SOXX517.86 broke below 530 and the secular trendline from the 2008 low yesterday. A weekly close well below 530 today would confirm the break and likely mark the beginning of the end.
As I have said before, bubbles do not wait for obvious bad news. They do not need AI demand to collapse or hyperscalers to halt data-center construction. The final break often comes on a quiet day and catches bulls off guard. Amateurs look for a shocking headline and, with hindsight, always manage to find one that appears to justify the move. Remember, news follows price, not the other way around.
ES1!7517.5 is also breaching the lower boundary of the ascending triangle. If it cannot close back above the trendline today, the path of least resistance shifts lower, confirming the immediate breakdown path I outlined on Wednesday https://www.meridianresearch.app/classic/notes/c9d55978-a84a-412c-95d7-fdb44ccb68a7.
Again, both breaks need confirmation before they signal a trend change. Until today's close, neither is confirmed. Key levels often take several attempts to break, and bulls will throw everything they have at defending them.
For anyone who has not built a short position and is feeling FOMO, do not worry. We are still somewhere between the bull trap and return to normal, perhaps only beginning to enter fear. The fat part of capitulation has not even started.
Trump's speech last night was also underwhelming. There was no material update on Iran, and equity bulls waiting for Trump to TACO got nothing.
U.S. strikes on Iran have now run for six straight nights. Weekend escalation risk remains high. The Strait of Hormuz remains effectively closed, while the SPR is still being drawn and now sits at its lowest level since 1983. If the fighting continues, oil is likely to keep moving higher over the coming weeks and months.
Continued U.S. involvement is not in America's interest. Looking back, the war may have initially served as a convenient distraction from the Epstein files. Trump should have pulled back. Instead, he has stayed in it for 4.5 months, with no sign of a near-term end. Perhaps Netanyahu has leverage over him, or perhaps the war is simply too profitable for too many people around him. Either way, this is increasingly looking like the long war I warned about when it began.
The longer this drags on, the more pressure it puts on risk assets. Higher oil -> higher yields -> lower multiples for long-duration assets.
I also want to touch on gold before the weekend. If the AI bubble bursts, investors will look for somewhere else to hide, and many will turn to gold as a safe haven during periods of uncertainty and equity drawdowns.
I repeated this every few days throughout Q1, and it is worth repeating now. Gold tends to outperform pre- and post-crisis but trades like a risk asset during a crisis. Once the floodgates open, nothing survives, including gold. If the AI bubble bursts, gold will likely fall with equities instead of acting as a safe haven.
This is especially true in the current macro setup. The SPR is still being drawn, Hormuz traffic shows no sign of normalizing, and the 3-2-1 crack spread continues to hit record highs. Oil and refined products are keeping inflation pressure alive and pushing yields higher, adding another direct headwind for gold.
As I said a few weeks ago, gold must decouple from yields and the dollar before it can stabilize and start grinding higher. This remains the most important signal for anyone eager to buy gold dips. Technically, 3.9K-4K remains solid ST support.