Hope you had a great long weekend and got some time to rest and recharge.

S&P reached yet another record high in Sunday globex session on the “news” that US-Iran are close to peace deal and it would be signed by end of this week.

Nasdaq futures also was flirting with the psychological 30,000 mark and at this point there is a career risk looming for fund managers who will have to chase this rally.

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Anthropic is profitable, sort of?

“Anthropic’s revenue is set to more than double to $10.9 billion in Q2 2026, an “explosive rate of growth” that will make the company profitable for the first time ever, per WSJ.

The company is set to turn an operating profit of $559 million in Q2 2026.

Why would Anthropic be profitable for only Q2 of this year?

Because SpaceX is subsidizing Anthropic’s GPU costs for this quarter.

Post Q2, SpaceX will start charging Anthropic the prevailing rate and they will likely dip back into being unprofitable. This is great timing for Anthropic because they can raise fresh capital when they are “profitable”.

They pushed down their costs with a sweetheart deal during a tiny window. Anthropic also made sure to leak this right when Nvidia reported earnings, just to keep the whole AI super(hype)cycle going. If you take away that discount, their actual business model goes right back to previous numbers. Their costs go up exactly as fast as their revenue does(linearly). I also find it hard to believe they magically fixed their inference margins in just six months. Remember in January when they missed their gross margin targets because compute costs were 23 percent higher than they expected?

I won’t call it fraud but the timing is beneficial for Dario & co.

All in all, we do live in interesting times.

The AI trade has been doing great for the last year but the SAAS trade is the casualty of the AI trade. The contrarian trade here is to buy beaten down SAAS names and look for reversals in them. Stocks like (servicenow) and (Salesforce) come to mind as the obvious beneficiares if vibecoding does not replace every large software contract.

What are the bonds saying though?

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Hello traders,

I hope you all had a great weekend and took some time off screens to rest and recharge for the upcoming week.

The main event this week is Nvidia earnings

But before we jump the gun to Jensen and Co, let us recap last week.

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Wishing a very happy Mother’s day to all the amazing moms around the world and hope you all have a joyous weekend(yes, you can sleep in today and no, the world won’t end if you take some time off :) ).

The S&P logded a new all time high this past week and so did Nasdaq.
Markets have been chugging along nicely since the Middle East conflict is fading into background and bumper tech earnings are driving the market higher.

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CPU, MEMORY AND STORAGE

Last week was one for the ages for CPU, Memory and Storage stocks

SANDISK closed the week 47% higher than where it started, with its YTD gain now at 539% or so.

INTEL went up 34% this week and is up 234% YTD.

This sneak preview might boost Intel even more in the short term.

We closed our AI and Optical stocks a couple weeks ago and now

are slightly regretting the decision. Just slightly as the newsletter is no longer bullish on Semiconductors in the short term. I will be looking for a pullback of about 20-25% on AMD to re-enter the position. I would leave SNDK, INTC and the rest alone and not play the game to time the so called top on them however I do not find the reward profile attractive in going long these names at this moment.

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Hello traders,

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Hello traders,

Markets chugged along nicely this week and made new all time highs on both Spooz and Qs as President Trump extended the ceasefire unilaterally by three weeks.

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But(there is always a but) as soon as the market closed, there were murmurs that US delegation to Pakistan may not happen and right on cue a “TRUTH” was shared by the President on Saturday afternoon.

So we are back to square one (yet 600 points higher on SPX, finance is wonderful)

EQUITY SPOTLIGHT

We closed our AMD, COHR and LUNR positions in the model portfolio on Friday, the X thread linked below explains the thesis on the trades so I would not repeat it here.

That brings us to closing out most of our high beta convex trades in the tech and semis space since early last year.

We are not in the business of calling tops or bottoms, but if I see a company run up 400% in just over a year, I will take chips off the table to wait for the market to cool down a bit and reallocate capital towards a less “hot” sector so to speak.

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EUPHORIA SEASON 3

I meant the market euphoria and not the Sydney Sweeney one, but if it helps keeping you on this post instead of scrolling away, so be it.

Due to the unbelievable rally off the lows, the market is now solidly in the greed stage. Trump might play the war card a couple more times but ground invasion in the face of midterms is something even John Bolton would stay away from. We have tech earnings this and the next week with the bulk of megacaps reporting this week.

The MAG7 stocks have a lot to prove especially with them going all in on capex spend/hyperscalers and laying off workforce (not so much by Apple but by the rest).

This past week Google announced it is going to invest upto $40 billion into Anthropic.

So the gameplan here by Sundar & co is to hedge their bets with Gemini and Anthropic. This is quite similar to Elon Musk’s SpaceX licensing Cursor and getting an option to acquire them for $60 Billion.

MAG7 companies sans Nvidia are now in a race to AGI and if AGI/ASI is all that is cracked up to be, the capex would seem like a negligible expense in order to advance humanity. However, if AGI/ASI is unable to provide the ROI on the hyperscaler investments, this can cause a sharp correction in the stock price.

Nvidia is the shovel selling business and will likely just laugh its way to the bank.

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It has been a historic two weeks for the markets. S&P erased a 10% drawdown to reach fresh highs quickly followed quickly by Nasdaq futures which are now within kissing distance of 27,000.

Seizing this turn of events, we lightened our stock portfolio and closed our CLS and ESLT positions completely.

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Hormuz Standoff continued over the weekend with the US blockade continuing as peace talks continue for another week in Pakistan.

So, how did we get here and what does it mean for the markets?

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Hello all,

On Sunday, April 12, President Trump posted on Truth Social that the U.S. Navy would “immediately” begin blockading “any and all Ships trying to enter, or leave” the Strait of Hormuz, labeling Iran’s toll collections as “illegal” and “world extortion.” He ordered the Navy to interdict any vessel in international waters that had paid a toll to Iran and instructed U.S. Central Command to begin de-mining the waterway. CENTCOM subsequently announced that enforcement of the blockade against all maritime traffic entering and exiting Iranian ports would begin Monday. Crucially, CENTCOM clarified that vessels transiting the Strait between non-Iranian ports would not be impeded; this is a blockade of Iranian commerce, not a closure of the Strait itself.

The announcement came hours after the collapse of 21-hour marathon negotiations in Islamabad, Pakistan, between Vice President J.D. Vance’s delegation and Iranian officials. The talks broke down over Iran’s refusal to commit to abandoning its nuclear weapons program. Iran’s Islamic Revolutionary Guard Corps rejected the blockade outright, warning that any enemy attempting to challenge their control over the waterway would be trapped in a “deadly vortex.”

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Hello traders,

Happy Easter. Hope your day is peaceful, bright, and full of good food, good company, and a little bit of joy.

We caught a decent chunk to close out last week and did not have any positions going into the weekend.

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Moving on,

Over the weekend US was able to exfiltrate the two pilots downed in Iran in a covert operation as mentioned by the President on truthsocial.

Additionally, President Trump also posted this not so cryptic message asking Iran to open up the Strait of Hormuz.

Geopolitical Architecture: The Hormuz Crisis

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Last week we had quite a week in the markets where after a brief relief rally, the broader market kept going down at a rather orderly pace and crude traded triple digits once again.

We closed our shorts and QQQ puts in the PM session on Friday.

This is not to say the market has bottomed or we will go to new all time highs in X weeks. However as prudent traders we have decided to close our short exposure as of now and not hold anything through the weekend due to the nature of this news-based market.

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TRADING IN TACO-TIMES

Intra-day trading in this market with your typical momentum/mean-revert strategies is not going to be a fun time unless you got the infrastructure and/or you are working in an HFT like setup.

But Algo I’m a crackhead daytrader and I need to trade everyday.

This sounds like a you problem, so I let you work on it.

Jokes apart, this is what I think.

Intraday action on indices has been news-driven and hence if you use stop losses, it quickly starts turning negative EV(assuming suboptimal path dependency). Most of you reading this would be aghast and be like "Is the paragon of risk Algo telling us to abandon stoplosses entirely?”

Well, yes and no.

If you run a selective timeframe ADR on say NQ, you can study historical adverse excursion over the timeframe you trade and cluster the data by volatility regime. If your stop sits outside normal noise, the trade can survive routine shakeouts.

However, if you are margin challenged, this can mean risking $3000-6000 per contract. Add in variance and out of sample behavior, you are looking at a possibility where you are out of 30-40K even if you are “right” directionally but get screwed over by breaking news or Trump tweets and so on.

In this situation, I would love to

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This past week, the fed held the rates steady and the geopolitical unrest caused the global markets to sell off into Friday.

We were well positioned with our NQ shorts, QQQ put spreads and CL longs.

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The Fed has its task cut out, inflation is not at post-pandemic crushing levels but it is sticky enough (even without the current geopolitical turmoil).

Target rate probabilities are hovering at 350-375bps base case by end of the year. Even though Warsh will be dovish, however the the chair does not individually decide the rate decision(even though President Trump thinks so)

Shelter and services pressure has not rolled over enough to give the Fed confidence to cut, and wage pressure in parts of the service economy remains another thorn.

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WHAT IS UP(or down) WITH GOLD?

1. Who is selling gold?
   The answer is not that direct but we can estimate that the Gulf Council Countries are selling the accumulated Gold (roughly $3 Trillion worth) because of checks notes being bombed every day.
   Once the U.S. began hostilities on March 2, every side likely switched to preplanned contingency playbooks. GCC actors, coordinated or not, started raising cash by selling gold, equities, and Treasuries. As the conflict dragged on, collateral values fell, and lenders exposed to GCC debt likely began issuing margin calls. Credit conditions would have tightened quickly. Critical infra was being hit, hundreds of ships were stranded behind the strait and the less we talk about oil wells the better it is. So asset prices were under pressure from two directions at once: normal risk-off selling and forced selling tied to GCC liquidity needs.
   

2. When will the sell stop?
   A lasting peace deal will cause Gold to stabilize and increase its value.

3. But I was told Gold is a hedge in times of uncertainty.
   Yeah, welcome to the real world bud.
   

   ---

Asset outlook and posture

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Hope you all had a great weekend.

Index futures attempt a feeble bounce after three weeks of losses. Oil hovers near $100. Bitcoin defies gravity. And the Federal Reserve faces its most consequential meeting in over a year.

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Hello traders,

What a week it has been in the markets so far. Our swing ideas largely worked well and hence we are calling it a week here.

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I hope you all had a great weekend.

The Iran-USA war has intensified over the weekend and the developing story is that USA has started to bomb refineries in Iran. What does this mean for the region and the world.

The first scenario is that Tel Aviv may have received indications that the U.S.-backed military campaign could reach a conclusion within approximately one week. Should this be the case, Israel may be acting with urgency to neutralize assets critical to Iran’s primary revenue streams before that window closes.

The second scenario involves a deliberate effort to provoke an Iranian response by directing strikes at oil infrastructure within the Gulf states, thereby extending the duration of the conflict. Such an escalation could significantly heighten tensions, potentially prompting the Islamic Revolutionary Guard Corps to abandon restraint and adopt a substantially more aggressive posture.

At present, the region appears to be entering an increasingly volatile phase. Wishing safety and well-being to the innocent across the Gulf.

We were short equities and long crude oil and closed our USO 80/95 spreads as they entered max gain last week.

We are still holding our /ES short and would like to hold it until 6844 or so (stops in +40 pt profit)

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Moving on,

Labor Market Weakness Versus Persistent Wholesale Inflation

The economic data released in early 2026 paints a difficult and unusual picture. On one hand, the labor market appears to be weakening fast. The preliminary February employment report showed nonfarm payrolls falling by 92,000, with the unemployment rate rising to 4.4 percent. That is a sharp reversal from the stronger job growth seen in January and suggests that tight credit conditions, along with higher input costs tied to global supply chain strain, are starting to force companies to cut staff more broadly. The weakness was not limited to one corner of the economy. Financial services posted their worst hiring month since April 2025, while overall job growth leaned heavily on steadier sectors such as healthcare and education.

At the same time, inflation has not eased in the way higher interest rates were supposed to encourage. Headline CPI for January cooled modestly to 2.4 percent year over year, but wholesale inflation remained stubbornly strong. The final demand Producer Price Index rose 0.5 percent month over month, above expectations for 0.3 percent. Core PPI, which excludes food and energy, jumped 0.8 percent in a single month. With core PPI running at 3.6 percent year over year, price pressures are still building in the production pipeline, raising the risk that those costs will eventually flow through to consumers.

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The Federal Reserve’s Dual Mandate Problem

That mix of softer employment and persistent inflation has thrown markets into confusion over what the Federal Reserve will do next. Before the February jobs report, the CME FedWatch Tool showed a 94.1 percent chance that the Fed would leave rates unchanged at its March meeting, largely because earlier labor data had looked solid. The payroll decline changed that view quickly. Traders in fed funds futures and interest rate swaps sharply repriced expectations, and the FedWatch Tool now points to a 97 percent chance that the Fed will cut rates to a range of 3.50 percent to 3.75 percent at the March 18 meeting.

At the same time, there are signs of a deeper split inside the Fed itself. More dovish policymakers, focused on the labor market’s sustained softness over the past six months, are said to support as many as four additional 25 basis point cuts this year to avoid a hard landing. More hawkish officials remain focused on the fact that core inflation is still well above the Fed’s 2.0 percent target. Their concern is that cutting rates too quickly, especially during a large oil price shock driven by geopolitical tensions, could push long-term inflation expectations higher and revive mistakes associated with the 1970s. Because Fed officials are now in the blackout period before the next FOMC meeting, investors will not hear any public guidance from Chair Jerome Powell, Governor Christopher Waller, or Vice Chair Michelle Bowman during the week of March 8 to 14. For now, markets are left to react almost entirely to incoming data.

So Algo, how does this impact the markets?

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Hello traders,

I hope you all have had a good weekend.

First of all wishing peace and safety to my Middle-East/West Asia subscribers.

Yesterday US and Israeli forces attacked Iran and in the process eliminated top brass of IRGC and Ayatollah Khamenei. This has caused oil to spike in the early markets to about 8-10%. If the Strait of Hormuz stays impacted, crude can easily go to 90-100 per barrel.

Our idea to long oil through USO spreads into the week would likely work out well. However, since the options do not open until 9:30 am Monday, today’s globex session is key.

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Recapping last week’s trades

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THE TIMELINE SO FAR AND WHAT IS NEXT

Feb 27, 2026: US-Iran talks in Geneva ended without any deal. Right after the talks, US authorized departures of non-essential Federal workers from Israel.

Feb 28th, 2026: US and Israel struck Iran with missiles and then Iran instantly retaliated by attacking US assets in neighboring countries like UAE, Qatar, Saudi Arabia, Bahrain and Oman. US also announced that Ali Khamenei was targeted and killed in a missile attack on his compound.

March 1, 2026: US strikes continue with attacks on Iranian Naval bases and ships with President Trump sharing it on his social media platform TruthSocial.

Readers, I’m gonna be honest here. I’m not a geopolitics expert. I can code and trade but I definitely do not know how this conflict is going to end . Past US attempts at installing Democracies failing in the region do not necessarily mean this one will also end up the same way.

However, these are three second-order effects that I believe are possible if this conflict extends beyond a few weeks.

1. Inflation expectations will start perking up based on Hormuz escalation. Crude spiking to 90 will first hit PPI and then passhtrough to CPI in a month or two, especially in the transport sector. Another concern is that the inflation might become “sticky” and even if crude prices go down, the CPI might stay higher for a while (primarily as companies would want to make as much profit as possible due to tariff uncertainity)

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I hope you all had a great weekend.

We had an excellent short week last week and ended up on the right side of the tape more often than not.
Brief summary here.

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THE FOUR TRILLION QUESTION : NVIDIA EARNINGS

Nvidia reports fiscal Q4 2026 earnings on February 25, 2026, carrying consensus expectations of approximately $65.56 billion to $65.68 billion in revenue and EPS near $1.46 to $1.52. Data center sales dominate the forecast at roughly $58.72 billion to $59.9 billion. Short term equities market volatility is guaranteed yet directionally unpredictable. Historical data confirms that pure earnings beats no longer drive immediate valuation appreciation. Pricing dynamics now rely entirely on Q1 fiscal 2027 forward guidance, specifically concerning Blackwell architecture production scaling, TSMC packaging capacity bottlenecks, and the preservation of gross margins in the mid 70 percent range. Guidance deviating downward from aggressive growth metrics will initiate severe liquidation.

Long term market impact is contingent upon the structural permanence of artificial intelligence infrastructure spending. Nvidia projects a $500 billion revenue path for its Blackwell and Rubin chip lines through 2026. This aligns with anticipated global data center expenditures escalating to between $3 trillion and $4 trillion annually by 2030. However forecast reliability remains suspect due to epistemological uncertainty surrounding circular artificial intelligence deals, inventory overbuilds, and unquantifiable geopolitical regulatory obfuscation. Sustained equity growth demands flawless execution of the architectural roadmap and empirical evidence of expanding enterprise workload diversification beyond concentrated cloud provider capital expenditure cycles.

What to Watch

Beyond the headline revenue and EPS numbers, focus on these specifics:

Blackwell ramp timeline: When do shipments meaningfully accelerate? Any delays matter because the product cycle is the growth engine.

Gross margin trajectory: Can they hold 74% as mix shifts to new products, or do yields and ramp costs pressure profitability?

China exposure: How much revenue is still coming from a region facing escalating restrictions? Any surprises here could be problematic.

Customer concentration: Are Meta, Microsoft, Amazon, and Google still buying at the same pace, or is there any sign of digestion?

Inference versus training: The bull case long-term depends on AI moving from model training (where Nvidia dominates) to inference (where competition is fiercer). Any data points on inference revenue mix help answer whether the moat persists.

The Economic Picture: Can Goldilocks Last?

Markets are walking a tightrope right now. Growth is holding up better than anyone expected, but we’re also dealing with genuine powder kegs overseas and corporate earnings that could make or break the quarter. As February winds down, traders are trying to figure out whether this “Goldilocks” scenario (decent growth without runaway inflation) can actually survive the real world.

The Supreme Court just threw a wrench in the works by striking down broad presidential tariff powers, which has everyone scrambling to recalculate what this means for bond yields, deficits, and the dollar. Meanwhile, tensions are flaring in the Middle East and we’re hitting the four-year mark of the Russia-Ukraine war, both of which are keeping energy markets on edge.

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The story of early 2026 has been the economy refusing to roll over. Despite some messy data from the late 2025 government shutdown, the underlying picture looks solid.

Manufacturing is finally waking up. The ISM index hit 52.6 in January, the best since early last year, and the Philly Fed jumped to 16.3. New orders are growing and price pressures are actually easing a bit, which is exactly what you want to see. Historically, this kind of manufacturing rebound favors value stocks, small caps, and industrials over the growth names that dominated for years.

Labor markets look weird but stable. Jobless claims are hanging around 200,000, which suggests employers aren’t hiring aggressively but also aren’t laying off. That’s good for consumer spending without triggering the wage-price spiral that would force the Fed’s hand.

But inflation isn’t going quietly. Headline CPI looked tame at 0.2% month-over-month in January, but dig deeper and it’s messier. Used car prices dragged the core goods number down artificially. Strip that out and core goods inflation actually accelerated to 0.36%.

So, what can exactly go wrong in this situation?

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Hello,

Please find the weekly levels for this week below.

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Hello traders,

Hope you had a lovely Valentine’s day and are enjoying your long weekend.

A quick recap of the last week.

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COLD CPI, A CONCERN?

The week that just ended on February 14, 2026, seriously challenged the popular belief that everything is going smoothly in the markets. For the past few months, low volatility had investors feeling comfortable, but that comfort zone is cracking. Right now, we’re dealing with three major problems all at once: inflation that’s cooling down but still stubborn in key areas, big tech stocks showing weakness, and geopolitical tensions that have gone from diplomatic talk to actual military action.

When the January 2026 Consumer Price Index came out, it highlighted a key disconnect. The headline numbers suggest inflation is still coming down, but if you look under the hood at core services and shelter costs, they’re staying stubbornly high. Making this worse, we now have a new tariff system that the Federal Reserve Bank of New York says is passing almost 90% of costs directly to American consumers. This creates a kind of stagflation tax that the Fed can’t really fix with their normal tools.

At the same time, something weird is happening with geopolitical risk. Usually when tensions rise, oil prices spike. But West Texas Intermediate crude ended the week around $62.89, dropping over 2.7% on Friday alone. This happened even though Israel and Iran are on the brink of a nuclear confrontation and the United States has set a hard June deadline for ending the Russia-Ukraine conflict. The market seems more worried about demand falling (because of tariffs hurting the economy) than about supply disruptions from wars. This mismatch in pricing is one of the biggest risk opportunities heading into next week.

Looking at stocks, the Nasdaq 100 is showing classic signs that big investors are selling. The index failed to get back above its 100-day moving average, and major names like Apple and AppLovin got hammered on earnings. This suggests we might be shifting from a “buy the dip” mentality to “sell the rally.”

With Kevin Warsh being nominated as the next Federal Reserve Chair and the Fed minutes coming out on February 18, we’re set up for volatility to spike. The easy money trades of 2024-2025, where you just bought index funds and AI stocks, are giving way to a market where you need to actually pick good stocks and worry about borrowing costs and geopolitical risks.

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Understanding the Economy: The Inflation-Tariff Trap

The Inflation Problem: Breaking Down January 2026 CPI

When the Bureau of Labor Statistics released the January 2026 inflation data on February 13, the market had trouble figuring out what it meant. Headline CPI rose 0.2% from the previous month and 2.4% from a year ago. That 2.4% is the lowest annual reading since May. On the surface, this looks good and supports the idea that inflation is cooling. But when you dig into the Core CPI (which excludes food and energy), you see structural problems that justify why some Fed officials are worried.

The good headline number was mostly created by falling energy prices, which dropped 1.5% in January. Gasoline prices crashed 7.5%, and that’s a volatile component that hid the persistent inflation pressure in services. When you strip out energy, the picture looks much worse. Shelter costs, which make up the biggest chunk of the CPI basket, rose 0.2%. While that’s better than the 0.4-0.5% monthly increases we saw before, it’s still mathematically hard to get back to a 2% overall inflation target without shelter costs falling faster.

The “supercore” inflation metric, which is services excluding energy and housing and is the Fed’s preferred way to track wage-driven inflation, keeps getting pushed up by rising costs in medical care, recreation, and airline fares.

This data backs up what Fed officials like Christopher Waller and Lisa Cook have been saying. They argue that risks are tilted toward higher inflation, which means we need to keep rates “higher for longer” even though the market is pricing in rate cuts. The split between the goods sector (where prices are falling because supply chains are fixed) and the services sector (where prices are rising because of wages and insurance costs) creates an economy that’s hard to manage with just one interest rate.

The Tariff Problem: Measuring the Real Impact

A big variable that the market isn’t pricing in properly for 2026 is the return of aggressive trade protectionism. A major study from the Federal Reserve Bank of New York in February 2026 measured the impact of the 2025 tariff regime and proved that the political talking points are wrong. Foreign exporters aren’t absorbing the tariff costs. American companies and consumers are paying nearly 90% of it.

The average tariff rate on U.S. imports shot up from a low 2.6% at the start of 2025 to 13% by year-end. That’s a five-times increase in the tax on imports, comparable to the trade wars of the 1930s in terms of percentage, though it’s happening in a much more globalized economy now. The New York Fed’s data shows that about 86% of tariff costs get passed through to import prices. So for every 10% tariff, import prices rise by 8.6%.

This structural shift has serious implications for the current market:

Profit Margin Squeeze & Earnings Risk: American companies, especially in industrial and retail sectors, face a tough choice. Either absorb these costs (which means lower earnings per share) or pass them to consumers (which means people buy less). Walmart reports earnings next week and will be a key test of this dynamic. If they signal they can’t pass costs on, the entire retail sector could get repriced lower.

Monetary Policy Conflict: The Federal Reserve can’t easily cut rates to boost growth if inflation is being artificially propped up by tariff-driven price increases. This “stagflation” impulse (lower growth because of higher costs) makes it harder for the incoming Fed Chair to navigate. It effectively raises the “floor” for inflation, making the 2% target impossible to reach without causing a severe recession.

Federal Reserve Policy Outlook: The Warsh Era Begins

Kevin Warsh being nominated to replace Jerome Powell adds a new layer of uncertainty to policy. The market sees Warsh as pragmatic but historically hawkish when it comes to fiscal irresponsibility and government overspending. His appointment signals we might shift away from the “flexible average inflation targeting” approach toward a more rigid defense of the currency and long-term fiscal stability.

At the January FOMC meeting, the Fed held rates steady at 3.50% to 3.75%, which is significantly lower than the 2023-2024 peak, showing that the Fed had done substantial easing throughout 2025. But the January pause wasn’t unanimous, revealing a divided committee. Dissenters like Stephen Miran argued for aggressive cuts (up to 100 basis points), saying tariffs haven’t had much impact. This view directly contradicts what the New York Fed found. Meanwhile, hawks like Alberto Musalem from the St. Louis Fed said further easing would be “unadvisable” given that the labor market refuses to weaken.

Key Event Ahead: FOMC Minutes (Feb 18): The minutes from the January meeting come out Wednesday, February 18, and people will be looking closely at how deep this division runs. If the minutes show growing agreement that the “neutral rate” has shifted higher because of fiscal deficits and tariffs, the bond market might have to reprice where rates will end up in 2026, which could trigger a sell-off in shorter-term bonds.

Stock Market Structure & Sector Analysis

The stock markets are showing classic late-cycle behavior: narrowing breadth, defensive rotation, and high sensitivity to liquidity withdrawal. The gap between the S&P 500 and the Nasdaq 100 is the defining feature of current market structure.

Index Performance: ES and NQ

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Hello traders,

Last week we had one of the most volatile weeks in the recent history outside of the Liberation day week in the markets. We were on the right side of the volatility most of the times and reaped great rewards for it. Some snippets here.

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Our equity ideas were a glimmer of green in the sea of red.

Are We all Fucked?

That is exactly what you would feel if you opened the finance news-cycle over the last few weeks.

But is it really true?

Equal weight S&P just made new all time highs and the S&P is off only a couple hundred bps from its own all time highs.
Then why is it that everyone is screaming from the top of their lungs as if a crash is coming?

The answer is leverage, it is always fucking leverage. People are levering themselves to the tits on Crypto-AI-Datacenter complex without looking at how the individual companies are performing, looking at you and .

Last few weeks have shown you what you own is garbage and what is not.

There is no shame in riding garbage to the top but as the music stops, you should exit it. Full stop.

The other question is the AI capex spend. More on that below.

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The $670 Billion Question

There’s an old saying in tech: “We tend to overestimate what we can accomplish in one year and underestimate what we can accomplish in ten.”

This week, one of the main stories was the wild Capex numbers by big tech.

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Hello traders,

Here are the weekly levels for this week.

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Hope you all had a great weekend.

A lot happened over the last week and we were on the right side of the markets for the most part.

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Fed Hits Pause Button, but Dissent Signals Debate Within

he Federal Open Market Committee voted 10-2 Wednesday to hold the benchmark federal-funds rate in a range of 3.50% to 3.75%, marking the first pause after three consecutive quarter-point cuts late last year that brought rates down from 4.50%.

The decision was widely expected, but the details provided fodder for both bulls and bears. The committee acknowledged that the labor market remained “low” in terms of job gains and that the unemployment rate had stabilized. On the other hand, the committee noted that inflation remained “somewhat elevated,” signaling that the fight against rising prices was not yet complete.

Governors Christopher Waller and Stephen Miran dissented, arguing for an immediate 25-basis-point reduction. Their opposition underscored a growing rift within the central bank over whether inflation has cooled sufficiently to warrant further easing. Waller, in particular, has been vocal in arguing that the risks of over-tightening now outweigh the risks of doing too little on inflation.

The dissents were the story. Waller is not a dove by nature. When he starts pushing for cuts, it deserves attention.

In its post-meeting statement, the Fed emphasized its commitment to assessing incoming data when considering future adjustments. This language was interpreted as leaving the door open to a cut as early as March, though market pricing suggests June or September is more likely.

The market reaction was muted but modestly positive. Equities rallied into the close, bond yields ticked lower, and the dollar weakened slightly. Fed funds futures shifted to price in slightly higher odds of a cut by mid-year, with the probability rising from around 40% before the meeting to roughly 50% afterward.

For now, the Fed’s message is one of patience. The committee is in no hurry to move in either direction, preferring to let the data guide its decisions.

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Commodities: A Month for the History Books

If January 2026 will be remembered for anything in financial markets, it may well be the historic surge in precious metals and the resurgence of crude oil. Safe-haven demand, a plummeting dollar, and geopolitical anxiety combined to produce some of the most dramatic moves in commodity markets in decades.

Gold Rallies to Record Highs Before Pullback

Gold delivered a historic monthly performance, surging to an all-time high of $5,626.3 before profit-taking drove a steep correction.

The yellow metal opened January around $4,330 and spent the month in a parabolic ascent, breaking above $5,000, then $5,200, then $5,400, before peaking at $5,608.35, a gain of nearly 30% at its peak. The move represented one of the largest monthly rallies in gold’s modern history.

Gold Futures closed January 30 at $4,763.10, a stunning correction from the highs but still up roughly 10% for the month.

The rally was fueled by converging forces:

• Central bank buying: World Gold Council data shows official sector purchases exceeded 1,000 tonnes for the third consecutive year, with China, India, Turkey, and Poland leading

• Dollar weakness: The DXY fell sharply as Fed cut expectations rose

• Iran tensions: The escalating nuclear standoff drove safe-haven demand to extreme levels

• Inflation hedge: With tariffs threatening renewed price pressures, gold attracted fresh positioning

The correction came on January 30 as traders booked profits and uncertainty emerged around potential Fed personnel changes. The move was exacerbated by margin calls on leveraged positions.

J.P. Morgan projects gold will average $5,055 per ounce by Q4 2026. Goldman Sachs raised its 2026 target to $5,400. The most bullish forecasters see $6,000+ if geopolitical tensions escalate to open conflict.

Gold Trade Idea

The pullback from $5,608 to $4,763 (down 15%) creates a buying opportunity for those who missed the initial surge. Fundamentals remain intact.

Setup: GC Long on Support Test

• Entry: $4,700 to $4,800 zone

• Stop Loss: $4,550 (below the 50-day MA)

• Target 1: $5,200 (prior resistance becomes support)

• Target 2: $5,600 (retest of all-time high)

• Target 3: $6,000 (extension)

• Risk-Reward: 1:3

Conservative Entry:

• Wait for daily close above $5,000

• Entry: $5,020

• Stop Loss: $4,800

• Target: $5,600+

• Rationale: Confirms buyers have absorbed the correction

Options Play: GLD Call Spread

• Buy GLD March $435call

• Sell GLD March $460 call

• Defined risk, leveraged exposure to gold rally

NB: These are setups and not trades. For more details, please check the discord.

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Silver Suffers Violent Correction After Parabolic Run

ilver’s January was extraordinary, one of the most volatile months in the metal’s trading history.

Silver exploded higher through mid-January, driven by industrial demand from AI infrastructure, solar panels, and electric vehicles, combined with safe-haven buying spillover from gold. The white metal surged from roughly $32 at the start of January to an all-time high of $121.67, a gain of nearly 280% at its peak.

Citigroup dubbed it “gold on steroids” and forecast $150 within three months. Chinese buying was relentless as industrial users scrambled to secure physical metal. Major miners like Fresnillo and Hecla revised production guidance lower, and the structural supply deficit asserted itself violently.

But the rally ended in catastrophe. On January 29, the CME Group implemented a new percentage-based margin system that hiked maintenance margins to 16.5% of contract value. The move forced leveraged speculators to liquidate en masse.

The result was a cascade crash. Silver plummeted from above $100 to as low as $75 in a matter of hours. Silver closed Friday, January 31 at $78.53, down 35% from the all-time high in just two days.

The crash wiped out billions in speculative profits and reminded traders why silver is called “the devil’s trade.”

Silver Trade Idea

Silver’s close at $78.53 after the crash from $121.67 creates both danger and opportunity. Only traders comfortable with extreme volatility should participate. Position sizing must be significantly reduced.

Setup: SI Long at Crash Support

• Entry: $70 to $72 zone (current area)

• Stop Loss: $64 (below the crash low with buffer)

• Target 1: $95 (50% retracement)

• Target 2: $110 (61.8% retracement)

• Target 3: $120+ (retest of highs)

• Risk-Reward: 1:3

• Position Size: 25% of normal due to volatility

Aggressive Breakout Setup:

• Entry: $88 on daily close above $85 with volume

• Stop Loss: $78

• Target: $110+

• Rationale: Reclaim of $85 signals liquidation is over

Conservative Play: Silver Miners (SIL)

• Entry: Current levels

• Stop Loss: 15% below entry

• Target: 40% to 60% upside if silver recovers

• Rationale: Leveraged silver exposure without margin risk

NB: These are setups and not trades. For more details, please check the discord.

Crude Oil Posts Best Month Since 2023

West Texas Intermediate futures surged 13.57% in January, their strongest monthly performance since July 2023, as tensions between Washington and Tehran ratcheted higher.

The rally came as the Trump administration warned of potential military action if Iran’s nuclear program advances further. Intelligence reports indicating Iran has enriched uranium to 90% purity, the threshold for weapons-grade material, sent traders scrambling for protection.

“The Strait of Hormuz risk premium is back in a big way,” said an energy analyst at a major commodities desk. “Add in supply disruptions from Kazakhstan, winter freeze-offs in the Permian, and tighter sanctions on Russian crude, and you’ve got a perfect storm for bulls.”

Production outages proved particularly supportive. Kazakhstan experienced unexpected shutdowns, winter storms triggered freeze-offs across the Permian Basin, and tighter restrictions on Russian oil purchases finally began to bite.

The International Energy Agency raised its global demand forecast for 2026 to 930,000 barrels a day, citing improving economic conditions. But not everyone is convinced the rally has legs. The U.S. Energy Information Administration still projects WTI averaging just $52 this year as global supply outpaces consumption.

OPEC ministers gather Monday, their first meeting since the January surge, and any signals on production quotas could set the tone for February.

Key levels to watch:

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