelines of this market. We booked profits on the NQ short last week, and our bias remains higher on SPX — the weight of evidence still points to rotation, not a significant correction taking hold.

The crowding in momentum we saw these past couple months was about as extreme as it gets though. This JPM chart makes the case. We’ll likely see these momo names struggle to find their footing for a while longer.

12. Our teammate Dean Christians made the same point in his latest monthly presentation. One chart he shared: Semis breadth composite is below -8%, a level where forward returns have historically been poor.

13. Still keeping an eye on the McClellan Summation and Oscillator to see if they can turn things around.

14. I’ve been revisiting some Natty equity plays, as positioning is crowded short in gas and a number of the equities are showing strength on the monthly charts. My current favorites are RRC and EXE, which is shown below.

The quick and skinny bull thesis on EXE is that it’s becoming both the largest producer and marketer of US natural gas, adding Twin Eagle’s storage and pipeline network to its existing scale. And management sees a multi‑decade demand boom from LNG exports, AI datacenters, and onshored manufacturing, making gas a long-duration way to play the AI buildout.

We’re digging into both of these and will be out with more for Collective members soon.

15. This from JPM is a bit of a head scratcher… if any of you have thoughts on why this is, please ping me. Here’s JPM:

“One of the more perplexing developments here is inventories, which have fallen for five straight quarters, with much of that coming in the manufacturing sector (Figure 3). This type of behavior is more typical of a recession, and yet goods-producing industries have been performing relatively well, at least in comparison to the standards of recent years.

“Normally, this type of inventory drawdown would lead us to raise our growth forecast for coming quarters, under the expectation that firms will need to restock, with at least some of that coming from domestic production. We have held off for now while we evaluate why the inventory decline has occurred. The inventory decline has overlapped closely with the trade war, and there is some possibility that an eventual re-stocking might come disproportionately via higher imports.”

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Thanks for reading.

Your Macro Operator,

Alex

The best improvements I’ve made to my trading—the novel insights that meaningfully added to my edge—are ideas whose source I cannot name.

This summer, like each before it, I will audit the adaptations I made earlier in the year: what worked, what didn’t. Inevitably, I will try to reverse engineer the best discoveries. I will ask: where did I go when I found them? And I will plot a deliberate return.

And yet it’s never about where I go. It’s about what goes away.

What goes away is the justification to start.

What goes away is the ten-step plan.

What goes away is the knowable payoff: the guarantee that the time I invest in following a thread today will not be wasted time tomorrow.

Traders and investors have a particular relationship with the unknown. We are trained to model it, manage it, mitigate it.

We peer into the future and concern ourselves with the unknowables: the hidden leverage, the black swan, the tail risk that undoes the thesis.

We forget to look back at what the unknown has already given us.

Every unexpected discovery. Every insight that arrived from no discernible direction. Every leap forward that came not from a plan but from following a thread with no destination defined.

The unknown births all that is new. What is known is priced in—already an edge the market has adapted to. And your edge, as you know it today, will never be transformed by the familiar.

It will require befriending the very thing you have been trained to defend against.

The unknown is not the enemy of your edge. It is the source.

Shifting Expectations

The U.S. Dollar dropped sharply back inside its year-long range this week when the Federal Reserve decided to hold interest rates steady. Leading up to this week’s meeting, we’d been tracking the Dollar’s steady rise on speculation of a potential rate hike. And in last week’s issue, we highlighted the 101.57 level as a critical point to watch for either a confirmed higher high or a rejection. Wednesday’s meeting gave us our answer: the Fed opted to maintain the status quo and the premium for immediate hikes dissipated, prompting a broad selloff as expectations readjusted.

Friday’s close back inside the weekly range establishes a short bias, with an initial midline target of roughly 97.95 for the failed breakout.

Also in currencies, Euro / Franc pulled back to retest the neckline of its three-and-a-half-month Head & Shoulders Continuation pattern.

And Pound / Aussie is forming a five-and-a-half-month Head & Shoulders Bottom pattern.

While British Pound futures have been coiling for over a year now inside what could be a massive Symmetrical Triangle. Weekly chart shown here.

Another Symmetrical Triangle on the weekly has formed in Corn futures. The continuation contract shown here. No pattern on the daily to get involved as of yet.

Heating Oil futures continue to hold the breakout from a Falling Wedge pattern on the continuation chart, and could now be forming a small continuation pattern.

After an impulsive initial breakout from a Symmetrical Triangle, White Sugar futures is back to its 50DMA attempting to hold and resume higher, toward a 1x measured move target of 514.3.

And despite all the volatility in semiconductors and AI-infrastructure names, which continued to hit the Nasdaq this past week, the S&P 500 Equal Weight ETF has slowly drifted higher since breaking out of its three-month Cup & Handle Continuation pattern this past May.

RSP displays just how resilient the broader market has been despite SPY’s continued consolidation and QQQ’s sharp selloff. A 1x measured move target for RSP sits at 222.44.

The Pauses That Refresh

There is a notable mix of long setups, short setups, continuations and reversals in this week’s equity screen.

Here are the names that caught my attention:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

The DXY looks ready to move again. Long bonds keep compressing. Historically elevated earnings expectations are not the bullish setup they’re sold as, and ship crossings through the Strait of Hormuz are back to nil. That’s going to matter soon.

***The MO port is currently up +43% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio rose 50 basis points last week, leaving us +43% on the year, below our high-water mark of +61%. We recently reset to mostly cash with a small Nasdaq short, small crypto longs, and a small long in oil and gas equities.

2. Bonds are compressing. Bollinger width on the monthly is its narrowest since 2018. Compression regimes are reliable in exactly one respect: they precede large moves. They say nothing about direction. Our bias is that this one resolves lower.

3. Ultras on the daily. Looks like a possible double bottom around the recent key pivot low. No trade here. Still watch and wait.

4. Our new teammate Dean Christians of TPMR pointed out last week (link) that the dollar is in an extremely tight short-term compression regime:

“Its Bollinger Band spread has compressed to only 0.93%, a reading that ranks in just the 4th percentile of all observations dating back to 1972. That’s an unusually quiet market. Even more interesting, the spread has fallen to its lowest level since December 2021, right before the dollar launched into a major advance as the Fed embarked on its 2022 tightening campaign. While volatility compression doesn’t predict direction, the historical backdrop suggests the current period of calm may not last much longer. As a reminder, the Federal Reserve meets next week.”

5. Our Lead Technical Analyst Mike G notes the DXY’s completed bull flag in his latest weekend must-read (link).

6. DXY breadth, measured by the percentage of pairs above their 200-day, recently crossed above 70%. That’s broadening strength. Green verticals mark past instances of a first cross above 70% in at least three months.

I don’t like how slow the dollar’s been to follow through post-breakout. The data still favors the upside case. FOMC will drive near-term direction, but we’re considering buy stops above last week’s highs.

7. The market is pricing one hike by September’s meeting. Harley Bassman (@ConvexityMaven) is one of the few bond commentators I read closely. His post from last week is worth chewing on:

“My two cents....

I have been on record as “higher for longer” against the naysaying Team Transitory. Thus I pushed back hard on the late-2025 expectation of three FED rate cuts.

To my chagrin, I was more right than anticipated as I now expect the FED to hike by 50bp in July.

A 25bp hike is too chicken $hit to match Warsh’s rhetoric, and 75bp implies he knows we have a massive problem, which he does not.

Moreover, this recent inflation is all sourced from Oil, which is indeed “transitory”; and I do not see how higher rates changes that. What matters is wage and service inflation, which is not crazy; and of course OER which is projected to decline.

A 50bps hike shows there is a new sheriff in town, and he is not beholden to the President. The tail risk, of course, is a 1994 Greenspan hike, but I am not sure he wants to devastate the Globally-linked UST rates plumbing (SVB redux anyone) with a full on Yield Curve inversion.

Everybody on the planet is into the “steepener”, and so I wonder if the selling of the front-end (T2s) is driven by new positions ahead of Warsh, or just stop-out after stop-out of all the long Yield Curve trades....it feels like the latter.

Enjoy the summer.”

8. Bloomberg’s Simon White had a good piece last week on the pickup in inflation volatility. It’s not the level of inflation that drives the pricing of risk assets. It’s the variance.

9. White’s point: “inflation exhibits heteroskedasticity, ie its variance rises as it increases. That’s clear as day if we split US CPI into deciles, with the highest decile having by far the largest inflation volatility on average.”

10. He shows the causal chain. Rising inflation vol leads to higher term premia and wider credit spreads.

11. Some of this is energy, courtesy of the US-Iran war. Trump reportedly called off an escalatory strike over the weekend, citing concerns over depleted US munition stockpiles. Doesn’t change the picture. Strait traffic is back to nil, and that starts to matter for oil and everything downstream. Fertilizer. Food.

12. Great chart from BCA Research with tweaks from @McClellanOsc. Better to buy when expectations are depressed, not exuberant like they are now.

13. We’re not bearish but we are increasingly cautious. Add the deterioration in credit to the list (chart from Jason Goepfert / SentimenTrader).

14. Internals continue to deteriorate. We still haven’t seen enough in the weight of the evidence to call a major trend change, but the backdrop points to more near-term weakness and volatility. If Bassman is right and the Fed hikes this week, let alone 50bps, we could be in for a volatility pocket.

15. Our preferred short-term breadth measure, the McClellan Summation and Oscillator, have both rolled over. That confirms what internals and credit are telling us. Be defensive and wait for clarity or a positive catalyst. We’re comfortable holding high cash and will reassess post-FOMC.

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Thanks for reading.

Your Macro Operator,

Alex

Simon Russo is the most successful trader Jack Schwager has ever interviewed. That endorsement alone is worth a pause.

Russo recently published a memoir: six parts, told in reverse, each principle threaded through image and metaphor.

He never saw trading as a sprint toward a fixed idea of wealth. For him, it was always an endless game with no final score. A thing-for-itself.

He goes further.

The discipline you practice today—the rules, the process, the painstaking structure—will be inherited, he argues, by a version of you that does not yet exist.

“You are building a cathedral for a stranger,” he writes. Requiring the mathematical precision of an engineer, the aesthetic touch of an artist, the spiritual devotion of a monk.

All while knowing you won’t be the one to worship inside.

Every morning I open the charts, I meet this stranger.

He steps into the cathedral—rules welded into archways, history stained into colored glass, structure reinforced by marble—and the very conviction that raised these walls now stands in quiet opposition.

The man who built this may have beaten the market. But I can beat his models.

The architect is gone.

The stranger stands alone, asked to trust a version of himself he no longer is. Asked to be a version of himself he has never been: humble, obedient, devout.

The ultimate question isn’t whether the cathedral was built with integrity.

It is whether he can kneel without proof. Whether he can honor what was revealed in past moments of clarity.

Whether The Stranger can become The Believer.

King Dollar

U.S. Dollar Futures appear to have completed a successful retest of prior resistance turned support. We first pointed out the growing appetite among buyers to defend higher levels in the June 13, 2026, issue.

The Bull Flag pattern on the daily, which we highlighted last week, broke out to the upside. Attention now centers on the 101.57 level to see if a higher high will be confirmed or rejected.

With a strong U.S. Dollar and an unwind in former AI leadership, the Nasdaq has fallen back to the lower limit of the consolidation range we have been watching for over a month.

If that lower boundary is breached, the 200EMA near 26,800 marks the next key support level. Reflecting this outlook, our Macro Ops Portfolio has carried a risk-defined short position in the indices since last week.

Lumber Futures continues to defy the typical inverse relationship between global commodity prices and a stronger U.S. Dollar by consistently establishing higher lows.

The short continuation pattern on the September contract, speculated in last week’s issue, completed on Monday and followed through into midweek.

Heating Oil also moved higher, despite exhibiting a weak close on Friday.

And Soybean Meal Futures continues to establish the major change of trend we’ve been tracking since May. The weekly continuation chart is shown below. I am watching for a pattern on the daily around which to define risk and frame a trade.

On the weekly timeframe, a Symmetrical Triangle spanning nearly two years has developed on the Corn Futures continuation chart. While the duration of this pattern exceeds my typical swing-trading preference, a confirmed breakout will establish a clear directional bias for any lower-timeframe patterns that form in its wake.

Metals stand out as the primary asset class currently responding to the strengthening U.S. Dollar. Specifically, Platinum Futures, which has maintained a downward trajectory since peaking in January’s blowoff top, has established a Bear Flag on the daily timeframe.

And in currency markets, the Euro / Franc completed a three-and-a-half-month Head & Shoulders Continuation pattern on Wednesday.

The Pauses That Refresh

Within the software and technology sectors, my attention remains on equity consolidations developing beneath their 200EMAs. Numerous names on the active watchlist pulled back below their long-term moving averages, remaining confined within their ranges without breaking out.

Examples include Alkami Technology (ALKT):

GoDaddy (GDDY):

Open Text Corporation (OTEX):

And Workday (WDAY):

For the Nasdaq to recover, such stocks may first need to drop to their lower support levels and test buyer interest there.

While technology has sagged, financials have caught a bid, resulting in an increased presence of this sector in my equity screens.

Here are the names that caught my attention this week:

Active watchlists, real-time positioning updates, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Look further out and the picture darkens. Positioning, sentiment, and liquidity are all stretched to levels that have rarely rewarded the crowd. Cash is near record lows, leverage near record highs, and everyone’s crowded into the same comfortable story.

So we play both horizons: long the trend until breadth breaks, while sizing for the reversion the intermediate evidence keeps pointing toward. Two surprises this week — financials gave a rare bullish signal, and our Market-Implied Regime indicator flipped to something we didn’t expect. More on both below.

***The MO port is currently up +42.5% ytd in 26’. The Collective is where we discuss the theory behind the positioning, publish the differentiated research, track the book in real time, and argue it out with a global group of serious investors. If that’s your kind of room, join us in Slack. ***

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MO Portfolio & Trades

1. The portfolio gave back 70 basis points last week, leaving us +42.5% on the year and below our high-water mark of +61%. We recently reset to mostly cash. From here we expect to rebuild exposure in biotech (XBI, ARKG, and select names), cybersecurity, energy and crude, and a narrow set of the Mag7 (META, NVDA).

2. Bonds are compressing. Bollinger width on the monthly is its narrowest since 2018. Compression regimes are reliable in exactly one respect: they precede large moves. They say nothing about direction. Our bias is that this one resolves lower.

3. The dollar is testing its own line. DXY is dancing on the level it recently broke, now acting as support. Whether it holds there or fails will set the tone for macro over the coming months. We’re watching for follow-through, or a bull trap.

4. The S&P continues to coil. Our base case remains an eventual break higher. Near term, renewed US–Iran tension and firmer oil argue for some potential downside first.

5. Breadth eased but held. Our Aggregate Breadth Indicator slipped to +2, still consistent with the prevailing uptrend. A move to +1 or below would, on our history, raise the odds of a 7%-plus correction materially.

6. Internals are deteriorating. The key market internals are moving the wrong way. If the picture doesn’t stabilize soon, our one-to-three-month outlook turns decidedly more cautious.

7. Liquidity keeps grinding lower. Our Liquidity Gauge continues to trend down, which adds weight to the intermediate-to-longer-term caution.

8. Positioning and sentiment are stretched, especially on longer horizons. Hedge-fund net leverage sits at 79%, just off four-year highs; gross leverage near 312%, close to a record. BofA’s Bull/Bear gauge is at 9.6, its highest in more than five years. Schwab’s STAX, which tracks actual retail flows and positioning, has jumped to 59, a four-year high. Our own Trend Fragility measure is at 71% and rising. None of these are a timing signal. But together they describe a market with little cushion.

9. The latest FMS tells the same story. BofA’s July Global Fund Manager Survey shows cash down to an “uber-low” 3.6%, managers their most overweight US equities since December 2024, the highest “boom” expectations since February 2022, and a record 54% now forecasting no landing. Consensus has rarely been this comfortable.

10. One model disagrees with us, and we’re listening. Nearly all of our work points to higher rates once the current one-to-two-month lull in inflation passes. One reading though cuts the other way. Last month our Market-Implied Macro Regime indicator flipped to a 100% Goldilocks signal, meaning low, positive growth alongside low and falling inflation. The indicator has a strong record predicting the regime six months out. It isn’t our base case. But a model with a good hit rate contradicting your priors is exactly the kind of evidence to sit with rather than wave off.

11. China is still deleveraging, and commodities don’t seem to care. State Street’s China Monetary Conditions Index keeps making new all-time lows, and it tends to lead macro momentum. What’s telling is how well commodities have held up regardless. Copper is near record highs through a long, deep Chinese deleveraging. The global growth and inflation picture changes materially the day China restarts its growth engine.

12. We still like precious metals, and we think we’re early. For now we’re waiting out the correction, which is a rates story. Until bonds find a durable floor, we stay on the sidelines here.

13. Central banks keep buying gold. The pace is accelerating, which puts a floor under how far the metals can fall.

14. The clearest positive is in the financials. Our new colleague Dean Christians (TPMR) flagged a rare breadth thrust in the sector. This week every financial sub-industry group registered a bullish short-term Dual Trend buy signal, something last seen in 2021.

The base rate is encouraging: when more than 95% of financial sub-industries are on buy signals, the sector has compounded at 19.6% annually, well above its average back to 1959. As Dean put it, “the ongoing rotation out of technology has fueled improving participation across several other sectors, with financials standing out as one of the primary beneficiaries.”

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Thanks for reading.

Your Macro Operator,

Alex

Early in my career, trading and investing appeared to hinge on the gathering of facts. To gather all the facts—regarding a company’s prospects, the market’s current phase, the economy’s outlook—would mean to know. And to know was the hurdle for risking capital.

Yet no matter how voraciously I ingested analysis, no matter the confidence with which it was presented, the facts kept… shifting. Over time, analysts revised their models. Forecasters moved their timelines. The targets that once felt inevitable quietly became footnotes.

But facts shouldn’t shift. Facts are facts, are they not?

That is what the intellect tells us. It divides our world into fixed categories: black and white, right and wrong. Once named, these become the things we say we know. And once known, they remain known.

Yet in markets, today’s facts consistently become tomorrow’s fictions.

Gradually, I began to perceive a resonance that accompanied the facts—and discovered it follows a reliable arc.

Early in a cycle, a compelling thesis hits something in me that is curious and alive. Novel. Seductive.

As price confirms the thesis, the novelty of those facts hardens into something different. Something that feels like solid ground. The model isn’t just interesting anymore—it feels true. Capital accumulates around it. Confidence builds.

In the latter stages, another shift occurs. Not in the data—not yet—but in the resonance. That felt sense of solid ground begins to recede. The delivery changes: more defensive, more emphatic, more insistent. More sophistication. More facts.

The resonance becomes one of grasping. And I feel it before I can explain it.

This resonance is the market’s most honest signal: truth, in all its fluidity, has moved on. And the facts, brittle and unbending, will inevitably break.

My trust has shifted: from the fixed I desire to the fluidity markets demand.

Facts lag. Resonance leads.

Around the World

The breakout in the U.S. Dollar is developing in a manner that keeps both longs and shorts on edge. For three weeks, price has been consolidating just above the breakout threshold, hovering near 100.

The structure on the daily timeframe resembles a Bull Flag pattern, with price action pulling back to test former resistance as newly formed support.

The month’s swiftest mover has been Euro / Pound, which this week met the 1X measured move target for the Descending Triangle pattern that comprised the Right Shoulder.

On the weekly chart, this highly directional move has already covered two-thirds of the 1X measured move target from the completed Head & Shoulders Top pattern. Given the intense momentum thus far, I anticipate heightened two-way volatility going forward.

Lumber Futures—the September contract shown here—continue to hold its higher low in what could be the formation of a tight continuation pattern on the daily.

Heating Oil broke out of the Falling Wedge pattern on the continuation chart, cited in last week’s issue. I have yet to identify a clear pattern on any specific contract month to properly structure this trade.

The consolidation in Feeder Cattle Futures continues to move within its congestion zone.

And as the SPY rolled over short of the 760 level required for a new high, the Nasdaq headed toward the lower threshold of the consolidation range I’ve been tracking for over a month.

The Pauses That Refresh

Our team at Macro Ops has been monitoring the recent sector rotation away from previous momentum leaders toward fresh beneficiaries. Specifically, financial stocks—most notably in the insurance space—have seen increased strength.

A prime example is The Travelers Companies (TRV), which was initially added to the active watchlist on June 20, 2026, and later flagged as a featured breakout in the June 27, 2026 issue. TRV posted impressive pre-market earnings on Friday, marking the climax of its recent powerful breakout.

Because TRV is currently extended by 7x ATR from its 50DMA—a threshold our Macro Ops team frequently utilizes for profit-taking on overextended positions—we anticipate the stock will consolidate or experience a pullback toward its long-term moving averages in the near term.

Here are the names that grabbed my attention in this week’s screen:

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***The MO port is currently up +43.3% ytd in 26’. If you’d like to join the Collective, our premier service that offers discussions on high-level theory and performance, differentiated research, real-time portfolio tracking, and a global community of serious traders/investors dedicated to mastery, then click the below and sign up. We look forward to seeing you in our Slack!***

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MO Portfolio & Trades

1. The portfolio ended last week down -70bps, bringing year-to-date returns to +43.3%, below our YTD NAV high of +61%.

Current positioning: All cash as we recently did a portfolio reset but we’ll be repositioning back into biotech (XBI, ARKG and select names), cyber security, energy / crude oil, and select Mag7 (META, NVDA).

2. Bonds continue their compression on the monthly tape with BB width at its tightest range since 2018. Compression regimes precede big trends but are directionally agnostic, though our bias is for a breakout to the downside (more on this below).

3. Bonds are testing key levels of support. Yesterday’s weak CPI surprise provided only a temporary boost before reversing and closing the day unchanged. There’s no clear short entry yet, as it’s oversold against its 20dma. We’re continuing to keep a close eye on this as I expect things are setting up for a bearish breakdown come end of summer, once this short-term disinflationary impulse runs its course.

4. There is a tactical long in the front end, 3m SOFRs. Speculative positioning is record short. I’ve laid out why I’m bullish rates (bearish bonds) here, but I think we’re in a 1-2 month window where inflation and growth surprise to the downside, making this a tradeable setup. I’m considering putting in a buy stop above recent highs to see if the market can pull us in long.

5. But again, this is a short-term tactical trade at best. The best central banker (2yr yields) says the Fed’s next move will be a hike.

6. Our Leading Yield Indicator continues diverging higher.

7. DXY continues to hold its breakout / support level. Not much to say here. We’re willing to play it in either direction; long on a move above recent highs and short on a bull trap breakdown.

8. Our bias for risk assets continues to be bullish. SPX is still trading in a 2 month sideways range, within a Bull Quiet regime.

9. Breadth continues to expand putting the odds strongly in favor of a bullish breakout. Notice the opposing breadth picture that preceded the March selloff, where breadth diverged lower compared to today’s where its diverging higher.

10. However, one thing we’re closely monitoring is the negative divergence in a few key internals, such as credit (green line) and Qs vs SPY (tan line). I suspect we’ll see both bottom out and reverse soon. If not, I’d be hesitant to buy any breakout in SPX as it’d likely be a trap.

11. From Citadel Securities: “Despite the S&P 500 trading within 1% of all-time highs, S&P 500 Information Technology, the Nasdaq 100, and even the S&P 500 Semiconductor industry all trade below their respective 10-year average forward P/E multiples.

Some of the market’s highest-quality growth companies are entering earnings with valuation support rather than valuation headwinds.”

12. Semi’s forward PE is back below their 10yr average. Admittedly, this is on the back of elevated earnings expectations (chart via Citadel).

13. Speaking of semis, RenMacLLC recently pointed out that nearly 87% of semi names are oversold.

14. The memory ETF DRAM is bouncing off its lower band, offering a decent spot to play for a tactical long with a tight stop, which we might do in small size.

15. Semis should continue to perform well as long as actual CAPEX keeps pace with expectations. 3Fourteen Research shows that MAG 7 CAPEX estimates are approaching 3% of GDP. These are insanely large numbers.

16. META’s valuation recently dropped to its second lowest level ever — the all-time low marking the end of its 22’ bear trend. The key catalyst is monetizing its massive compute base: if Meta can rent out spare AI capacity without slowing its own roadmap, investors stop treating capex as vanished cash flow. That reframe alone could re-rate the multiple.

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Thanks for reading.

Your Macro Operator,

Alex

Last month, a colleague wanted to talk through a difficult first half of the year. He pulled up a chart of the S&P and began walking me through it. His account was riddled with “I”: chopped up, trapped short, forced to cover, embarrassed. I stopped him.

He couldn’t have been trapped in April. He was sitting across from me right here, right now.

An uncertain laugh. I let the silence hang.

I asked him to walk through the chart again, this time with a condition: no references to self whatsoever. The words came slowly at first. Then he caught his stride:

Mean-reverting conditions. An adverse environment for trend trading. A v-reversal on de-escalation headlines. Price to new highs. The market, moving.

No story. Just circumstance.

That was the only accurate account of what happened. The “I” trapped short, the “I” that feels shame…that “I” is a story. There is no “I” in markets.

He pushed back. He existed, didn’t he? He was sitting right there.

Yes—exactly there, in that moment, talking to me. In the next, conducting research. The next, defining risk. The next, sizing and executing. Perpetually present; never in the chart.

The story was dissolving, but not without a fight. None of this reinstated his sold-out positions or made back the money lost on the short.

But his grip—interlocked with an invisible adversary, grappling on a fictional mat—loosened.

I could see him returning.

I asked him simply: what is the next right action? His response: tighter regime rules, smaller size in adverse conditions. And he went to work.

Listen to how you describe your trades. “I got chopped up.” “I was trapped.” “I got shaken out.”

And conversely, notice who is actually sitting right here, right now, ready to take the next right action.

Wide & Loose

It’s a Jesse Livermore classic: “It never was my thinking that made the big money for me. It always was my sitting.”

Sometimes, it seems like all markets are consolidating. In those periods, “my sitting” involves patiently awaiting a clear breakout to trigger a new trend.

Conversely, there are moments when everything trends simultaneously, and “my sitting” means waiting for that volatility to compress once more. Currently, the currency and futures markets reflect this latter environment.

U.S. Dollar Futures tested its prior resistance level for a second consecutive week following one of the most-watched breakouts in macro. We maintain our risk-defined long position within the Macro Ops Portfolio.

The Ascending Triangle pattern in Rice Futures—first featured in the May 2, 2026 issue—met its 2X measured move target this week following a volatile uptrend that included a deep retest of the 50SMA.

Following its Symmetrical Triangle breakout, White Sugar Futures may be undergoing a similar deep retest. This week, price pulled back after advancing more than halfway toward its 1X measured move target near 514.

Robusta Coffee Futures also met its 2X measured move target on Monday, followed by a strong reaction to this past February’s highs.

Lumber Futures put in the lower high speculated in last week’s issue—but not in as convincing a manner as I’d like.

Things look a bit more convincing on the September contract, where price is closer to reclaiming the June highs.

Soybean Meal Futures continue to attempt a major change of trend on the weekly. No clear pattern on the daily for getting involved—yet.

The Head & Shoulders Top pattern in Euro / Pound—first highlighted in the April 25, 2026 issue—sold off decisively this month.

Price action on the daily chart has now fulfilled two-thirds of the 1X measured move target for the Descending Triangle pattern that comprised the Right Shoulder.

And on the weekly, price is roughly halfway to the 1X measured move target of the completed Head & Shoulders Top pattern.

We continue to hold our risk-defined long position in British Pound Futures in the Macro Ops Portfolio.

Finally, the Double Bottom in Euro / Aussie—first featured in the May 16, 2026 issue—continues to stairstep higher.

Consolidation & Rotation

A select number of markets are presently in a consolidation phase.

Heating Oil, for instance, experienced an impulsive move this week, driving directly into the downsloping trendline of a potential multi-month Falling Wedge pattern.

Feeder Cattle Futures continue to consolidate within the Handle of a multi-month Cup & Handle pattern.

5-Year T-Note Futures are in as tight a range as they come. Personally, I find rates to be some of the choppiest markets I follow, with many false moves.

While the Nasdaq continues its time-based correction, my bias remains aligned with the direction of the preceding trend.

The SPY demonstrated notable relative strength compared to the Nasdaq, exemplifying the rotation out of AI names and into alternative sectors of the market. This rotation represents a far healthier technical development for the broader market than uniform, market-wide selling.

Rather than staging a third drive lower to allow the 200EMA to catch up, the index instead experienced a mere minor correction off the upper boundary of its Bull Flag to start the week. Strong buying then emerged from Wednesday through Friday, making Wednesday’s low a clean level for defining risk.

The Pauses That Refresh

Recent issues have highlighted an uptick in equity consolidations forming beneath their 200EMAs, primarily across the technology and software sectors. The resolution of these setups—either forcing an upside breakout to reclaim their 200EMAs or resolving lower to extend the underlying weakness—should offer insight into the Nasdaq’s next directional move.

One example from the active watchlist, AvePoint (AVPT), staged an upside breakout from its Head & Shoulders Bottom Reversal this week.

And in the first week of July, Slide Insurance Holdings (SLDE)—an “Insurtech” name also featured on the active watchlist—broke out to the upside.

Of the remaining names in this same category, nearly all are at or above their range midpoint, closer to completing upside reversals than downside continuations.

Here are the symbols I’m watching going into next week:

Active watchlists, real-time trade alerts, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

Breadth continues to improve. Short-term sentiment and positioning are elevated and climbing, but not yet at levels that push us into defensive posturing. The longer-duration signals are a different story. The MO Liquidity Tool and BofA’s Bull/Bear indicator both point to a more volatile regime ahead.

Near-term, the path of least resistance is still up. The longer-term picture is another matter.

Crypto is coiled for a run. Global defense names look to have put in a bottom. Plus more.

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MO Portfolio & Trades

1. The portfolio ended last week up +140bps, bringing year-to-date returns to +44%, below our YTD NAV high of +61%.

Current positioning: elevated cash, long Nasdaq, long Russell2k, long biotech complex and cybersecurity names, long GBP.

2. Bonds continue their compression on the monthly tape with BB width at its tightest range since 2018. Compression regimes precede big trends but are directionally agnostic, though our bias is for a breakout to the downside.

3. 10-year TNotes continue trading in their range within a Blended Bear Quiet regime. The direction of breakout will likely determine the near-to-intermediate term direction for the broader equity market as well as the USD.

4. This is a make or break week for the DXY as it should decide whether this breakout holds or ends in a bear trap. The answer holds big implications for the rest of global markets.

5. Last week we highlighted the mean reversion setup in GBPUSD, supported by the record short positioning in Specs. The trade is working nicely so far (chart below is a weekly).

6. SPX continues consolidating its gains off its April lows. The weight of the evidence favors a coming breakout through the upside of its current range.

7. Our Aggregate Breadth Indicator strengthened last week to +3. Major corrections (10%+) occur when this measure falls to 1 or below. This improvement supports an eventual bullish breakout in equities.

8. However, our longer-term measure of liquidity is plumbing new lows. While this indicator can have a long lead of 3-6 months, the lower it goes the lower average forward returns for the market become.

9. This dichotomy in the setup between short and intermediate terms can be seen in the sentiment and positioning data as well. Our Trend Fragility indicator, a composite of short-term sentiment and positioning data points, is at 71% and rising. Still well below the 90%+ threshold for an official sell signal. While BofA’s longer-term measure, is giving a strong sell signal.

10. Our 6m oscillator for net Speculative positioning in the SPX is elevated at 81% but still below the 90th percentile that suggests caution.

11. Perhaps the catalyst for the next move up in risk assets will come from a softening (read: more dovish) tone from the Fed as the Narrative Pendulum swings in the doves favor?

12. We like crypto here. SOLUSD has put in a bear trap on the weekly, and sentiment is coming off the lows (see next chart).

13. From Sentix: “Last week, the sentiment barometer for Bitcoin stood at -34 percentage points. Consequently, we highlighted in our newsletter the counter-cyclical opportunity arising from this extreme in sentiment… The TD Index still stands at -15 percentage points and is ‘cushioning’ prices against a fall. The sharp improvement in sentiment, coupled with a simultaneous rise in bias, carries a second piece of information. This is a sentiment impulse which, according to conventional interpretation, points to the prospect of further price gains.”

14. Global Defense stocks have set up again after correcting over -25% ytd. We like both ITA and SHLD.

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Thanks for reading.

Your Macro Operator,

Alex

I‘ve lived in three Americas.

In the first, I delayed all gratification. I hustled. I held every penny hostage to the future. While others rested, I worked. Against all odds, I parlayed a $20,000 brokerage account in my late twenties to seven figures before I turned forty.

In this America, the nation was an objective arena for the game of capitalism. Each individual an atomized player on the field. Success or failure: 100% personal effort. Isolation wasn’t a cost. It was the strategy for avoiding a median outcome.

I’ve lived in three Americas.

In the second, the single-family home in Pasadena demanded my entire account. The consolation: a new-construction condo downtown. Taken from under me by foreign buyers, paying all cash. I’d had every advantage: middle-class upbringing, two degrees from a top university, a white man in a white-collar profession. And still: a rented apartment.

Seven figures was no match for capital that had begun compounding before I was born. Before my parents were born. If someone like me—every card meticulously played—still couldn’t close the distance…

Outrage. Fury. Powerlessness. Isolation wasn’t a cost. It was the system’s design.

I’ve lived in three Americas.

The third: mountain ranges older than any deed of ownership. Snow so light it sprays like champagne. Lakes of stained glass. Forests you can feel breathe. Beaches covered in sand like powdered sugar.

And here: “Grandma” and “Grandpa” across the road. Mom and Dad a morning’s drive away. Baristas whose faces I recognize. Bags of hand-me-down clothing finding the doorstep of new families. Teachers who matter to our children.

The hustle, the fury, the beauty.

I live in three Americas.

Consolidation & Continuation

Equity indices continue to form consolidation patterns near their highs. The pause in the Nasdaq I’ve been featuring, occurring right on top of a multi-month trendline, further tightened this week inside the initial range.

The SPY could be forming a Bull Flag above its rising 200EMA. To my eye, price looks like it wants to make a third drive down, allowing the 200EMA to catch up and support a more sustainable trend continuation higher. My bias is always for consolidations to resolve in the direction of the prior trend.

While equity futures consolidate, commodity futures continue to move. Robusta Coffee reached its 1X measured move this week, with a 2X target sitting at roughly 3758.

White Sugar Futures, shown here on the continuous contract, followed through on last Friday’s breakout, pushing halfway toward a 1X measured move target of roughly 514.3.

Lumber Futures pulled back at the end of June, but is possibly putting in a lower high with this week’s turn.

The much-followed breakout in U.S. Dollar futures came back to test prior resistance this week. We’re holding a risk-defined long position in the Macro Ops Portfolio.

And the massive Head & Shoulders Top in Euro / Pound finally broke down this week. As I’ve stated previously, due to the size of this pattern, I expect ample volatility on the daily timeframe regardless of how price ultimately resolves. We are long British Pound futures in the Macro Ops Portfolio.

The Pauses That Refresh

There was an uptick in equity consolidations forming below their 200EMA in my screening this week—many in the software and technology spaces, currently bouncing from oversold conditions.

Resolution of these consolidations—to the upside while reclaiming their 200EMAs, or to the downside as continuation of weakness—could inform the next move in the Nasdaq.

Here are the names that caught my eye:

Active watchlists, real-time trade alerts, and live portfolio tracking are reserved for members of The Collective, our premier service offering discussions on high-level theory and performance, differentiated research, and a global community of serious traders and investors dedicated to mastery. Learn more about The Collective here.

The next two weeks are telling for DXY. It needs to hold its recent breakout. If it can’t, and this turns into a bull trap, GBP is the long — positioning there is the most crowded it’s been in history.

Breadth is broadening and diverging higher. That’s not a bearish signal. But there are early signs that volatility is building under the surface, and the next leg up in equities will be a rougher ride than the last.

We close with a full Trifecta setup in the insurance sector, and crypto remains a great short.

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MO Portfolio & Trades

1. The portfolio ended last week up +230bps, bringing year-to-date returns to +42.6%, below our YTD NAV high of +61%.

Current positioning: elevated cash, long Nasdaq, long Russell2k, long biotech complex and cybersecurity names.

2. Bonds continue their compression on the monthly tape with BB width at its tightest range since 2018. Compression regimes precede big trends but are directionally agnostic, though our bias is for a breakout to the downside (more on this below).

3. Last week we made the case for higher rates, eventually… I say eventually because bonds are both short-term oversold, up against major support, and positioning has flipped decidedly bearish (see chart below).

4. I’m watching to see what 10s can do here. I’m willing to play a tactical long on a breakout above this range.

5. The DXY has so far held its breakout (chart below is a weekly).

6. It’s now around 2std overbought across all-three timeframes, while short-term positioning is elevated. The next two weeks will be the tell in whether DXY can hold and consolidate these gains, or this turns into a major bull trap. The answer will have significant implications across assets (ie, commodities, EM, growth, etc…). We are long.

7. If you’re of the mind that DXY is setting up a bull trap, then long GBP offers a nice trade It’s at the bottom of its 15-month+ sideways range/compression regime.

8. Our Spec oscillators on both a 6m and 3y basis are in the 4th and 1st percentiles, respectively.

9. In fact, Commercials are holding their most crowded long positioning in history. The last two times Commercials were even remotely this long it marked a significant bottom in the pound.

10. Our HUD multi-chart page shows that GBP is basically the inverse of DXY right now. It’s roughly 2std oversold across all three timeframes. Seasonality flips positive one week from now. But… yield spread momentum remains low and we’d want to see that flip in order for long GBP to have prospects of more than just a small mean reversion positioning fade.

11. This is a pretty incredible relative flows chart from SG.

12. NYSE A/D Line (in amber) hit a new all-time high last Friday, positively diverging from the index, which typically is not a bearish development.

13. And our friend Dean Christian’s over at TPMR shared this study last week showing that over 75% of cyclical subindustries are in bullish trends on both short and long-term measures. Going all the way back to the 60s, this has occurred only 3.8% of the time, and the SPX has historically seen annualized returns of +10.8%.

14. The path of least resistance remains up. That’s what the weight of the evidence (breadth, internals, technicals) tell us. However, we expect the trend to be more volatile going forward, with frequent positioning induced air pockets. Our resident vol trader, Tony, shared some great stuff on this very topic in this week’s Vol Street Journal. I highly recommend giving it a watch. Here’s some of his summary notes:

This week’s episode examines a series of shifting conditions across my proprietary market models, volatility complex, currency, and credit markets that point to growing market vulnerability. I break down the developments and explain why the risk environment has changed.

• Proprietary Models: Both models have been flashing warning signs for weeks, and Friday sent the EWS model to its highest, most cautionary level since the early days of the Iran conflict.

• VIX Futures: The front of the futures curve is flattening as spot VIX tightens its gap to the July contract and the July-August spread compresses.

• Chronic Undervixing: Realized volatility continues to climb while implied volatility lags, squeezing the variance risk premium as individual stock volatilities rise.

• Positioning Dynamics: Speculators are heavily long the Dow and strongly bought the S&P dip, alongside crowded long positions in the US Dollar and short positions in major cross currencies.

• Credit Market Stress: High-yield and investment-grade spreads are beginning to widen from very tight levels as capital rotates toward Treasuries and equities start to follow high yield bonds lower.

15. Been tracking this one for a while now and it looks like it’s finally tee’d up. The SPDR Insurance ETF (KIE) has put in a bear trap reversal within a major compression regime on the monthly. Its relative performance versus the SPX is coming off all-time lows, even below levels hit during the 09’ bottom. We will likely be getting long this ETF along with some select names.

16. Here’s the Koyfin holdings breakdown for it. The top 1-month performing names are BWIN, OSCR, SKWD, and RYAN. OSCR is my current favorite.

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Thanks for reading.

Your Macro Operator,

Alex