The Reset Button Pressed Itself.

Friday was long overdue and hopefully the first of many. Perhaps less stonks-and-only-goes-up moves to a little more to’ing and fro’ing like Uncle Russ or the Dow have been doing. But before then – let’s get the reset button pressed.

Will there be a 10% corrective move? Despite my own biases – probably not. Some more akin to a sideways range is more probable. Although I’m not completely shut off to it. Anything can happen.

The great thing about opinions is we all have one, and we’re usually wrong. Lol. This is why I much prefer rules. The system is going to tell me what to do next, and that’s why I’m making the Benjamin’s without having to worry about being right or wrong. I just need to place the trades, collect the theta, and play the odds.

Thinking about my swings – waiting for the SPX break down and out, or up and out for that matter, before returning to the swings. What turned out to be mostly a month off through May was definitely the right thing to do. A little patience is paying off quite nicely – and we hit the ground running harder than Wile E Coyote trying to catch the Road Runner. Meep meep.

RUT also the same, but a lot clearer and cleaner. Both had clear breakout-pullback setups on Friday, and both have the %R in a strong bearish trend mode, as is the MACD-v. For the moment we don’t want to fight that. Waiting for a more conservative entry, or for price to be out of the extreme readings before thinking bullish again, may be wise.

The overnight futures are trying to push for a small uptick, but it is by no means recovering or bouncing – dead cat bounce style. This could well be a pause before the next leg down. The post-Friday-sell-off data suggests we could see Monday go either way – but it’s the post-dust-settling data that gives us the biggest clue. Historically it’s better to wait for 1-2 days, so after Wednesday, before the real recovery may happen – assuming we don’t go full correction. And even then, we may see the same start of the recovery Thursday/Friday.

GEX is weakly showing not clues – but is more negative GEX and resistance at 7400.

BTC has been my little work horse – just following the roadmap we laid out a few weeks ago now. Range highs to lows – breakout – breakout target met. There is a possible next target to the 50k level, but I’d expect a pause or consolidation here first before we see a move in either direction.

CL crude oil has been on my watch list in the same way the other charts have been – we have a consolidation that is just waiting for the move to trigger one way or the other. We did look at the 60min range marked on the chart as a possible pattern trigger for the next move. While it did break down and run to its pattern target, there was no pullback to use as the entry pattern before price reversed. I’ve marked my bull and bear triggers and will look for retests of the anchored VWAPs to join the party – assuming there is a party to join. We could just as easily see price continue to grind out a new range zone.

Such is life.

PopPop

Market Briefing:

Monday 8 June – the trading session after the Friday on which Wall Street spent the morning discovering that a healthy economy is a personal attack. May Non-Farm Payrolls printed at 172,000, roughly double what anyone forecast. The S&P fell 2.6%. The Nasdaq fell 4.8%. Roughly one trillion dollars was erased before lunch, which the tape absorbed with the composure of a dropped tray.

• Friday’s reset: SPX 7,383.74 -2.64% / Nasdaq 30,389 -4.8% / Dow -3 (-0.01%) / RUT 2,880.89 +0.34% (small caps, the news copy noted, were not invited to the crisis)

• The chip names that built the rally dismantled it in formation: Marvell -16.7%, Micron -13.25%, Nvidia -6.2%, AMD -6%+ / a beat-and-fade pattern that began with Broadcom and has now become a personality

• VIX leapt 40% to 19.82 / 10-year yield pushed past 4.5% / Brent topped $96 after Iran fired missiles at Israel (all intercepted) – markets filed this under “fragile ceasefire” rather than the more accurate “not a ceasefire”

• Today’s calendar: Consumer Credit later this session. Wednesday: Oracle reports on whether enterprises are still funding the AI build-out everyone keeps citing as a reason to sell everything else. Target and Nasdaq hold annual meetings, where someone will use the word “resilient”

• Warsh chairs his first FOMC on 16-17 June – hired to cut, handed a jobs report arguing he should not. Markets price a hold near 65% and quietly eye hikes

• BTC 63,448 / spot ETFs bled $4.4bn across 13 straight sessions (a record), flipping 2026 flows negative for the first time since launch / Strategy ~$10bn underwater on coins bought near $75,700, a position now called conviction

Market Snapshot

• ES: 7,419.00 / +51.00 (+0.69%) / NATHs 7,632.25 / pre-market trying to push, not recovering

• YM: 50,810 / -3.00 (-0.01%) / NATHs 51,849 / Uncle Dow flat after the smash

• NQ: 29,211.00 / +381.75 (+1.32%) / NATHs 30,785 / Nazquack trying for the dead-cat-bounce

• RTY: 2,852.40 / +34.20 (+1.21%) / NATHs 2,952.00 / Uncle Russ continuing the up-day-down-day rhythm

• GC: 4,314.00 / -39.90 (-0.92%) / haven bid easing

• CL: 94.62 / +4.37 (+4.84%) / above the consolidation, between the bull and bear triggers

• VIX: 19.82 / -1.68 (-7.81%) / off Friday’s spike but still elevated, year low 13.38 a distant memory

• BTC: 63,448.13 / +145.40 (+0.23%) / green while the blue chips bled, an outcome nobody ordered

Tag ‘n Turn

SPX waiting for the break down-and-out or up-and-out before returning to swings.

RUT same setup but cleaner.

BTC roadmap target met, pause or consolidation expected before the next move.

CL consolidation with bull trigger 97 and bear trigger 89.68 set.

Four waits on four charts. SPX with strong bear %R and bear MACD-v extremes – the kind of readings the rules say not to fight. RUT identical setup with cleaner lines. BTC having done what the roadmap asked of it, now waiting to see whether 50k follows. CL having broken its 60min range to target without offering a pullback for the entry. The talking heads who described the rally for sixty-five days are now describing the smash with the same conviction and an entirely new set of reasons.

SPX Analysis

Waiting for the SPX break down-and-out or up-and-out before returning to swings. A month off through May was definitely the right thing to do. Patience paying off quite nicely – hit the ground running harder than Wile E Coyote trying to catch the Road Runner. Meep meep. NATHs 7,620.90. 30-min close 7,383.73.

Thinking about my swings – waiting for the SPX break down-and-out or up-and-out for that matter before returning to the swings.

What turned out to be mostly a month off through May was definitely the right thing to do.

A little patience is paying off quite nicely – and we hit the ground running harder than Wile E Coyote trying to catch the Road Runner. Meep meep.

Gamma Exposure

GEX weakly showing not clues – more negative GEX with resistance at 7400. Gamma flip 7,550.01. Put wall 7,400. Call wall 7,400. IV 16.61%. IV Percentile 83% (up from 26%).

GEX is weakly showing not clues – but is more negative GEX and resistance at 7400.

The gamma flip has lifted again to 7,550.01 with cash at 7,383.74 – cash is now below the flip, in the negative-gamma regime. Put wall and call wall both sit at 7,400 – the same compression strike as the prior session, now acting as overhead resistance rather than a coiled level.

IV at 16.61% against historic 12.40%, with IV Rank 37.88% and IV Percentile 83% – a marked jump from Friday’s 26%.

RUT Analysis

RUT same setup as SPX but a lot clearer and cleaner. Both had clear breakout-pullback setups on Friday. Both have %R in strong bearish trend mode as is the MACD-v. Don’t fight it. Wait for conservative entry or price out of extreme readings before thinking bullish. NATHs 2,942.41. Daily close 2,880.89.

RUT also the same, but a lot clearer and cleaner.

Both had clear breakout-pullback setups on Friday, and both have the %R in a strong bearish trend mode, as is the MACD-v.

For the moment we don’t want to fight that. Waiting for a more conservative entry, or for price to be out of the extreme readings before thinking bullish again, may be wise.

BTC Analysis

BTC: little work horse. Following the roadmap we laid out a few weeks ago – range highs to lows – breakout – breakout target met. Possible next target 50k. Expect pause or consolidation here first before move in either direction.

BTC has been my little work horse – just following the roadmap we laid out a few weeks ago now.

Range highs to lows – breakout – breakout target met.

There is a possible next target to the 50k level – but I’d expect a pause or consolidation here first before we see a move in either direction.

The 4hr chart shows the full descent from the daily range highs near 82,000, through the Smaller Range Breakout Target at 70,000, into the Larger Range Breakout Target zone at the 60,000 level (now reached as marked on both daily and 4hr). Current 63,116. The Bear Entry annotation at 76,385 with Stop Loss 77,834.55 sits well above the action.

CL (Oil) Analysis

CL consolidation waiting for the trigger. 60min range broke down and ran to its pattern target on Friday but no pullback for entry. Bull trigger 97. Bear trigger 89.68. Looking for VWAP retests to join the party – assuming there is a party to join. Could grind out a new range zone instead.

CL crude oil has been on my watch list in the same way the other charts have been – we have a consolidation that is just waiting for the move to trigger one way or the other.

We did look at the 60min range marked on the chart as a possible pattern trigger for the next move. While it did break down and run to its pattern target, there was no pullback to use as the entry pattern before price reversed.

I’ve marked my bull and bear triggers, and will look for retests of the anchored VWAPs to join the party – assuming there is a party to join.

We could just as easily see price continue to grind out a new range zone.

Rounding Off

The Economy Worked, So Everyone Panicked. Wall Street spent Friday discovering that a healthy economy is a personal attack. The May payrolls print came in at 172,000 jobs – roughly double the highest of the consensus forecasts that on Friday could not agree on itself within forty-five thousand jobs. E-mini S&P 500 futures dropped 2.6%. Nasdaq 100 futures shed 4.8%. The logic was impeccable: a strong labor market means rate cuts never arrive, and the rate cuts were the only thing holding the chip rally together. So the chips went. Marvell -16.7% before the bell. Micron -13.25%. Nvidia -6.2%. AMD more than 6%. The very names that carried the S&P to its 7,600 record last week were now carrying it back down with equal enthusiasm. Wall Street, having spent months insisting the economy was strong, reacted to confirmation of that strength as though someone had read its bank statements aloud in public. The Russell rose 0.34%, because small caps were apparently not invited to the crisis. Brent topped $96 after Iran spent the weekend firing missiles at Israel – all intercepted – which markets filed under “fragile ceasefire” rather than the more accurate “not a ceasefire.” The VIX leapt 40% to 21.5, the market’s preferred way of admitting it had not seen this coming despite forecasting it monthly.

What’s In Front Of Me Today. The reset I’d been waiting on for sixty-five days arrived in a single afternoon. The system kept me out of the swings for most of May, and a little patience is now paying off. Today’s job is to wait – SPX break down-and-out or up-and-out, RUT the same with cleaner lines, BTC pause or consolidation here at the roadmap target, CL bull trigger 97 or bear trigger 89.68 with the VWAP retests as the entry pattern. Dead cat bounce is in play in the overnight futures – not recovery, not bouncing, just a pause. Historically the real recovery starts 1-2 days after Wednesday, so Thursday or Friday. Assuming no full correction. Anything can happen. The great thing about opinions is we all have one and we’re usually wrong – which is why I prefer the rules. Place the trades. Collect the theta. Play the odds.

Expert Insights

A month off through May was, the chart now confirms, the right trade. Friday’s smash compressed approximately two months of theoretical “should be down” into a single afternoon. The names that built the rally led the unwind. The talking heads who described the rally are now describing the smash. The reset button has been pressed. The rules-versus-opinions thesis has had a particularly clean confirmation on a one-trillion-dollar tape.

Livermore’s “sitting” line is not about doing nothing. It is about not doing the wrong thing while waiting for the right thing. May offered the wrong things. June, beginning with Friday, may offer the right ones – or it may offer a sideways range. Either is tradeable through the system. Neither is tradeable through opinion. Today’s job: wait for the SPX break, watch the RUT mirror it, hold the BTC roadmap pause through the consolidation, watch the CL triggers for the VWAP retest entry. Place the trades the system prints. Collect the theta. Play the odds. Repeat.

[Source: Jesse Livermore via Edwin Lefèvre, Reminiscences of a Stock Operator (1923), public domain]

Fun Fact:

The “Fear and Greed Index” mentioned in Friday’s news copy – which printed 11 on 3 June, deep in the “extreme fear” zone – actually exists in two distinct forms.

The CNN Business Fear & Greed Index (originally CNN Money) measures US stock market sentiment using seven equally-weighted indicators: stock price momentum (S&P 500 vs its 125-day moving average), stock price strength (52-week highs vs lows on the NYSE), stock price breadth (the McClellan Volume Summation Index), the put-call ratio, junk bond demand (the yield spread vs investment-grade bonds), market volatility (the VIX vs its 50-day moving average), and safe-haven demand (stock returns vs Treasury bond returns). The index runs from 0 (extreme fear) to 100 (extreme greed), with 50 being the neutral midpoint.

The Crypto Fear & Greed Index referenced in the news copy is a separate index, created by Alternative.me in 2018, using different inputs: volatility, market momentum and volume, social media sentiment, market dominance, surveys (until 2021), and Google Trends search behavior. It runs on the same 0-100 scale.

A reading of 11 sits in the lowest band of the scale and is typically considered “extreme fear” – the band where, historically, the index has tended to read in the immediate aftermath of major capitulation events rather than ahead of them. The index is widely used as a contrarian indicator, on the logic that extreme fear has historically clustered around medium-term bottoms more often than around medium-term tops, though this is not a guarantee in any given cycle.

It is worth noting that the index measures sentiment, not price – and sentiment-based contrarian signals work best in conjunction with price-based confirmation, which is, broadly, what every chart this morning has been telling us to wait for.

[Sources: CNN Business Fear & Greed Index methodology documentation;
Alternative.me Crypto Fear & Greed Index methodology; public]

Trade well,
T2 Markets

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