Hi YXI friends,
Stocks not only topped after the FOMC on Wednesday but also turned into an ugly selloff on Friday after Trump unexpectedly announced Kevin Warsh as the next Fed Chairman.
Gold and Silver both dived massively, wiping out the late entrants to the rally.
Moreover, we saw Crypto being crushed over the weekend through key support levels not seen since November.
Is this the end of the bull market as we know it? Let’s dive in.
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TLDR:
Friday’s tape was ugly, but the cross-asset “crash filters” are not yet screaming systemic stress.
What we do have is a broad positioning cleanout: crypto broke key supports, precious metals went from “too far, too fast” to air-pocket, and growth/beta cooled—while funding stayed quiet.
That combination usually argues for churn / corrective digestion, not an immediate “real crash” call, unless funding and credit start to confirm.
Housekeeping: I am off on Tuesday due to an immutable annual event. Therefore, this report combines many of the topics we typically share on Tuesday as well.
Table of Contents
DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
Please check out our glossary for explaining the acronyms, financial terminology, and economic data.
1. YXI Dashboard
Previous Day Price Action
Macro Assets
The key signal is dispersion.
Equities were mixed-to-down (QQQ/IWM softer), while gold (GLD) was the true unwind (a deep drawdown intraday). IBIT rose before the close but was crushed over the weekend (not shown in this chart).
If “risk-off” were truly systemic, you often see TLT catch a stronger bid and/or UUP (USD) rip. Here, it looks more like a crowded trade exit than a funding event.
Magnificent-7s, PLTR, COIN, HOOD
Friday suggested broadly a beta unwind.
COIN/ HOOD/ PLTR notably weak vs the Mag-7s.
The Mag-7s not all waterfalling suggests this can still be a range/churn regime (i.e. leadership rotates, not collapses).
Sector ETFs
Sector dispersion often accompanies late-cycle grinding rather than an immediate index crash.
Dashboard
GLD -10.27% and SLV -28.54%: this is a parabolic exit.
SPY remains near its highs and above the 50-day MA, indicating the index structure has not yet broken.
TSLA rose by 3% in a countertrend fashion. More on this below.
TLT fell while UUP rose. This aligns with market expectations for a hawkish Fed chair appointment of Warsh, whose policy stance could favour higher yields and a stronger US Dollar.
However, I think this is an initial surface-level market reaction, without further clarity on Warsh’s real approach to monetary policy once appointed. Trump would NOT have chosen Warsh without Warsh having sounded more dovish than his past tone.
2a. Seasonality
SPY Monthly Returns
Between May 2025 and January 2026, the S&P 500 was up 9 months in a row, although November and December were essentially flat.
Only the Nov 2016 - Jan 2018 stretch lasted longer (15 months). That was Trump's first year in office, before the trade war escalated.
SPY vs 10-Year Average Seasonality
The S&P 500 is broadly tracking its 10-year seasonal pattern.
SPY 10-Day Forward Returns (Average over 10 years)
The near-term seasonal window still appears mildly constructive on average.
TLT 10-Day Forward Returns (Average over 10 years)
TLT is in a seasonality headwind, with buyers typically less inclined to hold long-end bonds.
GLD 10-Day Forward Returns (Average over 10 years)
GLD returns to a positive seasonal period ahead of the Chinese New Year. This could mean dip-buying this week.
Bitcoin 10-Day Forward Returns (Average over 10 years)
Bitcoin is in a positive seasonality period until mid-February, although it sure does not feel like it!
2b. Macro Dynamics
Curve Steepener
The curve steepener proxy ratio is rising, which aligns with long-end yields staying sticky.
If steepening is “rates up” (term premium) rather than “front-end down,” it’s a valuation headwind for QQQ and long-duration assets.
Credit Risk: HYG / IEF
HYG/IEF remains near its highs and continues to improve, so credit is not confirming any panic.
Without a decisive deterioration in HYG/IEF, I’m reluctant to call this a true crash.
Credit Spreads
Recent weekly changes in credit spreads remain contained relative to previous periods of acute stress. This is another one of my “crash filters” that has not been triggered - at least not yet.
Crypto vs Gold: IBIT vs GLD
The divergence here is extreme. Gold massively outperformed into the recent peak, while Bitcoin lagged. Now that GLD is also selling off, it appears crowded hedges are being unwound.
Macro: 21-Day Return Correlation
UUP (USD) shows a negative correlation vs SPY and HYG (USD up = tighter).
Watch how the US dollar behaves. A sharp USD rally would pose a greater risk than the initial equity drawdown.
Mega-Caps: 21-Day Return Correlation
3. US Dollar, Japanese Yen
DXY
A soft DXY is generally supportive of risk assets (easier financial conditions).
I can see one more low being tested in wave (v).
USDJPY
The USDJPY is the carry unwind monitor. Sharp, disorderly moves in USDJPY can pressure global risk.
If USDJPY stabilises and reclaims the 50-day MA, the unwind may have been a one-off shock. I still see one more high being possible for wave (v).
The 30-year yield is still elevated and structurally in an uptrend channel even after a pullback. If it moves down toward the 50-day MA, repatriation pressure on global risk assets eases.
4. Treasury General Account and SOFR Spread
Treasury General Account Balance
TGA is now quite high at 968 billion and has been rising recently. This is a liquidity headwind at the margin. The sharp spike in TGA coincided with the weakness in equities and bonds last week.
SOFR - EFFR
The SOFR - EFFR spread is close to 0, suggesting there is no funding stress.
5. FOMC, Treasuries, TLT, USO
FOMC Projections
We utilise the Fed Funds futures market to gauge market expectations for future FOMC interest rate decisions.
The Fed Funds market now projects lower rates for this year, following weakness in stocks. This could suggest that Warsh will ultimately continue the Fed put if the market tanks.
US Treasury Yield Curve
The curve steepened significantly over the past week. We want the long-end yields to come down to ease the pressure on tech, crypto, and growth stocks.
US 30Y Yield
The 30-year yield is retesting the wave (c) high but may be forming a head-and-shoulders topping pattern.
TLT
TLT is attempting a bottom here. There is still a lot of work to do, as it remains below the 50-day MA and in the high-volume profile region.
USO
USO has rallied toward $80, just below our wave (c) target. A sustained oil shock is bad for bonds and stocks, something Trump does not wish to see. Today, there is news that Trump has reached out for more negotiations with Iran, before escalating into a full conflict.
6. S&P 500, Nasdaq 100, Russell 2000, Semis
SPY
SPY is poised to open lower again today, but still in an upward channel around the 50-day MA.
The volume profile shows a thicker cushion below in the 680 area, which can dampen downside.
SPY vs RSP
The equal-weight S&P RSP has outperformed SPY over the past three weeks, which is a positive signal for risk appetite. It suggests the rally is broadening beyond the Mag-7s.
SPY Valuation
SPY trades near the 10-year high in terms of P/E, although now off the 2-standard deviation level.
On a growth-adjusted basis, SPY’s P/E is not as aggressive as it looks. Robust earnings growth this year can hold up its valuation.
QQQ
QQQ failed to sustain its breakout last week. It will now retest the lower trend support line. Holding it will be key in maintaining the upward path.
IWM
IWM will open down another 1% today, which will land in a typical wave (ii) pullback zone of the 0.618-0.786 retrace of wave (i). Holding the 50-day MA will keep the upward path intact. It can also confirm that overall risk sentiment remains favourable.
However, the key risk is that USO sustains its high level while long-end yields refuse to move down. That combination will be a headwind for IWM.
SOXX
SOXX had the sharpest index-level hit (-4% day), but it’s still above the 50D; the move looks like a fast correction within an uptrend so far.
Semis stabilising quickly would signal the “AI/growth engine” is still intact.
SPY, QQQ, IWM ETF Flows
Equity ETF flows have been mixed but not bearish in the past week, with the exception of IWM, which saw consistent outflows.
7. Crypto
ETH is updated every Monday. COIN is updated every Tuesday. HOOD is updated every Wednesday.
BTC
BTC broke a multi-month support shelf and is now trading in the high $70ks.
The weekend breakdown suggested a wave v move inside the wave C of (4). This was never off the table (I previously highlighted the bear-flag risk), but I had thought the odds were diminishing over time. Unfortunately, the bullish expectation was wrong.
The bullish scenario from here is that wave v is approaching the typical wave v target zone. The breakdown may be false if BTC quickly reclaims the green line and holds above it for follow-through.
However, the volume profile overhead supply is heavy, and the market may be tempted to sell into it.
ETH
ETH also broke the previous key supporting trendline, rather quickly tapping into a more tested support zone from 2024-2025.
The bullish case is for ETH to hold this support zone, with the latest leg being a wave (c). However, given the thin volume profile below $2000, I cannot rule out a deeper retracement to $1800, where volume strengthens again.
I remain bullish for this year still and believe there will likely be new all-time highs for BTC and ETH.
IBIT vs ETHA Daily Fund Flows
We saw a string of outflows from IBIT and ETHA in the second half of January.
8. Gold
GDX is updated every Monday
GLD
GLD just staged a textbook “too far, too fast” blow-off followed by a sharp reversal. It remains in a broader uptrend, but the short-term structure is clearly broken.
The volume profile and the 50-day MA beneath current prices suggest there is room for a deeper mean reversion before GLD encounters a thicker layer of demand.
The bull case is that if GLD holds the 50-day MA, we could still find at least a wave B bounce. The market narrative in wave B will be “a capitulation flush of late longs” rather than the “start of a lasting top”.
Gold Silver Ratio
Gold/ Silver has reversed off the key support zone, as Silver dived 30% on Friday.
GDX
GDX followed gold down hard. It has now returned to the previous upward channel. We could see it test the 50-day MA before a corrective wave B bounce.
9. Large Cap Equities
ORCL, APP, CRWD, NET, AVGO, ASML, ARM, AMD are covered between Wednesday and Thursday this week.
Upcoming Earnings
This week is another very busy week on the earnings front. PLTR reports this evening, already with a high degree of topping risk.
AMD, AMZN, GOOGL, and ARM are reporting between Tuesday and Wednesday.
Regarding priority for YXI Profiles, I will focus on the PLTR, AMZN, and GOOGL reports first.
Apple: AAPL
AAPL looks like it’s trying to bounce off a selloff base. The rally into earnings could still be a corrective wave iv bounce, before one more low that tests the 50-day MA.
Amazon: AMZN
AMZN is in an upward channel. The structure is still constructive, but earnings present a major event risk to this trend holding.
Alphabet: GOOGL
GOOGL is maintaining its leadership, although the near-term topping risk has risen inside the wave circle-v.
Meta: META
The market could digest the earnings jump for a wave (iv) retrace, before resuming the short-term bullish trend.
Microsoft: MSFT
MSFT’s selloff tapped into a typical wave (v) target, although there is room to test $412. The bullish news is that RSI is showing a positive divergence (lower lows in prices vs higher lows in the RSI), which typically precedes a bottom.
Nvidia: NVDA
NVDA is now making an attempt to move past the December high-zone. This could be the start of wave (iii) towards $220+.
Tesla: TSLA
I have become more neutral on TSLA than before. Neutral means waiting for a clear directional signal first.
Last week’s price action risked breaking down the supporting trendline, which could open the door to $375 at the 200-day MA.
However, the Friday counter-trend rally has kept the bullish path alive, pointing to $540 before wave (v) completes. This bullish path must prove itself quickly by clearing the $450 high-volume zone.
PLTR
Ahead of PLTR’s earnings, the stock appeared to be testing the neckline of a head-and-shoulders topping pattern.
Historically, PLTR has consistently beaten expectations, with 5 of the past 8 quarters showing a positive price reaction.
10. Notable ETF Flows From the Previous Week
Recent Notable Flows (% of AUM)
The flows are represented as a percentage of the AUM prior to the flow.
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