Bond Market Ran Friday. Equities Are Catching Up.
Ahoy there, Trader! ⚓️
It’s Phil…
The markets start the week tipping a little lower, and for a change potentially more than a one-day sell-off. Is the shine coming off the SP and Naz run up? Dow failed to reach a NATH and sleepy Uncle Russ is pushing back into the prior range.
VIX remains elevated and pushing higher. Oil stagnating despite the continued “thingy” going on. BTC pushing lower quite nicely from the range highs to the range lows.
Over on the TnT swings, the system remains bullish and just missed out of a bear TnT setup, which over the past several weeks has not been too much of a bad thing. A new bull tag failure, should that happen, will flip the system to bearish should it be needed.
RUT is behaving completely normally, tagging and turning quite nicely. On the daily we are also pushing back into the range, and so the overall bear thesis needs to be considered.
Let’s see if we get a non-bullish directional move.
BTC, new on the analysis sections. Using a bit more of traditional analysis while I also tinker with blowing the dust off some old systems. It is showing a strong bear trend while it remains below minus 80% on %R. MACD-v is also in a bear trend and a cat’s whisker away from Target 1. Target 2 being the lower side of the daily range.
In the wider world: Friday delivered eleven weeks of news in ninety minutes. PPI at 6%, the hottest since January 2023. Core PPI at 5.2%. Markets shrugged Thursday. Friday they remembered everything at once. The 30-year cleared 5.12% and kept going. Brent past $111 overnight. Warsh sworn in Friday afternoon. The week’s catalysts: Walmart Tuesday, FOMC minutes and Nvidia after the close Wednesday.
Shine Slipping. Bear Thesis Live. BTC Trending Lower. Calendar Helpful.
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Market Briefing:
Monday 18 May.
- Friday close: SPX 7,408.50 (-1.24%) / NazQuack -1.54% / VIX +6.78% to 18.43 / 10Y 4.595% (+13.6bps) / 30Y above 5.12%
- Monday pre-market: ES 7,401.50 (-0.22%) / NQ 29,144 (-0.10%) / RTY 2,788.2 (-0.14%) / YM 49,312 (-0.35%)
- 30-minute SPX: Bullish Above (Flipped) 7,267.09 / NATHs 7,517.12 / system bullish, just missed a bear setup, bull-tag failure flips to bearish
- 30-minute RUT: Bearish Below 2,854.67 / PFZ 2,873.87 / Target 2,817.4 / daily back inside range, bear thesis live
- 4hr BTC: bear trend below minus 80% on %R / MACD-v in bear trend / Triangle Target 1 at $76,459.65, Target 2 at $72,500 / current $77,037
- Friday metals: Silver -9.12% / Gold -2.63% to $4,562 / margin-call style
- Brent $111.41 overnight / WTI $103 / Hormuz still closed
- Warsh sworn in Friday afternoon / 17th Federal Reserve Chair / inherits 6% PPI, $6.7T balance sheet, Shiller P/E 42.18 (within 5% of December 1999 peak)
- This week: Walmart Tuesday pre-market / Home Depot and Target midweek / Nvidia Wednesday after close (consensus $78B rev, +78% YoY, EPS $1.77 / Polymarket beat odds 90%) / FOMC minutes Wednesday
- GEX: 7,400 anchor breached Friday / 7,450 secondary / 7,500 above / Call wall 7,400 / Put wall 7,000 / IV 15.27% / IVP 71%
Market Snapshot
- ES: 7,401.50 / -0.22% / off Friday’s NATH 7,540
- YM: 49,312 / -0.35% / Dow failed to reach NATH
- NQ: 29,144 / -0.10% / off NATH 29,782
- RTY: 2,788.2 / -0.14% / Uncle Russ in prior range
- GC: 4,549.5 / +0.13% / steady after Friday slide
- CL: 101.94 / +0.77% / Brent past $111 overnight
- VIX: 19.11 / +3.75% / pushing higher
- BTC: 77,031 / -0.49% / range lows
Tag ‘n Turn
SPX: System remains bullish. Just missed a bear TnT setup. A new bull-tag failure flips the system to bearish.
RUT: Bearish Below 2,854.67. PFZ 2,873.87. Target 2,817.4. Daily back inside the prior range. Bear thesis live.
BTC: Bear trend below minus 80% on %R. MACD-v bearish. Cat’s whisker from Target 1 at $76,459.65.
The shine is coming off SPX and NazQuack. The bull-tag failure is the trigger to watch this week. RUT has done the work already on the 30-minute and the daily.
BTC is the cleanest directional read across the analysis block. The %R is doing what it does in a trend.
SPX Analysis
Bullish Above (Flipped) 7,267.09. NATHs 7,517.12 reached Thursday. System remains bullish having just missed a bear TnT setup. A bull-tag failure flips to bearish.
The Bullish Above (Flipped) status reads from the info box at 7,267.09. PFZ Level 7,231.3. Target Pending. NATHs 7,517.12 from Thursday now well above current.
Friday’s session printed bearish candles inside the 30-minute Bollinger bands and pulled the chart back toward the lower band. The system did not generate a bear TnT signal, which over the past several weeks has been the right call. The bull-tag failure becomes the trigger.
Bull thesis outside the range. Bear thesis inside the range.
Current Status: Bullish Above (Flipped) 7,267.09 / PFZ 7,231.3 / Target Pending / NATHs 7,517.12 / awaiting bull-tag failure trigger
Gamma Exposure
7,400 anchor breached on Friday. 7,450 secondary spike. 7,500 above. Call wall 7,400 now functioning as resistance rather than support.
The GEX field has rearranged itself. 7,400 sat as both call wall and the anchor at the start of last week. Friday’s -1.24% session pulled price back below it. The level now functions as overhead resistance rather than dealer-hedge support.
7,450 sits as the secondary spike above. 7,500 is the next major node.
Put wall 7,000. Gamma flip 6,739.28. IV 15.27% / IVP 71% / IV Rank 29.38% / HV 11.70%. IV firming as the chart works the downside.
RUT Analysis
Bearish Below 2,854.67. PFZ Level 2,873.87. Target 2,817.4. Daily pushing back into the prior range. Bear thesis live on both timeframes.
RUT is behaving normally. Tagging and turning. The bear TnT printed cleanly with a PFZ Flip and target at 2,817.4.
The daily chart is the bigger story. Price has pushed back into the prior range, which means the broader bear thesis is now live rather than theoretical. The 30-minute setup is the trade. The daily is the context.
Bull thesis outside the range. Bear thesis inside the range. Price inside, bearish.
Current Status: Bearish Below 2,854.67 / PFZ 2,873.87 / Target 2,817.4 / NATHs 2,888.61 / daily back inside range
BTC Analysis
4hr bear trend. Below minus 80% on %R. MACD-v in bear trend. Cat’s whisker from Triangle Target 1 at $76,459.65. Target 2 at $72,500.
BTC is showing the cleanest directional read of the analysis block. The 4hr chart has the bear trend marker set: %R below minus 80% and holding. MACD-v also in a bear trend reading. Current price $77,037, with Triangle Target 1 sitting at $76,459.65.
Phil note: traditional analysis layered with the dust blown off some older systems. The %R below minus 80% is the older-system signal that has held the trend.
Daily chart shows BTC has broken back inside the larger rising range. Triangle Target 2 sits at $72,500 as the lower-range floor.
Current Status: 4hr bear trend / %R below -80% / MACD-v bearish / cat’s whisker from Target 1 $76,459.65 / Target 2 $72,500
Rounding Off
Friday’s reckoning. SPX -1.24%. NazQuack -1.54%. VIX +6.78%. The 10-year ripped 13.6bps to 4.595%. The 30-year cleared 5.12%. Silver lost 9.12% in a single session. The market that had priced peace before peace existed noticed that Hormuz is shut.
Warsh inherits. Sworn in Friday afternoon as the 17th Federal Reserve Chair. Inheritance: PPI at 6%, hottest since January 2023. Core PPI at 5.2%. A $6.7 trillion balance sheet. A Shiller P/E of 42.18, within 5% of the December 1999 peak. A long end approaching a generational ceiling.
The week’s calendar. Walmart Tuesday pre-market sets the consumer tone. Home Depot and Target follow midweek. FOMC minutes and Nvidia after the close Wednesday. Consensus on Jensen: $78B revenue, +78% YoY, EPS $1.77. Polymarket has beat odds near 90%. Wall Street is hoping the tone matches the numbers.
Cross-asset. Brent past $111 overnight. WTI $103. Dollar index 99.21. Gold $4,562 after Friday’s 2.63% slide. The bond move is the actual story. Equities are the second derivative.
Current Status: Shine slipping SPX and NazQuack / Dow failed NATH / Uncle Russ back in prior range / VIX 19 / BTC trending lower / Warsh’s first week / Walmart Tuesday / Nvidia Wednesday
Expert Insights
“The bond market always wins eventually. The equity market just takes longer to notice.”
Paraphrasing a quote often attributed to James Carville, who admitted he was paraphrasing someone else.
The 10-year added 40 basis points across the Iran conflict window and refused to give them back when the ceasefire was announced. The equity tape ignored that signal for eleven weeks. Friday it stopped ignoring it.
The new Federal Reserve Chair was sworn in on Friday afternoon, ninety minutes before the close. The yield curve had already done his job for him by that point.
The discipline this week is to recognise that the bond market has already priced what the equity market is now waking up to, and that the operative trades are the ones that work in both directions: the RUT bear setup that has already triggered, the BTC bear trend that has already confirmed, and the SPX bull-tag failure that has not yet triggered but is the right trigger to wait for.
[Source: James Carville public attribution, paraphrased |
BLS PPI release data, public |
CME FedWatch implied probability data, public]
Fun Fact:
Meme of the Day:
Happy trading,
Phil
Less Brain, More Gain
…and may your trades be smoother than a cashmere codpiece
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