SEVEN Critical Charts I'm Watching Here:

Market Context:

1. 1. Positioning is a MINE FIELD…
2. 2. Crowded trades are everywhere, and consensus is becoming dangerous.

PLAN:

We’ll go through each Top Chart Setup, focusing on the WHY and most importantly, WHY NOW.

By the end of this report, we’ll build a complete plan with key signals to watch, and how we’ll be navigating markets from here.

Have a great week ahead!

Let me know if you like this new special format, and we might turn it into a recurring feature…

CHART 1: STOCKS

THE TOP STOCK CHART I’M WATCHING:

Breadth is near the most oversold levels in recent years. Stocks remain in a range for now, while this sets the table for an upside resolution in time, pending a clear catalyst:

MARKET CONTEXT:

Stocks with a Bullish Cross are approaching an oversold Buy signal. There may be residual volatility in this range, as the red line continues to fall — but at this pace, signals will be oversold quite soon. I strongly believe this will help identify the start of a big rally. Monitoring for a turn UP:

Funds just went through one of the biggest deleveraging phases of the last decade (source GS):

Here’s the historical chart — showing when funds cut exposure this quickly. In summary… start thinking about “loading the boat”:

Core Risk is dropping quickly again. There’s no strong signal either way yet, but at the pace this is moving, it could get oversold relatively soon. Will be watching this closely as well:

At the beginning of the month, I wrote a series of reports making the case for a choppy range as the most likely outcome for the month of September.

Halfway into the month, the range has played out in textbook fashion — and I think it likely continues to test both sides for now:

SUMMARY:

• ✅ Historically, it didn’t pay to get overly bearish in these conditions.
• ✅ Continue to think Stocks should remain in a range for now, and buying breakouts / selling breakdowns will be punished.
• ✅ Don’t get chopped up, let the market come to you...
• ✅ If there’s residual downside, it most likely would not be sustained — and Core Models would fire strong Buy signals (pending). If we get these triggers, I will press exposure aggressively for a rally. Stay tuned.

CHART 2: VOLATILITY

THE TOP VOLATILITY CHART I’M WATCHING:

Volatility Clock — Stocks have gone 31 days without a 1% decline. Historically, after these levels were reached, the first down day tended to signal a TACTICAL shift in market volatility (will update):

MARKET CONTEXT:

Investors are preparing for a Volatility spike, and buying massive amounts of VIX Calls. This behavior occurred before some important market pullbacks — as shown by the vertical lines. But there were also times where VIX Call buyers got it WRONG — see early 2023, early 2024, Sept 2024, to name a few. Overall, it’s clear that many investors see value in hedging risk with VIX Calls here. It’s a fairly cheap hedge, with VIX recently at ~14 and VVIX at low 80s — more on this next…

VIX bottomed at key support range, spiked to ~18 this week, tested the 200d, and then plunged on Friday — the rollercoaster has begun:

This could be the beginning of a tactical turn in volatility…

Above: note the VIX gap at 14.53.

If VIX retests that area, I will Buy a VIX Call Spread — as detailed in the Portfolio Holdings page. I’ll publish a subscriber Note if we get active.

To be clear: this would be a hedge to take advantage of cheap levels — not a bet that things get out of control.

I’m purely interested in following the asymmetric setup and flow — while keeping in mind that VIX positioning remains quite Short (see Flows & Positioning section later). VIX could squeeze even if Stocks just pull back a little.

Related:

VIX sentiment spiked to the same level where it peaked in July. This could support a retest of VIX’s lower gap, and more basing:

Credit Spreads may be forming a base with the 50d starting to flatten/potentially turn up — will be watching this closely as well:

Don’t forget this will be a big week:

• SEP 16 — FOMC meeting + VIX futures expiration
• SEP 18 — BOJ meeting + OPEX

CHART 3: PRECIOUS METALS

THE TOP METALS CHART I’M WATCHING:

Gold may be developing the PERFECT breakout-retest. Note multiple support levels coming into this range, and the 50d catching up to the breakout area:

MARKET CONTEXT:

Silver is also coiled at the perfect retest spot:

Big picture:

Metals remain extremely resilient.

Oil is up ~$20 this month, the 10YR is up ~25bps…

Meanwhile DXY is down for the month of September:

Which brings us to…

CHART 4: DOLLAR

THE TOP DOLLAR CHART I’M WATCHING:

If the Dollar can’t rally in this environment, it will plunge on any change in news:

How long will this hold?

This tape is the complete opposite of Q1-Q2... when the Dollar was ripping higher, and Metals were sold.

When markets don’t do “what they should”, they provide important information.

If the Dollar breaks down, Gold could trigger a continuation Buy — if so, I will press exposure without hesitation.

Maybe a Fed rate hike catalyzes a rally in all markets? (Sell the rumor, Buy the news?)

Will update as signals develop this week.

CHART 5: RATES

THE TOP RATES CHART I’M WATCHING:

Bond Sentiment is the lowest in four years, tied with the 2022 bottom (9% Bulls printed on October 20-21 2022). Monitoring for a turn UP:

Could a Fed hike trigger the beginning of a BOTTOM in Bonds?

MARKET CONTEXT:

Yields are extremely overbought — matching prior cycle TOPS in recent years:

Could the 10YR spike through 5% with a Fed rate hike this week — and then reverse?

CHART 6: OIL & ENERGY

THE TOP OIL CHART I’M WATCHING:

Oil sentiment hit 91% this week, the highest since the 2022-2023 Tops. These are extreme conditions, now we wait for a turn. Below, the vertical lines show prior turns in sentiment — which were near-perfect Sells. Looking for a “Big Short” and watching for a turn with strong interest (will update):

MARKET CONTEXT:

Oil is extremely overbought, matching prior major tops:

The gap at $107.77 could get tested on residual noise — regardless, we are on HIGH ALERT for a reversal in this range:

Energy stocks are barely holding the breakout...

ANY weakness could complete a Bull Trap reversal, and turn the trend:

OIH is down for the month of September — and will be my focus as the ideal Short vehicle on a confirmed turn (as always: when buying, focus on the strongest… when shorting, focus on the weakest). OIH is clearly the weakest Energy ETF here, with multiple warnings accumulating:

Monitoring for Short entry — possibly this week.

Looking for an asymmetric setup to allocate good size (will update).

Stay flexible/ready — this could be a big setup coming soon.

CHART 7: BITCOIN

THE TOP BTC CHART I’M WATCHING:

Bitcoin continues to show TEXTBOOK evidence of a new Bull Market gradually getting started. This week triggered the first Golden Cross of this new 200d uptrend — a signal last seen in 2019 and 2023, right when BTC was starting historic advances:

Watching for pullbacks — will update on new asymmetric setups with priority.

FLOWS & POSITIONING

Positioning extremes:

VIX positioning is at 2nd percentile.

Rates positioning remains extremely low — this week’s highlights: SOFR (new record low), TY (4th percentile all-time).

Industrial Metals, Gasoline, and Grains are extremely crowded.

FX positioning remains crowded long U.S. Dollar (85th percentile).

横向滑动查看完整图表

POSITIONING HIGHLIGHTS

Russell fund positioning remains extremely short:

SOFR made a new record low:

Ten-Year remains near historic lows:

Gasoline is extremely crowded — highlighted below, 11 out of 13 prior extremes led to major tops:

VIX positioning remains crowded short:

Grains are getting crowded:

Copper remains crowded (this week’s breakout failed — important):

POSITIONING SUMMARY

Positioning looks like a mine field with plenty of economic data, monetary policy, and election catalysts on the calendar.

Avoid crowded trades wherever possible…

Staying disciplined and focusing only on BEST risk-reward setups — as we’ll highlight next:

PORTFOLIO HOLDINGS

The Portfolio Holdings page has been updated here.

PORTFOLIO NOTES

No forced trades — let the market come to us:

• ✅ Looking for new opportunities, and moving more capital into potential leadership.
• ✅ Paying especially close attention to new leaders in Health Care, Materials, Rates-sensitives, and Cyclicals here.
• ✅ If the market gets choppier, watch what’s holding up the best…

CHART HIGHLIGHTS & TOP SCANS

CONSTRUCTIVE / LEADERSHIP POTENTIAL:

Like what the SOX is doing so far, but it’s decision time: let’s see if they can finally push through resistance this week…

IGV has a textbook pullback in range of a bottom, monitoring for a roll-up. If this confirms, I’ll press Longs for an extension to new highs (will update):

MAG7 continues to hold up, adding important support for the whole market:

XLK is holding firm near the highs for now:

Interesting developments in EWY and DRAM — both above their 50-day now, with 10/20d grinding higher. (1) If the trend turns down again, can use a 20d break as a clear warning. Overall, the line in the sand looks quite well-defined here. (2) On the bull side, a break above this week’s high would likely accelerate the uptrend:

TEN STOCKS WHICH STOOD OUT THIS WEEK

In my view, these are “tale of the tape” stocks:

• ✅ Some are showing potential to LEAD the next advance.
• ✅ Some are testing make-or-break levels.
• ✅ Some are building bottoming structures — representing the roll-up potential in key groups.

Let’s see if they can build out from here:

FINAL THOUGHTS

Markets are searching for a catalyst, while the “perfect setup” may be quietly building:

• ✅ Equities remain in a range — with models likely to reach Buy signals on any residual volatility.
• ✅ Watching Tech and Cyclicals/Rate-sensitives for the next big opportunity. Key stocks may be showing the way.
• ✅ VIX could offer a cheap hedge at the right price — monitoring.
• ✅ Rates and Oil are extremely overbought, with sentiment also at extremes. Energy could be setting up a clean Short (monitoring).
• ✅ The Dollar remains a no-show. Watching Gold for a continuation Buy, and DXY for a potential breakdown.
• ✅ The sequence is critical — near-term, Rates could test key levels into the FOMC meeting…
• ✅ Could a rate hike could catalyze a turn in Bonds? (Sell the rumor, Buy the news?)

Let’s see what happens…

Good luck this week!

Thanks for reading.

Onwards and upwards, -MC

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