Trading Desk

We have seen a rotation from AI themes to more defensive plays since November, with DJI outperforming. Now the question is whether the defensive trade is coming to an end, and what comes next. Will the market re-embrace AI themes? I don’t think so.

The patterns below are rare. SPX and DJI have not completed their final legs, which partly explains the recent choppy tape, while NDX completed its final leg earlier and has been in distribution mode for the past few months.

Commodities and equities have followed our script. Gold and silver have made new ATHs and are pushing toward our targets of 5K and 100, respectively, while SPX, NDX, and DJI have started to reverse. I’ve warned about this several times, but I’ll reiterate it once again: the sharp rise in gold and silver is not good. It’s very, very, very bad. Historically, moves like this have often been followed by major equity corrections, and I expect this time to be no different.

XAUUSD Breakout level at 4530 is acting as support for now.

US10Y Yields continue to rise alongside Gold and Silver. Warning signs cannot be more dire.

MAGS (Magnificent 7) remains under pressure even as SPX printed an ATH. If it breaks below 63, it could get ugly.

XAGUSD sits more than 20% above the upper Bollinger Band. Once it enters a correction, we could easily see a 20-40% fall.

SPX

XAGUSD Gold and silver continue to outperform. I still see gold ultimately working higher toward 5,000 and silver toward 100.

Historically, gold tends to outperform both before and after crises, but during crisis it can trade more like a risk asset - often dipping alongside equities during sharp drawdowns.

This cycle may not be any different.

XAUUSD Gold and silver continue to outperform. I still see gold ultimately working higher toward 5,000 and silver toward 100.

Historically, gold tends to outperform both before and after crises, but during crisis it can trade more like a risk asset, often dipping alongside equities during sharp drawdowns.

This cycle may not be any different.

DJIIndices rallied sharply as we expected. Timing tops is extremely difficult, especially when trying to call the final leg of the broadening patterns shown below (charts showing the best scenario for bulls). The completion of the final leg does not require tagging the upper resistance line; it could reverse at any time. What we’re witnessing is the market’s last dance before the music stops.

SPX NDX

Indices rallied sharply as we expected. Timing tops is extremely difficult, especially when trying to call the final leg of the broadening patterns shown below (charts showing the best scenario for bulls). The completion of the final leg does not require tagging the upper resistance line; it could reverse at any time. What we’re witnessing is the market’s last dance before the music stops.

Given NDX's relative weakness, I doubt this scenario will play out.

XAUUSD, LT resistance sits around 5k, which is our target for 2026. Historically, gold tends to outperform both pre and post crisis and during crisis it often behaves more like a risk asset. The surge in gold price suggests a looming crisis.

Similar topping / distribution-like patterns are showing up on SPX and DJI, though they're not fully complete yet.

DJI, similar to $SPX

The bellwether remains weak despite Jensen's attempts to talk it up. More importantly, NVDA and NDX have been lagging for months while SPX pushed to new ATHs—that's not a healthy divergence.

SPX 1h, close-up

My base case is that NDX closes below resistance on Friday. I'm placing SL on NQ at 26k

NDX on the longer timeframe, the structure appears heavy—price is pressing into overhead supply rather than breaking cleanly through it.

SPX Daily, closed below resistance

BTC1!
Rejected

Chart: Binance BTCUSDT perpetual · Asset Tag: CME Bitcoin futures (BTC1!).

Opened short at 190.5

NVDA

GB10Y