7 Trades. 7 Wins. The SaaSpocalypse Can Wait.

Well, if Monday was my bad start to the month – Tuesday more than made up for it.

7 trades. 7 wins. A full bag of Poppers and swingers. Including a $90 Morning Pulse at 90% ROC and a RUT Tag ‘n Turn swing at 95.7%.

Today is a new day. The overall bear thesis is still in play for the swings. Time decay is doing its thing while the days yoyo around. And once again, I’m awaiting the opening bell to see if there are more morning Poppers.

Meanwhile, the rest of the market? Absolute carnage. Anthropic launched a legal AI tool and $285 billion in software stocks evaporated. PayPal crashed 20%. Bitcoin hit its lowest since the election. They’re calling it the “SaaSpocalypse.”

We just traded the range.

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Market Briefing:

Multi-Market Status

SPX: Bearish at Upper Range. Current 6,917.82. Target Range Lows around 6,840. BB %b at 0.32 showing price in lower half of bands. MACD-V bearish. The bear swing continues grinding lower. Time decay working whilst price yoyos.

RUT: Bearish at Upper Range. Current 2,648.49. Target Range Lows around 2,520. The head and shoulders pattern remains textbook – left shoulder, head at NATH (2,735), right shoulder complete. Price back around the neckline area. Pattern intact.

ES Futures: 6,948.75 – hovering mid-range. 5% correction levels still marked but never tested.

NQ Futures: 25,442.50 – tech under pressure from SaaSpocalypse and AMD’s weak outlook.

YM Futures: 49,474 – old economy holding up. Transports hit ATH Monday.

RTY Futures: 2,665.1 – small caps bouncing but H&S structure unchanged.

Gold: $5,074.2 – continuing its recovery. Now back above $5,000 after the crash to $4,617. Deutsche Bank was right: positioning unwind, not fundamental.

VIX: 17.90 – slightly elevated. Enough to fatten premiums.

Bitcoin: $76,077 – touched $72,884 Tuesday. Lowest since November 2024 election. Bitwise CIO declared “full-bore 2022-style winter.” Fear & Greed at 14. Half a trillion erased in a week.

Tuesday’s Trades: The Redemption Round

After Monday’s gong, Tuesday delivered the complete opposite. 7 trades. 7 wins. Here’s every one:

SPX Premium Popper #1: $25 index move / 61.5% ROC Bear break off ORB20. Price broke lower, collected premium. Clean setup.

SPX Premium Popper #2: $20 index move / 58.3% ROC Continuation bear break. ORB20 doing exactly what it does.

SPX Premium Popper #3: $24 index move / 64.3% ROC Third BO – the system kept giving and the setups kept working.

SPX Morning Pulse: $90 index move / 90.0% ROC Bearish at Upper Range. The big one. Entered at the range highs and rode the move down. 90% return on capital. This is what the Morning Pulse does when the range setup aligns.

RUT Tag ‘n Turn: $30 index move / 95.7% ROC Bearish at Upper Range. PFZ flip confirmed the direction. Nearly full return on capital. The TnT swing doing what it does best in range-bound conditions.

RUT Premium Popper: $10 index move / 65.5% ROC Bear break off the VWAP area. Smaller move but solid return.

RUT Premium Popper (Range Reversal): $14 index move / 64.5% ROC Range reversal pattern. Price hit the upper boundary and reversed. Classic.

Tuesday’s Totals:

• Trades: 7

• Wins: 7

• Win Rate: 100%

• Total Index Points: $213

• Average ROC: 71.4%

• Best Trade: RUT TnT 95.7% ROC

February Running Total:

• Monday: 0/1 (gong)

• Tuesday: 7/7 (perfect)

• Week: 7/8 (87.5%)

One bad day doesn’t make the week. One good day can turn it around. Process over emotion. Every single time.

The SaaSpocalypse

While we were collecting Premium Poppers, the software world was having an existential crisis.

What happened: Anthropic launched a legal AI tool that can do in seconds what armies of legal analysts do in hours. The market’s reaction was immediate and brutal.

The Carnage:

• Goldman Sachs software basket: -6% (worst day since April)

• RELX: -13%

• Thomson Reuters: -16%

• LegalZoom: -20%

• CS Disco: -12%

• ServiceNow: -7% (now -28% YTD)

• Salesforce: -7% (-26% YTD)

• Intuit: -11% (-34% YTD)

• iShares Software ETF: down 20% YTD

Total damage: $285 billion in market cap erased.

Jefferies called it “get me out” selling. JPMorgan said the sector isn’t just “guilty until proven innocent” but “sentenced before trial.”

Even private equity got hit: Blue Owl, TPG, Ares, KKR all down double digits. The market is asking: if AI replaces the workers, who needs the software the workers use?

The winners: Old economy. Procter & Gamble. FedEx. Union Pacific. Transports hit all-time highs on Monday. Walmart crossed $1 trillion market cap. The stuff that can’t be replaced by a chatbot.

The Crypto Winter Returns

Bitcoin’s slow-motion breakdown accelerated Tuesday:

• Touched $72,884 – lowest since November 2024 election

• Down 39% from peak

• Bitwise CIO officially declared “full-bore 2022-style winter”

• Fear & Greed Index: 14 (Extreme Fear)

• Half a trillion dollars erased in one week

For context: this price level means Bitcoin has given back every single cent it gained since Trump’s election victory. The entire “crypto president” trade has been unwound.

Gold meanwhile continues recovering – back above $5,000 at $5,074. The “real” safe haven slowly reasserting itself whilst the “digital” one keeps sliding.

New Day, Same Plan

Let’s not get carried away by Tuesday’s perfect day. The plan remains:

Bear swings: Still active on both SPX and RUT. Time decay is doing its thing. The days yoyo up and down but the theta clock ticks in our favor. No harm, no foul.

Morning Poppers: Awaiting the opening bell again. Yesterday the bears showed up at the ORB20. Today might be different. The system will tell us – we don’t predict.

The range: SPX still between range highs (~7,000) and range lows (~6,840). RUT H&S still intact. The structure hasn’t changed just because one day was perfect and one day was a gong.

Tonight: Alphabet reports after close. $2.64 EPS expected, $111.48B revenue. The question isn’t whether Google beats – it’s whether anything can stop the software bleeding.

The Week So Far

Still to come:

• Wed 4 Feb: ADP Employment (48K exp), ISM Services (53.6 exp)

• Thu 5 Feb: Unemployment Claims (213K exp)

• Fri 6 Feb: NFP (67K exp) – if government reopens, currently postponed

Expert Insights

The SaaSpocalypse Thesis: Real or Overblown?

The market’s reaction to Anthropic’s legal AI tool raises a fundamental question: is software dead, or is this an overreaction?

The bear case: AI agents can now perform tasks that previously required expensive software AND the humans to operate that software. If an AI can draft legal documents, process invoices, and analyze data, why do companies need Salesforce, ServiceNow, or Intuit? The entire SaaS business model – charging per seat for software humans use – faces an existential threat when AI removes the human from the equation.

The bull case: Every major software company is integrating AI themselves. Salesforce has Einstein. ServiceNow has Now Assist. These platforms have decades of enterprise data and integrations that can’t be replicated overnight. The -6% basket decline looks like panic selling, not fundamental reassessment.

The reality: Probably somewhere in between. Some software will be replaced entirely. Some will be enhanced. And some – like Palantir at Rule of 40 of 127 – will be the ones doing the replacing.

For traders, the SaaSpocalypse creates volatility. Volatility creates premium. Premium is what we sell. The existential questions are fascinating but irrelevant to the opening bell.

Fun Fact:

The $285B SaaSpocalypse in Context

Tuesday’s $285 billion software rout triggered by Anthropic’s legal AI tool wasn’t just the sector’s worst day since April – it may mark the beginning of a structural repricing of the entire SaaS business model.

Consider how quickly the thesis changed: in 2023, AI was going to boost software companies by making their products smarter. In 2024, software companies were the “picks and shovels” of the AI revolution. By early 2025, the question shifted to “does AI replace some software?” By February 2026, the market is pricing in “AI might replace most software workers AND the software they use.”

The iShares Software ETF is now down 20% year-to-date. ServiceNow, the poster child of enterprise SaaS, has lost 28% this year. Intuit, which helps small businesses with accounting, has shed 34%. The market is essentially saying: if AI can do accounting, legal, and customer service, who’s paying $150 per seat per month for software?

Meanwhile, the companies building the AI are thriving. Palantir’s Rule of 40 at 127. Super Micro’s revenue 24% above estimates. The money isn’t disappearing from tech – it’s moving from software that humans use to AI that replaces humans.

[Source: Goldman Sachs software basket data, iShares Software ETF performance, Q4 earnings reports]

Trade well,
T2 Markets

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