In today’s post:
✅ In the Weekly Review, I wrote this could be a *critical* week — and a potential game-changer for markets.
✅ Markets are now *in motion* — and there may be a LOT more to come.
Strap yourself in…
On Saturday, I wrote:
The Dollar may be finishing its base *right here right now*.
This is a critical moment — EVERYTHING converging for a decision next week.
Below, the Dollar is coiled in an *extremely tight* range between long-term support and downtrend resistance.
ANY push above ~98.30 next week would break through key resistance. If the Dollar can push through the 50dma it would be a MAJOR inflection point. Watch these levels closely next week.
ANY push below ~96 would be a complete breakdown. Think this is the less likely outcome, as Weekly charts continue to suggest *significant* upside potential.
Time for the Dollar to make a decision — next week’s economic news / Fed meeting could be big catalysts.
What the Dollar is doing now:
Undoubtedly already a BIG start for the week:
*But* the week is still beginning…
There’s a lot of market-moving data still to come in the next few days: Fed meeting, GDP, PCE, NFP, and ISM — to name a few.
With all this in mind, it’s starting to look like a DECISIVE move in the Dollar — and as before, ”the Weekly charts continue to suggest *significant* upside potential”.
A major turn developing in the BIG FOUR:
Similarly, a setup for a potential breakdown in Gold Miners:
GDX bull trap reversal after ticking a new high on July 22.
“Coming in hot” for potential daily Sell and break of 50dma — maybe this week.
A confirmed breakdown would target a multi-week correction to (ideally) 200dma, currently ~43 and rising. *If this were to happen, everyone who bought after mid-March would be underwater.
*I continue to avoid exposure to the group.
THE PAIN TRADE
Remember when they bought Europe at the top and it was the “end of American exceptionalism”?
Well:
Year-to-date, QQQ is now beating SX5E, CAC and UKX in local currency.
All the “outperformance” in Europe since MARCH has been from the currency.
Ex-currency, DAX has underperformed S&P by -10% since March (not shown, DAX has underperformed NDX by -15% since March):
Even worse, SX5E has underperformed S&P by -15% since March:
And the most stunning chart of all… SX5E vs. NDX is almost back to ALL-TIME LOWS.
“Thanks for playing the end of American exceptionalism”
Meanwhile, NVDA is $4T and SX5E is flat since mid-February (nearly 6 months).
What happens to Europe longs treading water for months if EUR corrects?
Best guess: Max pain = capital stop-out / migration to U.S. assets.
What’s the narrative? U.S. is “safe” now that “uncertainty finally lifted”?
WHAT TOPS LOOK LIKE — A CHECKLIST:
*Two charts which caught my attention yesterday — continuing the theme:
✅ From DB: The most shorted Stocks have seen a surge in Call volume matching the prior peak of the 2021 Meme Bubble:
✅ Another way to visualize it: the stocks with the most Call volume rank among the highest Short interest percentile in the market — matching the prior peak of the 2021 Meme Bubble:
All this while High-Beta momentum continues to quietly fade (and many key names already rolling over):
Continuing to execute the plan & without hesitation:
✅ Reduced notional Equity exposure by 20% so far, and overall Equity portfolio Beta by nearly 40% — raising cash from high-beta names rolling over / triggering trailing stops / extended. If more key stocks peel off the rally, will continue cutting exposure.
✅ Monitoring Core Models for Sell signals to fully hedge the rest of the book (“cost of doing business”). *Likely August business*.
✅ May consider tactical Net Short position depending on how clean the setup gets. Key to remember: this is a Bull Market tactical pullback setup — less focused on big downside bets, more focused on buying/adding quality names at good prices.
✅ The next weeks could be critical — will update conditions with priority as we go.
Thanks for reading.
Onwards and upwards, -MC
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