Stocks Stopped Reading The Headlines.

We are looking at a very much struggling rally on the stock indexes. Prices are grinding higher but the VIX remains at its elevated levels, so there is some fear ready to hedge or unload on a hair trigger’s notice.

There were more strikes overnight and the same stock indexes don’t seem to be bothered one way or the other. I think it’s fair to say they are conditioned to now ignore what’s going on. It’s old news.

Also, the way the news would have you think – same news cycle, “Oil Jumps 3%… blah blah blah” – you’d think that was a huge move. Look at it in context. Oil has not even moved past yesterday’s high-to-low range, let alone moved beyond what a typical day does. More examples of the talking heads trying to make something bleed on the lead and over-sensationalize non-news events. (Hard eye roll.)

BTC, however, is being kicked in the shins. And of course we remain bearish from the larger range highs targeting the range lows. Regular as clockwork. I can almost hear the screams of the Alt fans saying “but it’s Alt season, it’s supposed to go up.” And in my best hooded-emperor-of-the-dark-side voice: Good. Let the hate flow through you.

Over on the Tag ‘n Turns: SPX is grinding sideways with the Bollinger Bands pinching. More of the same?

RUT has finally exited the bull extreme but as we have the signals already flipping and being ignored, we need to wait out 1-2 days for a bear signal. Otherwise it’s the bull resumption signals (bull PFZs) that are the signal. We are also not too far away from a pinch point on the BBW – so waiting for that and then a subsequent breakout will be the safe choice.

Market Briefing:

Thursday 28 May – PCE tomorrow, Warsh’s first as Chair. Strikes overnight, the tape unmoved.

• US forces struck an Iranian military site overnight / IRGC said they hit a US airbase / drones came down / Brent cleared $97 then faded

• Stock indexes shrugged: ES -0.30% / NQ -0.50% / RTY -0.40% / all just off Tuesday’s records / VIX 16.68 +2.39% – the only number reading the news

• BTC fell to $73,205, down 1.49% / BlackRock IBIT posted its second-largest outflow on record / the geopolitical hedge sold off into the geopolitical event

• Gold barely moved near $4,480 / the original crisis hedge shrugged whilst the digital one bled

• Today: Salesforce, Synopsys, Agilent, HP, Dick’s reported after Wed close / PCE Friday 08:30 ET is the print Warsh watches most

Market Snapshot

• ES: 7,531.25 / -23.00 (-0.30%) / NATHs 7,569.75 / dozing near Tuesday’s record

• YM: 50,676 / -112 (-0.22%) / NATHs 51,209 / Uncle Dow easing

• NQ: 29,974.25 / -151.00 (-0.50%) / NATHs 30,379 / Nazquack giving a little back

• RTY: 2,917.70 / -11.80 (-0.40%) / NATHs 2,952.00 / Uncle Russ cooling off

• GC: 4,419.20 / -35.70 (-0.80%) / actual gold shrugging at the strike

• CL: 90.29 / +0.88 (+0.98%) / “3% jump” that never cleared yesterday’s range

• VIX: 16.68 / +0.39 (+2.39%) / the one asset paying attention

• BTC: 73,205.51 / -1,110.47 (-1.49%) / kicked in the shins

Tag ‘n Turn

• SPX grinding sideways with the Bollinger Bands pinching – more of the same.

• RUT has finally exited the bull extreme but signals are flipping and being ignored, so wait 1-2 days for a bear signal or trade the bull PFZ resumptions.

• BTC bearish from the range highs to the range lows, regular as clockwork.

SPX Analysis

Grinding sideways with the Bollinger Bands pinching. More of the same. Bearish Below 7,515.44, PFZ 7,539.09, Target 7,460.85.

SPX is grinding sideways with the Bollinger Bands pinching. More of the same.

The BBW + Pinch Points indicator is compressing toward a pinch. When that completes, the subsequent breakout is the read.

Current Status: Bearish Below 7,515.44 / PFZ 7,539.09 / Target 7,460.85

Gamma Exposure

Gamma flip 6,856.82, well below cash. Put wall 7,400, call wall 7,500. Big call gamma node at 7,600. IV 13.77%, IV Percentile 44%.

The flip sits well below cash, deep in positive gamma. The put wall is at 7,400 and the call wall at 7,500, with the largest call gamma node on the board at 7,600.

IV at 13.77% against historic 10.13%, with IV Rank 19.83% and IV Percentile 44%.

Current Status: Flip 6,856.82 / Put Wall 7,400 / Call Wall 7,500 / IV 13.77% / HV 10.13% / IVR 19.83% / IVP 44%

RUT Analysis

RUT has finally exited the bull extreme but the signals are already flipping and being ignored. Wait 1-2 days for a bear signal, otherwise the bull resumption signals (bull PFZs) are the signal. Not far from a BBW pinch point – waiting for that and then a subsequent breakout is the safe choice.

RUT has finally exited the bull extreme. As we have the signals already flipping and being ignored, we need to wait out 1-2 days for a bear signal. Otherwise it’s the bull resumption signals (bull PFZs) that are the signal.

We are also not too far away from a pinch point on the BBW – so waiting for that and then a subsequent breakout will be the safe choice.

Current Status: Bullish Above (Flipped) 2,923.04 / PFZ 2,912.69 / Target Pending

BTC Analysis

BTC being kicked in the shins. Bearish from the larger range highs targeting the range lows. Regular as clockwork. The Bear Flag Target sits near 72,000.

BTC is being kicked in the shins. We remain bearish from the larger range highs targeting the range lows. Regular as clockwork.

The Bear Flag Target annotation on the chart sits near 72,000. For an asset marketed as the hedge against precisely this kind of geopolitical event, BTC has done the opposite again – BlackRock’s IBIT posted its second-largest outflow on record. The range-high-to-range-low playbook continues to print on schedule.

Current Status: Bearish range highs to range lows / Bear Flag Target ~72,000

CL Analysis

Oil “jumped 3%” overnight per the headlines. In context it has not even cleared yesterday’s high-to-low range, let alone moved beyond what a typical day does.

The overnight strike headlines pushed crude higher and the talking heads called it a 3% jump. Put it on the chart and it has not even cleared yesterday’s high-to-low range, let alone moved beyond what a typical day does.

More of the talking heads trying to make something bleed on the lead and over-sensationalize a non-news event. If actual strikes can’t push crude past a normal daily range, there isn’t much to the move.

Current Status: Inside yesterday’s range / non-event

Rounding Off

The War Resumed. The Tape Pressed Snooze. US forces struck an Iranian military site overnight, the IRGC said they hit a US airbase, drones came down, and the stock indexes opened lower by less than half a percent. The textbook supply-shock reaction arrived in oil and nowhere else. Stocks are conditioned now – thirteen-plus weeks of Hormuz headlines have trained the tape to treat fresh escalation as background hum. The grind continues, the Bollinger Bands pinch, and the only asset registering any concern is the VIX at 16.68.

The Hedge Hedged Against Itself. Bitcoin, the asset marketed for exactly this moment, fell 2.2% into the strike. Gold, the unfashionable original, barely moved near $4,480. BlackRock’s IBIT posted its second-largest outflow on record. Digital gold sold off, actual gold shrugged, and the geopolitical hedge led the losses on the day of the geopolitical event. Warsh, four days into the job, now has a 3% oil spike feeding inflation just as Friday’s PCE lands. Welcome to the chair.

Expert Insights

Bitcoin was sold as the hedge against everything – the asset that would shine in exactly the scenario that played out overnight. The strike came, the drones came down, and the supposed crisis hedge fell 2.2% whilst the 5,000-year-old crisis hedge sat still. The “this time it’s different” thesis on digital gold met its test and declined to participate.

The discipline isn’t about being right on whether BTC eventually becomes a hedge. It’s about reading what the asset actually does in the moment rather than what the marketing said it would do. The chart said range-high-to-range-low, regular as clockwork. The marketing said hedge. The chart was the one telling the truth.

[Source: Sir John Templeton, widely attributed across investment literature, public]

Fun Fact:

Gold has served as a store of value for over 5,000 years. The first standardized gold coins were minted around 600 BC in the kingdom of Lydia, in what is now western Turkey, under King Alyattes and later his son Croesus – whose wealth gave rise to the phrase “rich as Croesus.”

Bitcoin, by contrast, has existed since 2009 – roughly 15 years.

On a day when US forces struck Iranian targets and the textbook crisis-hedge reaction was expected, the 5,000-year-old hedge barely moved near $4,480 whilst the 15-year-old “digital gold” fell 2.2%. The original declined to flinch. The upstart led the losses. Croesus, one suspects, would have had opinions.

[Source: British Museum / historical numismatics record, britishmuseum.org, public]

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T2 Markets

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