At the Jackson Hole Symposium, Fed Chair Warsh acknowledged that inflation remains consistently elevated and delivered a hawkish message, signaling a willingness to act if persistent price pressures continue. The CME FedWatch Tool is now pricing in a 57% probability of a rate hike at the September FOMC meeting, up sharply from 40% on Thursday. This major repricing reflects growing market expectations of a September hike, while simultaneously signaling a broader restoration of institutional confidence in the Fed's commitment to price stability.

This also caused a flattening of the yield curve, as the 2Y Treasury yield rose 2.98% while the 30Y rose only 0.35%. This is considered a “Bear Flattening” — expectations of a Fed rate hike push the front end higher, while the long end stays comparatively anchored as the market prices slower growth and inflation further out.

The Fallout of Jackson Hole

So what affect does a Bear Flattening Regime have on the financial markets?

Gold (GLD): Restored confidence in the Fed triggered a selloff in the “vote of no confidence” trade, dropping gold (GLD) by 3.23% after RSI entered overbought territory. Keep an eye on the $403–$404 region, where key moving average support (confluence of 20, 100 and 250 SMAs) could setup another long trade opportunity. An RSI bounce off the 50 mark would serve as confirmation of a new leg higher.

High Valuation Stocks (IWO): Rising interest rates act as a higher discount rate…effectively compressing the PE ratios of equities. Those with a higher PE ratio get hit the most. Small Cap Growth (IWO) has a Forward PE ratio of 40x (compared to 20x for the S&P 500) and dropped 2.07% yesterday compared to only 0.23% for the SPY. Look to avoid highly valued story stocks for now.

Interest Rate Sensitive Stocks: Higher short term rates will hurt banks. The Regional Banks ETF (KRE) appears to already be in a downtrend. Ad RSI is below the 50 mark, look for more weakness.

Real Estate (XLRE) will be hurt by higher for longer 30-year rates, which will translate to higher mortgage rates. XLRE is down more than the SPY and looks ready to roll over.

Industrials (XLI) which rely on bank financing and credit will also experience compressed valuations and future revenue.

Expected Outperformance

So what does well during this bear flattening regime?

Value (IWD): Stocks with lower valuations (PE ratios) will outperform their more expensive peers. As other asset classes fell hard, IWD moved sideways showing significant relative strength. This asset class seems to wait for the 20 SMA (gray) to catch up before moving higher. It is sitting on the 20 SMA now and a new bullish setup may come next week.

Energy (XLE): Energy stocks were up Friday after the Jackson Hole Symposium, one of the few groups higher for the day. XLE broke out a few days ago and re-tested the breakout zone. Look for this to continue higher next week.

Agriculture (DBA): Agriculture prices are spiking, evidence that inflation is going higher. DBA typically does well in a Bear Flattening regime. RSI is in the overbought zone so it may be too hot now. Look for pullbacks to buy.

Commodities (PDBC): Similarly, commodities do well in a Bear Flattening Regime. PDBC is not overbought yet and is above all moving averages. This could be a buyable opportunity right now.

A Big Warning

The Bollinger Bands for the SPY on the daily chart are super contracted. Those who use Bollinger Bands know that this is the squeeze and it precedes a large move. Over the next few weeks, expect a large move either up or down. With all the recent selling at the top (look at the Volume Profile selling in red), I believe that the next move in September is down.

Cycles Say…

Our July & August Cycle Forecasts for SPY was quite accurate. It called a July weakness starting in the middle of July, followed by a strong up-cycle (came within 4 trading days). It also called some strength around August 20th. Overall our Cycle Forecasts have acted as fantastic guides for the markets.

In the Premium Section we’ll go over our Cycle Forecasts for the S&P 500, Nasdaq 100, Russell 2000, Gold, Silver, Oil, Treasuries, Bitcoin, Ethereum and more.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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Every sustained rally has been preceded by long periods of weak performance, where commodity prices remain depressed, capital exits the space, and investment in new supply dries up.

Today, we appear to be at the early stages of another structural Commodity upswing, coming out of a decade of underinvestment following the 2011 peak.

Years of low prices led to reduced capex, depleted inventories, and tightening supply across Commodities.

What the market is still under-appreciating is that these cycles have historically persisted for a minimum of 10 years or more.

Even though Gold had been in a correction since the past 6 odd months, it’s important to put Gold’s price into perspective.

US Gold reserves as a % of government debt stands at only about 3%.

This chart is essentially screaming to us that Gold is so undervalued relative to all the US government debt there currently is present.

Investors seem to be finally starting to wake up to this fact after the US government’s debt just crossed $40 trillion recently, once again acting as a wake up call that every investor needs exposure to hard assets in this Macro environment.

Gold Miners also just saw a major breadth thrust.

The percentage of gold miners above their 200-day moving average reached washout levels in July before recently spiking to over 60%.

This is the typical threshold used for healthy markets and Gold miners have just met the criteria for one!

Silver has just reclaimed its daily 200-EMA and has also broken above its multi-month downtrend line.

Both of these developments are suggesting that the downtrend is coming to a wrap-up here for this precious metal too.

Not to mention Copper that seems to have never gotten the memo for a correction.

This industrial metal has basically been gradually and consistently rising throughout the last few months, despite a correction in the broader Commodities market.

There’s also Uranium that’s starting to show promising signs of life once again.

The key level to break is $28.33 and above that Uranium should get going pretty quickly to the mid-$30s.

So we have the Commodities complex across the board starting to show signs of preparing for another leg up in the coming months.

But most investors have no idea how to position for this Commodity cycle.

For the past decade, Commodities have not been a “hot” area of the market.

There’s been very little incentive to study how this space works, how capital rotates within it, or where the real opportunities tend to emerge.

As a result, when a cycle like this begins, most investors are completely unprepared.

That’s exactly why we created: “The Commodity Cycle Masterplan”.

The Commodity Cycle Masterplan

This Masterplan is designed to give you both the big picture understanding and the specific tools needed to help you profitably navigate this cycle.

It breaks down the entire Commodity landscape into a step-by-step frameworkthrough 5 detailed documents:

• A clear blueprint of how Commodity cycles unfold, and in what sequence capital rotates across different Commodities

• A 3-year proprietary Cycle Forecasts across key commodities to help you gain a Timing Edge

• A complete Commodity ETFs guide, covering 33 Commodity ETFs in-depthacross the entire Commodity spectrum, along with the key technical levels and our proprietary Cycle Forecasts for each one

• A curated list of 33 high-quality Commodity stocks (for different Commodities), with detailed breakdowns of drivers, risks, and technical levels

• A comprehensive “Masterlist” of 200+ names, giving you a full pipeline of ideas for investing and trading across precious metals, industrial metals, energy, agriculture, and more.

Basically, we’ve built a practical system designed to help you identify, track, and act on opportunities for this Commodity cycle.

If you’re interested, you can purchase The Commodity Cycle Masterplan for $500 here OR upgrade your Substack plan to our $800 Founding Member tier to receive it as part of the membership.

BONUS: For the next 10 purchases, we’ll also throw in our yearly Cycles Edge membership worth $350 to further sweeten the deal for you. After your purchase, you’ll also have email access to our team for any follow-up questions you have after going through The Commodity Cycle Masterplan.

Disclaimer - All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

Keltner Channel Basics

Let’s observe the S&P 500 (SPY) in 2026 using just the Keltner Channels (based off the 21 Exponential Moving Average) and Relative Strength Index (RSI) on the daily timeframe.

Notice that:

• In January price was chopping between the Keltner Channels in a range-bound manner.

• In March price got caught below the Middle Keltner Channel as it pushed the Lower Keltner Channel down. This led to the 10% correction of 2026. Notice that the Keltner Channels pointed down telling you the trend.

• In early April the RSI indicator was oversold and price kept above the Lower Keltner Channel. This signaled the bottom. On April 8th Follow Through Day price reclaimed the Middle Keltner Channel (21 EMA) and this told us that a new uptrend was intact.

• From April 13th til June 2nd price grinded above the Upper Keltner Channel. This was the sign of a power trend, which is the best time to make easy money.

• June 2nd we see RSI making a bearish divergence and the this ended the power trend. Price ended up dropping to the Lower Keltner Channel. June and July had a correction in time contained within the Upper and Lower Keltner Channels.

• On August 4th price broke above the June 2nd high signaling the end of the correction in time. Price tried to grind the Upper Keltner Channel up however it is Summer so there is no volume. As a result this power trend failed to launch.

• Price pulled back to the Middle Keltner Channel as RSI held the 50 mark. So what now?

  • A retest of the Upper Keltner Channel is possible, but look for that to fail. I don’t think the market has the fuel for this.

  • Price could form a lower high. Look for changes in the direction of the Keltner Channels to signal a change of trend to a downtrend. This is most likely.

  • Price could bounce off the 21 EMA and form a new power trend. This is least likely as it is Summer (low volume) and there don’t seem to be many bullish catalysts. There are however many risks in the market.

In the Premium Section we’ll explain how we Keltner Channels on multiple timeframes creates magic. We’ll also go over the most import asset classes on this setup. Consider becoming a Paid Subscriber and you can use this setup for the rest of your life.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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The 7-Year Cycle is a market-timing tool built from two repeating cycles that run back-to-back and together span roughly seven years.

Each stretch is labeled either “Favorable” or “Unfavorable” based on how stocks have historically performed during that window.

The idea behind cycle analysis like this is that markets don’t move in a straight line.

Instead, prices tend to move through recurring phases shaped by things like investor sentiment, credit conditions, and economic momentum.

Just as the 4-year presidential cycle or the 10-year decennial pattern are used by some analysts, the 7-year cycle offers another lens for gauging whether the odds currently favor a stronger or weaker stretch for stocks.

The aim of this article is to understand where we are in this 7-Year Cycle and get a True Timing Edge to position for what’s to come!

How the Cycle Is Built

The full 7-year cycle is made up of two smaller cycles that run one after another:

• The first cycle lasts 1,248 calendar days (about 3.42 years) and contains its own Favorable and Unfavorable stretch.

• The second cycle lasts 1,308 calendar days (about 3.58 years) and also contains its own Favorable and Unfavorable stretch.

After the second cycle ends, the pattern starts over with the first cycle again.

Added together, the two cycles run 2,556 calendar days, which works out to 7.0027 years — so it isn’t an exact 7-year cycle, but close enough to treat as one.

The Favorable and Unfavorable Windows

Each 7-year cycle contains two Favorable periods and two Unfavorable periods:

Cycle 1 (1,248 calendar days / 3.42 years):

• First 654 days: Favorable

• Next 594 days: Unfavorable

Cycle 2 (1,308 calendar days / 3.58 years):

• First 684 days: Favorable

• Next 624 days: Unfavorable

Once Cycle 2 finishes, the pattern repeats starting with Cycle 1 again.

Where Exactly are We Today? - The Historical Calendar (Through 2063)

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Using the Darvas Box Method we can see that the SPY broke above the June-July consolidation and then formed a smaller box around the R2 Pivot Point. It is trying to breakout now and the odds are favoring higher prices as the TTM Squeeze indicator shows strong bullish momentum and the RSI indicator does not show bearish divergence yet. As the 8 EMA (red) catches up with price, it bodes well for a continued uptrend.

Using the Elliott Wave framework, we can see that price could hit an upside target of $800 to $820.

The current Dumb Money Drive is not overbought yet so there is more gas in the tank for this Summer Drift uptrend.

The Fear and Greed Model confirms that there is more room to run before sentiment gets overly bullish.

However, we should stay mindful of key upcoming dates that could trigger market downdrafts or reverse the current trend.

Potential Downdrafts

Here are a few potentially bearish days:

• Aug 19 (Wed): August VIX Expiration — often brings sudden volatility.

• Aug 21 (Fri): August Options Expiration — market makers typically pin prices, often increasing volatility.

• Sep 16 (Wed): FOMC Decision & September VIX Expiration — a high-impact catalyst with potential for a major trend shift.

• Sep 18 (Fri): September Options Expiration.

Now let’s analyze my “Market Regime” setup.

We can see that:

• Dispersion (DSPX in purple) is declining rapidly. This means stocks are moving together in an increasingly correlated fashion.

• The VIX Curve (VXV/VIX in magenta) is at an extreme high of 1.29. Normally, institutions take profits when it hits 1.20x, but we know many are away on vacation. This suggests the rally is living on borrowed time.

• Nasdaq Stocks Above the 5 SMA (orange) is increasing and not yet overbought, signaling that the rally still has some short-term fuel left.

• The Advance/Decline Line (ADL in blue) shows breadth is on an upward trajectory, remaining supportive of this move.

• Net New Highs continue to expand, preserving a decent environment for single-stock selection.

In conclusion: The market is drifting higher for now, but given the extreme VIX Curve, it remains vulnerable to a sudden and violent downside reversal. Declining dispersion signals that the risk of a synchronized “sell-everything” waterfall drop is rising. An autumn decline could potentially trigger another round of de-leveraging, as both margin debt and Leveraged ETFs are high.

In the Premium Section we’ll go over some new opportunities that are starting to show their hand.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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This move is coming off of the $3928-$4021 support zone and has led Gold to break above its downtrend line that had defined the recent correction.

But there’s still the daily 200-SMA (green line) that’s yet to be reclaimed before the bulls claim victory.

It’s not just Gold itself that’s showing strength though.

Even the Gold miners have seen a weekly gain of over 20%.

A move of this magnitude has occurred only 5 other times in more than 70 years.

The last instance (2016) was followed by an 85% gain over the next 6 months.

So promising signs for Gold and Gold miners are definitely starting to emerge.

But at the same time, we’re also seeing the 10-year Treasury yield climb and near a potential break above the 4.7% level that’s held it down until now.

Gold tends to typically perform poorly when yields are rising because Gold is a non-interest bearing asset.

So higher yields (i.e., higher interest on Treasuries) directly puts pressure on Gold.

If yields breakout from here then Gold is likely to be in trouble… at least that’s what the surface level thinking would be.

But as we’ll show you later in this article, there’s a major aspect underneath this rising yield that we have to take into account to anticipate whether Gold would fall if the 10-year Treasury yield breaks out here.

Before we get to that, let’s take a look at Silver quickly.

It has also shown good strength, albeit less than Gold.

Silver still has to break its downtrend line (unlike Gold) and then there’s the daily 200-SMA (green line) that should also be a battle zone between the bulls and bears.

All in all, Silver is starting to look constructive, but there’s much more work to be done.

So now let’s jump to answer the question on whether a further rise in the 10-year Treasury yield could reverse Gold’s current strength.

We’ll also cover the 1 key Gold chart that all medium-to-long term Gold investors MUST be monitoring closely - it’ll save you from Gold’s multi-month drawdowns.

After that, we’ll share our Cycle Forecasts for Gold and Silver to provide you with a real Timing Edge to maximize profits.

Next, we’ll go over Gold miners and figure out if they are a more attractive bet here.

Lastly, we’ll take a look at Gold vs Silver to figure out when would it be the right time to go aggressive on which of the two metals.

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Is The Bull Run Already Crowded?

The stock market is posed for a strong August before a possibly volatile September.

Dumb Money is pouring back into the stock market and this momentum usually continues until it gets overbought. There is a way to go before that point is hit.

The Fear and Greed Model shows that the market is on a Greed run once again. Again, this can continue for some time before it gets overbought.

Sentiment is still quite balanced as Bullish and Bearish sentiment is close to even. Bullish sentiment is only at 37% and the 1-year high is 49.5%. Again the bulls have a way to run before the trade gets crowded.

As a conclusion, we think this bull market will run some more, but by the end of August to early September, the market may run into a down-cycle. The Cycles APP from The Foundation for the Study of Cycles shows that the S&P 500’s two strongest cycles point up until around August 27th, before a down-cycle lasting until November 6th.

Let’s Observe Some Investable Trends

The Keltner Channels (blue) are a way to easily see trends. When the Upper, Lower and Middle Keltner Channel lines point up you can assume that an uptrend is in play (and vice versa). We will also observe the following charts with the 8-day Exponential Moving Average which catches powerful uptrends. Finally we will use the Webby RSI 2.0 indicator, made by Mike Webster who was a protege of the legendary William O’Neil. Here is a description of this indicator.

Webby’s RSI 2.0

• Measures how stretched a stock is from its 21-day moving average

• Expressed in units of the stock’s own typical daily range (50-day ATR), not raw percentages — so a reading means the same thing on a quiet index as on a fast-moving growth name

• Above the average, it uses the day’s low: did even the weakest moment hold up?

• Below the average, it uses the day’s high: how close did the tape come to reclaiming it?

• The key insight is counterintuitive: too much extension is a warning, not a strength

S&P 500 (SPY):

• The SPY in a new uptrend as it broke above the June 2nd high (yellow line). If this is retested, it will coincide with support from the 8 EMA (pink).

• Notice that the July 29th bottom coincided with the Lower Keltner Channel. Now price is pushing the Upper Keltner Channel higher, which is a signal that an uptrend is still in the early phase and can continue.

• The Webby RSI 2.0 is green confirming the uptrend. Price is a bit extended from the 21 EMA so some pause or backfill would be completely normal before the uptrend continues.

• This is essentially a 2-month base, which provides an excellent opportunity. A measured more of the depth of the base provides an upside target of $800.

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We believe there will be an excellent opportunity to make money in the markets this fall; however, it is still too early. The recent bounce will probably run out of steam, and when that happens, further downside is possible.

The market is in a deleveraging mood, and there are still plenty of leveraged positions left to wash out. Markets excel at inflicting maximum pain, and twisting the arms of traders holding leveraged ETFs is easy low-hanging fruit.

Record NYSE margin debt means the unwind isn't over. If the market wants to inflict maximum pain, triggering forced margin liquidations is the obvious next move.

Smart Money and Dumb Money are both selling into recent strength. This supports our thesis that despite a bounce, further downside is probable before a lucrative new uptrend begins.

The Fear and Greed Model is in no-man’s-land right now and that is pretty consistent with typical low-volume summer chop trading.

Breadth is still weak and declining as shown by the McClellan Summation Index.

The NYSE High-Low Index also confirms that breadth is weak and it is a very hostile environment to invest in individual stocks right now.

The S&P 500 (SPY) is just chopping sideways in what appears to be a topping pattern. If the June 2nd high holds, a real decline could begin after Labor Day when institutions come back from summer vacation. In the chart below, notice:

• Price action is being contained in the Bollinger Bands and they are pointing sideways, displaying summer chop.

• The VIX Curve (VXV/VIX) is close to 1.20, which often acts like an overbought signal. If the VIX Curve begins pointing down, another leg down is ready.

• Dispersion (DSPX) is declining sharply. This means: 1) this is now a Macro-driven market and macro factors are bearish and 2) stock correlations are rising and different areas of the market are beginning to move more in unison. If the SPY starts a shaper downtrend, declining dispersion leaves the door open for a waterfall (sell-everything) drop, which could coincide with de-leveraging and margin debt liquidations.

The Nasdaq 100 (QQQ) still has relative weakness vs. the SPY as it is still below the 20 SMA (or Bollinger Band Midline). RSI is still below 50 and On-Balance Volume (OBV) is still trending below it’s10 SMA, showing that sellers are still in control despite the recent bounce. Another leg lower is possible.

The Russell 2000 (IWM) appears to be transitioning from an uptrend to a downtrend. Notice how the price formed a rounded top pattern below the 20 SMA. Now, both the upper and lower Bollinger Bands are pointing down. The RSI is in a downtrend and below the 50 mark, signaling a loss of momentum. The OBV is also in a downtrend below its 10 SMA. Fundamentally, higher interest rates remain a strong headwind for small-cap companies, which often rely heavily on debt to fund operations.

Semiconductors (SOXX) look even weaker than QQQ and IWM. Friday closed with a heavy red candle on high volume beneath a declining 20 SMA. With Bollinger Bands downward-sloping, RSI sub-50, and OBV putting in lower highs and lower lows, technicals are breakdown-ready. The deleveraging wave in chip stocks isn't over.

Inside the Premium Section, we cover three key topics:

1. Our Cycles Roadmap: Pinpointing the exact time to buy the dip

2. Macro Breakdown: Navigating the bear steepening regime

3. Actionable Strategy: Where to deploy capital today

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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It basically compares the price action of Semiconductors to the typical cycle of an asset bubble.

And the tweet suggests that we’re not entering the “Capitulation” phase, which would mean a free fall in the Semiconductors name.

So, is that what’s really coming next for the sector that makes up almost 20% of the S&P 500?

If yes, then it’s time to run for the hills, but if no, then this could prove to be a major buying opportunity.

Let’s figure out…

First, we got to understand how the asset bubble cycle exactly works.

• Stealth Phase: A fresh technological breakthrough draws initial market notice and early investors/Smart Money start to strategically position.

• Awareness Phase: Real wealth grows as funding speeds up and institutional investors rush in to position themselves.

• Mania Phase: Retail hype takes over and capital flows at an enormous phase, which keeps getting increasingly more extreme.

• Blow off Phase: Profits fall short of costs, spending drops, and the cycle turns downward unwinding all of the excess that was built up during the Mania.

Now the tweet earlier is suggesting that we’re in the Blow off Phase already and within that we’re entering the most painful part of it i.e., the “Capitulation”.

This type of bubble behavior is something we clearly saw back in 1990s and early 2000s in what’s called the “Dot Com Bubble.”

• Stealth Phase: In the early 1990s, the birth of the World Wide Web created a massive technical disruption that laid the groundwork for future growth.

• Awareness Phase: Institutional capital quickly rushed in, driving a $500 billion infrastructure buildout by telecom giants like WorldCom and Global Crossing to wire the nation. Early on, this created genuine economic prosperity and explosive profits for hardware suppliers like Cisco, propelling the broader stock market up nearly 200%.

• Mania Phase: By the end of the decade, retail frenzy pushed deployment into hyperdrive. Companies blindly laid fiber lines until the network capacity exceeded actual public demand by a staggering 100-to-1 ratio.

• Blow-off Phase: In 2000 and 2001, the unsustainable funding dried up completely. The broader economic expansion stalled instantly, triggering a massive market crash that wiped out trillions of dollars in investor wealth.

So are we about to see another one of these wipeouts in the second half of 2026?

Well there is a key difference between the Dot Com bubble and today that we also need to account for in order to answer this… let’s look at that next.

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U.S. equities posted their second consecutive week of losses, driven primarily by a heavy sell-off in big tech names as the first batch of Q2 earnings sparked investor anxiety over massive AI capital expenditures. While cooling inflation data and a resilient labor market provided underlying macro support, surging oil prices and geopolitical tensions in the Middle East added to market volatility.

Here are the current key drivers:

1. AI Capex Anxiety vs. ROI Realities

The kickoff of big tech earnings turned risk-off as investors scrutinized corporate spending:

• Alphabet (GOOGL) and Tesla (TSLA) sparked Thursday’s tech slide. Alphabet raised its AI infrastructure spending targets toward $200B, while Tesla reported its first quarterly cash burn in two years alongside forecast outlays, sending TSLA down over 14% and GOOGL down 7%. Below are the daily charts of GOOGL and TSLA showing that both are now in downtrends below the 20 Simple Moving Average (SMA) and 200 SMA.

  

  

• Intel (INTC) jumped almost 14% after hours after topping revenue and EPS expectations, buoyed by a 59% year-over-year surge in data center CPU demand. However it gave back that entire gain and ended the closed the next day (Friday) down almost 8%. This is a perfect example of how unforgiving this earnings season is. Here is the 15 minute chart showing the nasty whipsaw price action after earnings in the extended hours session.

  

2. Energy & Geopolitics

• Crude Oil Volatility: WTI crude oil gained over 10% last week due to escalating tensions in the Middle East. Rising energy prices have kept inflation expectations sticky.

  

3. Macro & Economic Indicators

• Labor Resilience: Weekly initial jobless claims dropped to 187,000 (below the 212,000 consensus estimate), demonstrating continued labor market strength.

• Rates & Inflation: The 10-year Treasury yield hovered around 4.68%, up 2.99% last week. Recent cooler inflation prints (June CPI falling 0.4% MoM) have given the Federal Reserve room to hold interest rates steady, though energy price spikes remain a key risk factor.

Next week Microsoft, Meta and Amazon report, which should be the key group of catalysts. Markets will look for clearer evidence of AI revenue monetization to justify ongoing capital spending. Unadulterated AI capex spending could trigger heavy selling.

Should You Buy The Dip?

With the Nasdaq 100 (QQQ) down almost 9% from recent highs, is it time to buy the dip?

The Smart Money/Dumb Money Confidence indicator shows that Smart Money is noticeably buying the dip, as Dumb Money is heading for the exits. Should you follow on?

On top of that, the NYSE Advance/Decline Line is ticking up at strong support from the 50 Simple Moving Average (SMA) and Lower Bollinger Band). Breadth could continue higher from here if dip buyers come in.

Here’s the answer…

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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Investors are still of the opinion that Bitcoin cannot bottom before October 2026, based on the 4-year Cycle, and there’s much more downside remaining.

Back in 2022, the consensus social media number was $12k for a macro bottom on Bitcoin because of which investors missed the actual bottom.

Today, the new “$12k” is “$40k-$50k” and we believe waiting for this number is going to once again wrong-foot investors.

We’ve already seen a lot of excess leverage and speculation cleaned up from the Bitcoin system

Not only has Michael Saylor (MicroStrategy) done a full 180-degree on his “We’ll NEVER sell Bitcoin” motto, but Bitcoin Treasury companies have been hit left-right-and-center.

We’re also seeing technical and on-chain signals flash that have historically occurred only at or very close to a macro bottom on Bitcoin.

For starters, the 50-week EMA crossing below the 100-week EMA.

This has only happened 3 other times since 2013: Two of them marked a macro bottom and the third one (2022) saw price fall slightly lower because of a black swan event (FTX collapse) before the macro bottom.

Secondly, the percentage of Bitcoin supply in profit has dipped below 50%, which has systematically only happened during a macro bottoming process.

Lastly, the supply of Bitcoin in loss recently hit 10.8 million.

Above the 10.5 million threshold is where all of the past major Bitcoin bottoms have formed.

So just because some “time” factor hasn’t been met based on the 4-year Bitcoin Cycle, investors are ignoring ALL the other evidences that’s telling us that Bitcoin has either already put in a macro bottom OR is one last dip away from doing so.

In the next section, we’ll show you a very interesting chart that’s indicating which one of the two is more likely.

Then, we’ll cover Ethereum.

And finally, we’ll figure out when and how to position in Altcoins to prepare before the crowd arrives - here I’m going to also share the exact strategy you can use to evaluate any Altcoin at any moment.

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Nicolas Darvas built his box method from ticker tape in the 1950s — no indicators, just price and volume — and turned roughly $36,000 into about $2.25 million in eighteen months, largely while touring internationally as a professional dancer and trading by telegram.

A box forms after a new high holds for at least three days without breaching its top or bottom; the breakout above that box, on a volume surge, is the buy signal, with the stop trailed up to the bottom of each new box. It’s a sound trend-continuation framework, but “volume surge” was never quantified, and the method has no built-in filter for hostile market regimes — both of which matter more in today’s whipsaw-prone tape.

Six adjustments modernize it without changing the core mechanic:

• Quantify volume: Require breakout volume above the 20-day average. On Balance Volume (OBV) can be used to visualize volume — it should be trending up through the consolidation itself, signaling accumulation before the breakout even prints.

• Trend filter: The Pristine Method works well here. Only take breakouts above both the 20 Simple Moving Average (SMA) and the 200 SMA.

• Relative strength: Only take boxes in names already outperforming their sector, restoring the leadership bias Darvas traded implicitly.

• Momentum: The TTM Squeeze confirms momentum and can catch the volatility-compression-to-expansion transition. Timed as price clears the box, a squeeze firing concurrent with the breakout is a strong continuation tell.

• Expansion/contraction: Bollinger Bands (based of 20 SMA) can also be used to spot periods of expansion and contraction. A Bollinger Band expansion timed with price breaking a box, after a period of contraction, is a powerful signal.

• Timeframe: The daily timeframe remains right for box formation, but the weekly timeframe can be used to confirm the broader stage-2 uptrend first.

Layered together, these filters and indicators cut down the false breakouts that erode the original method’s edge, while keeping its core logic intact. Now let’s use this.

S&P 500 (SPY): The top of the box was formed on June 2nd and the SPY has been in Summer Chop ever since. Within the box, price is deteriorating as it closed below the 20 SMA. Next stop could be the Lower Bollinger Band at $730 or the low of the box at $717. If that breaks, the top of the previous box at $697 (6% lower) can serve as support. Note this also coincides with the 200 SMA. OBV shows volume distribution, as the TTM Squeeze shows waning bullish momentum. Overall, I expect a break down as the Midterm Elections take center stage.

Nasdaq 100 (QQQ): The Nasdaq 100 is a weaker picture as price is already at the lower end of the box. This occurs as the Bollinger Bands appear to start an expansion phase. Volume is above the 20 SMA and the OBV confirms that volume is distributing. The RS Line shows that QQQ has relative weakness vs. the SPY. The TTM Squeeze is confirming increasing bearish momentum. If price breaks the lower box, the top of the previous box could act as support at $637 (8% down). Alternatively the previous box’s lower line at $580 (about 17% down) could also act as support.

Semiconductors (SOXX): The chart of the SOXX shows why the Darvas Method needs additional indicators. Since early April price was trending above the 20 SMA (or Bollinger Midline in blue). Mid May showed a clean bounce off the 20 SMA. Early June showed a more sloppy bounce off the 20 SMA. During the June 22nd high you can see that OBV made a lower high as the TTM Squeeze showed waning momentum. By the end of June the RS Line showed that the SOXX was beginning to have relative weakness compared to the SPY. We are currently 20% off the highs in a technical bear market. The next support is the current box low at $478 about 8% down. If price goes down to the lower box’s top at $364 it would be an additional 30% drop from Friday’s close.

It’s not all bad as there is a rotation into defensive areas of the market. In the Premium Section we’ll go over possible areas to invest in now using the Darvas Method 2.0.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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Brazil (EWZ) has broken out of its short-term downtrend line and is currently retesting its daily 200-EMA.

Off the bat, it’s important to understand that being bullish on Brazil partially also means being bullish on Commodities, given the high Commodity exposure that makes up Brazil’s stock market.

This stock market is currently retesting its multi-year breakout trendline.

While such breakouts can take sometime to wrap up the retest, as far as they hold above the breakout trendline, they tend to gain a significant amount of momentum.

This provides investors with an asymmetric risk-reward, but for those that are willing to take the risk before the upside momentum gets going.

So should we expect this breakout to hold and should we be positioning for more upside on Brazil?

That’s exactly what we’ll cover in the next section!

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The S&P 500 has been range-bound since the last high that occurred on June 2nd. Recent price action looks more bullish as the June 26th bottom touched the Anchored Volume Weighted Average Price (AVWAP in purple) from the beginning of the April 2026 rally. Since then price was able to break above the AVWAP from the June 2nd high and this is a bullish sign. Additionally, price is trading above the 30 SMA (green) which favors the bullish side, however the 30 SMA is flat instead of up-sloping so it is not totally bullish.

What do the indicators say? This is mixed. The Directional Movement Index (DMI) is still in a downtrend. The Relative Strength Index (RSI) is in a new uptrend and is currently above the 50 mark, which is bullish. MACD made a new bullish crossover above the 0 mark, however follow-through momentum does seem muted. The Average True Range (ATR) indicator shows that price action volatility is declining, which is often bullish.

US and Iran news is very negative this weekend and a gap down below the 30 SMA is possible. If price is able to remain above the 30 SMA and June 2nd AVWAP, it has a chance break above the June 2nd high, which is $760.40, the yellow horizontal line. If price breaks above and stays above this level, a summer melt-up is possible. Volume is low and the Volume Profile shows a mix of heavy selling and buying making this a two-sided trade. If price can make a new high, volume should be high or else the chance of a downside reversal is high.

We can see that Dumb Money or retail has been buying and Smart Money appears to be on vacation.

Greed is making its way back in the market so this is positive.

Breadth is currently supportive as the NYSE Advance Decline Line ($NYAD) appears to be in an uptrend.

Sentiment, as per the AAII Survey, shows that Bullish Sentiment is slightly above historical averages and Bearish Sentiment is higher than historical averages. This is strangely the same numbers before the June 3rd drop.

Recent price action appears bullish however it’s prudent to plan for volatility to return abruptly for three reasons:

• The US & Iran hostilities are picking up this weekend

• Friday July 17th is Options Expiration Day

• VIX Expiration Day is Wednesday July 22nd.

In the Premium Section we’ll go over the best way to trade the Summer Chop.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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Price has also broken out of its downtrend line after retesting the 4-hour 200-EMA (green line) as support.

On the daily timeframe, price has reclaimed and held the 9 and 21-EMAs with a bullish MACD cross.

The daily RSI remained above 35/40 region throughout the recent consolidation, which indicates that the bulls are still in control.

Now there are some people on social media that are talking about the rising bullish sentiment as the stock market has held up well.

And we as traders and investors have to understand that there is an important difference between bullish sentiment and risk-on behavior.

A high degree of bullish sentiment (i.e., how investors “feel”) can signal trouble for stocks… But a high degree of risk-on behavior (i.e., what investors are actually doing with their investment capital) typically suggests a more sustainable bull market.

So we’ll be taking a look at 3 key risk-on indicators that will tell us whether we should expect the constructive technicals to make new all-time highs OR if this is a bull trap.

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The S&P 500 (SPY) appears to be past the easy phase of its uptrend. While price was trending above a rising 20 SMA, the Average True Range (ATR) declined in an orderly fashion. That is typically the easiest part of the trend, when the market makes it relatively easy to generate gains. During that period, price also remained relatively close to the 200 SMA (red).

Now, the 20 SMA has turned lower, the ATR is signaling elevated volatility, and price remains extended above the 200 SMA. In addition, price action appears to be forming a Diamond Pattern, which is often associated with market tops. A move back to retest the 200 SMA is possible, implying a decline of roughly 7%.

I often say that when the ATR spikes, the market is trying to take your money. This is a time to be cautious and manage risk carefully.

Nasdaq 100 (QQQ) looks even weaker as price closed below a declining 20 SMA. Price is also stretched from the 200 SMA as ATR is high. This is a corrective pattern and odds favor a trip back to the 200 SMA, which is about 11% lower.

Semiconductors (SOXX) now appear to be in profit-taking mode. Notice the large volume spikes as downside volatility increases and the Average True Range (ATR) begins to surge.

This is a great lesson in trend trading. When the ATR is low and orderly, price is above both the 20 SMA and the 200 SMA, and it is not overly extended from the 200 SMA, that is the ideal environment for making money in a new uptrend.

Right now, the picture is the opposite. Volatility is rising, profit-taking is accelerating, and the risk-reward has become much less favorable. This is a good time to take profits, protect capital, and wait for a new setup to develop over the coming months.

South Korea (EWY) has a similar picture…price below the 20 SMA and extended from the 200 SMA, while ATR is high. Looks like it will go back to touch the 200 SMA.

Russell 2000 (IWM) is showing relative strength as it trends higher above an up-sloping 20 SMA. Beware that price is stretched from the 200 SMA. The Russell 2000 is about to re-balance, so it’s possible that many of the leading stocks might graduate to the Russell 1000 (large cap). If ATR increases, expect a downturn.

Dow Jones Industrial Average (DIA) is showing relative strength as it was the only index that made new highs Thursday. When growth rolls over and value shows relative strength its often the sign that the rally is getting old and a downside reversal is coming soon. Price is above an up-sloping 20 SMA while it is not at the distance from the 200 SMA where the 200 SMA starts acting like a magnet…which is only 2% higher.

Value (IWD) is confirming the later-cycle character of the market as it is looking very strong trending above the 20 SMA. It is extended from the 200 SMA, so it may be running on fumes at this point in time.

Growth (IWF) is much weaker as it trades below a down-sloping 20 SMA. The high ATR makes trading growth stocks a nightmare right now. Also notice the heavy selling volume that began in June. This provides the expectation of further weakness, until a downside washout.

Healthcare (XLV) is a mid-cycle sector and tends to outperform when tech and growth experience profit-taking. The recent bullish price-action can be used as another confirmation that the price cycle is aging. These rotations can last 2 to 4 months, so expect some more upside.

Financials (XLF) is the other mid-cycle rotation and it is also outperforming at the moment. I personally don’t favor financials because I believe we are in the part of the 20-year cycle where financial meltdowns can occur, but for now XLF is outperforming. Again, look for these rotations to last 2 to 4 months.

The Price Cycle is aging as money rotates out of technology and growth and into value, healthcare, and financials. As these sectors become overvalued, there may be one final rotation into Consumer Staples (XLP) and Utilities (XLU) before the risk of a meaningful pullback or correction moves to the forefront.

In the Premium Section we’ll go over the Cycle Forecasts for our main asset classes for July and August.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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The stock market is showing conflicting signals right now. In this article, we’ll take a look at both sides of the story and figure out which side holds the upper hand.

Favorable signal #1: Industry % Indexes in Bear Market

This indicator shows the percentage of 23 industry groups trading more than 20% below their 52-week highs. The chart below shows all dates on which this figure fell below 10%. Obviously, to drop below 10%, it must first rise above that level. An increase above 10% typically signals a market correction. The hope is that a drop back below 10% signals a positive reversal. Recent signals have occurred in April and May, and most recently on June 11th.

The table below summarizes subsequent S&P 500 performance.

Favorable signal #2: Bear Market-Macro Index Spread

This indicator shows the spread between the Bear Market Probability and Macro Index Model. The higher the indicator, the greater the probability of a new bear market, combined with deteriorating fundamental macro conditions, which is a negative for stocks. The lower the indicator, the lower the probability of a significant decline, usually combined with improving macro conditions, which is a positive for stocks.

The chart below highlights all dates when the indicator crossed below -20. The most recent signal occurred at the end of May 2026.

The table below summarizes subsequent S&P 500 performance.

There are still 2 very important favorable signals we’ll look at before covering the 4 key unfavorable signals and evaluating which side is more probably to win. That’s exactly what we’ll cover in the Premium section.

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In this article we’ll go very important reasons to have a capital protection plan. If you’ve made profits over the past few months it’s crucial that you protect your profits.

Reason 1: Stretched from the 200 Simple Moving Average

The S&P 500 (SPY) is stretched form the 200-day Simple Moving Average (SMA) and when that happens the 200 SMA acts like a magnet…pulling price back towards it like an invisible resistance level. Going back to 20218,, when price extends about $65 from the 200 SMA, the magnet affect turns on and significant pullbacks of corrections occur. We’re at that point now, and thats why I believe that hedge funds cashed out for the Summer on June 5th, which I wrote about here.

Reason 2: The Pendulum Effect

The next chart may shock you as to how simple markets can be. Below is a weekly chart of the SPY using the Keltner Channels. Notice that:

• When price hits the Upper Keltner Channel and RSI is in the overbought position, it changes, price tends to lose upward momentum and usually drops to the Middle Keltner Channel (currently at $711 of 5% lower from here) or the Lower Keltner Channel ($671 or 10% lower from here.).

• When price hits the Middle Keltner Channel price often snaps back up.

• When price creates a reversal candle (red to green with high volume) near or below the Lower Keltner Channel it often marks the bottom of a downtrend and is the beginning of a powerful uptrend (as it did on April 1st).

Bottom line…the easy part of the rally is over. Look for a pullback to the Middle or Lower Keltner Channel over the next few months.

Reason #3: Summer Seasonality

Seasonality shows that its right about time for the June drop.

The analysis from Stock Traders’ Almanac is that seasonality for 6th Year Presidencies begin a nasty multi-month pullback at the beginning of July.

Reason #4: Shift in the Market Cycle

Using the Market Cycle with Gann’s key dates which we wrote about here in May, we believe that July 1st is a key inflection point, where the character of the market can abruptly shift. Here is a picture of the analysis we wrote in May:

Now let’s apply the Cycle of Price Action from Oliver Kell:

In the uptrend since the March 31st bottom we had EMA crossbacks to the 8 EMA (red) on 4/23 and 4/29; a Base and Break between 5/7 to 5/22 and what I believe was a Exhaustion Extension on 6/2, followed by a large drop that was an expectation breaker on 6/5 (the day I believe hedge funds cashed out). The SPY has since rallied a bit to form a lower high that resembles a Head & Shoulders topping pattern. On the Volume Profile I see a lot of institutional selling at this level. For those that know the William O’Neil method, there are now 6 Distribution Days, providing further evidence of institutions selling out.

This analysis adds further weight to the view that the market is in a topping process and remains vulnerable to transitioning into a downtrend.

In the Premium Section, we’ll cover breadth, rotations, interest rates, valuation and cycles. This analysis is especially important given what may be coming next in the markets, so you won’t want to miss this one.

Disclaimer — All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

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This chart highlights one of the most important dynamics in the Commodities market - they move in long, multi-year cycles.

What stands out is what happens before these major commodity upcycles begin.

Every sustained rally has been preceded by long periods of weak performance, where commodity prices remain depressed, capital exits the space, and investment in new supply dries up.

Today, we appear to be at the early stages of another structural Commodity upswing, coming out of a decade of underinvestment following the 2011 peak.

Years of low prices led to reduced capex, depleted inventories, and tightening supply across Commodities.

What the market is still underappreciating is that these cycles have historically persisted for a minimum of 10 years or more.

In fact, there’s a typical 30-year cycle that’s existed in Commodities, wherein the asset class outperforms for 15 years followed by stocks outperforming for the next 15 years, and then back to Commodities.

So, leadership changes roughly every 15 years.

Commodities usually dominate during inflationary, supply-constrained environments, while equities lead during disinflationary, liquidity-driven expansions.

The last cycle from 2008 to 2023 overwhelmingly favored stocks, driven by falling inflation, low interest rates, and abundant liquidity.

That environment is now changing.

We are in a new window from 2023 to 2038 that history suggests should see Commodities outperform.

And capital has already begun to rotate toward real assets, with Gold’s performance since 2023 being a prime example.

This is where the opportunity becomes very clear.

The Commodities-to-Equities ratio is currently sitting near one of the lowest levels in history.

Every time this ratio has reached similar extremes, it has marked the beginning of a major commodity outperformance cycle.

We saw this in the early 1970s, just before the inflation-driven commodity boom.

And again in the late 1990s, right before the 2000s supercycle.

In both cases, Commodities were deeply out of favor, capital had been pulled out of the space, and valuations were compressed - the same setup we have today.

If this ratio were to revert to just the average level since the early 1970s (around 4), it would see Commodities outperform by almost 7x.

And a move back to the highs would see Commodities outperform by almost 14x.

We’re already beginning to see a shift in Commodity-linked equity markets.

Brazil ($EWZ), one of the most commodity-sensitive markets globally, is starting to show signs of life again.

This was an area of the global market that saw a 1,800% rise during the 2000s commodity cycle.

What’s notable is how closely it tracks Platinum, with the metal historically leading major moves in Brazilian equities.

Today, Platinum has already broken higher, while Brazil remains relatively early.

If this relationship holds, it suggests Brazil has significant room to catch up as the Commodity cycle gains momentum.

But remember, Brazil is just one of the equity markets that are heavy on Commodities, with other options like Canada and Australia too.

Furthermore, despite the early signs of a Commodity upcycle, allocations to Commodity ETFs still remain near multi-year lows.

At the peak of the last cycle in 2011, Commodities made up over 10% of ETF assets.

Today, that figure is closer to 3%.

In other words, capital has not meaningfully rotated yet.

This is what an early-cycle Commodity environment typically looks like.

This means there’s still a LOT of room for capital to flow back into Commodities, creating a generational wealth-making opportunity for us investors and traders.

But here’s the problem.

Most investors have no idea how to position for a Commodity cycle.

For the past decade, Commodities have not been a “hot” area of the market.

There’s been very little incentive to study how this space works, how capital rotates within it, or where the real opportunities tend to emerge.

As a result, when a cycle like this begins, most investors are completely unprepared.

So, even if they get the big picture right, they still miss the life-changing gains.

The worst part is there has not been a clear, structured resource that breaks all of this down into a simple, actionable framework.

Something that allows investors to understand the cycle, identify opportunities early, and act on them without wasting years figuring it out themselves.

That’s exactly why we created what we call “The Commodity Cycle Masterplan”.

The Commodity Cycle Masterplan

This Masterplan is designed to give you both the big picture understanding and the specific tools needed to help you profitably navigate this cycle.

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Basically, we’ve built a practical system designed to help you identify, track, and act on opportunities for this Commodity cycle.

This resource is designed to ensure that you’re able to quickly adapt to this new Market Regime, without having to spend hundreds of hours starting from scratch.

Our goal is to make this available at an affordable price point, so that we can help as many people as possible to Make Money in this Commodity Bull Cycle.

If you’re interested, you can purchase The Commodity Cycle Masterplan for $500 here OR upgrade your Substack plan to our $800 Founding Member tier to receive it as part of the membership.

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Disclaimer - All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts.

We suspect that hedge funds and traders took profits from the AI-driven rally and decided to start their summer vacations early.

Our Premium Subscribers we’re ready for this profit-taking event as they were for-warned on May 18th here. In the Premium Section we provided Cycle Forecasts to the end of June and you can see from the picture below, our Cycles Composite (blue) had a high on June 4th followed by a down-cycle until June 26th.

What’s Changed Fundamentally?

There are some important fundamental changes in the market that are throwing water on this rally:

1. Interest Rates - As the jobs report came in strong on Friday, the 10-Year Treasury Rate (TNX) spiked above 4.5%, a key level. There is now an expectation that the Fed will raise rates, and this is compressing the stock market.

2. Iran War - The US and Iran are in a classical “impasse”. Both sides are stonewalled at key negotiation points and neither are willing to budge. Meanwhile the oil reserves of countries are running low. The expectation that the Iran War would pass quickly is now changing.

3. AVGO Earnings - On Wednesday, Broadcom sank 13% after CEO Hock Tan declined to raise the company’s $100 billion full-year AI chip revenue target. That guidance hold—not a miss—triggered a 13% selloff in a mega-cap semiconductor name. That’s a market that has already priced in accelerating growth, where anything short of perfection is being punished.

4. End of Earnings Season - With earnings season coming to an end, the market will focus on macro instead of micro and the macro picture is not great.

Technical Conditions are Weakening

The chart below tells the whole story of the market:

• Trend - The SPY has pulled back to its 30 SMA (green), a level that must hold if this remains a strong rally. In previous advances, as long as the 30 SMA held, the market retained enough momentum to push to new highs. When the 30 SMA failed to hold and price instead found support at the 50 SMA (pink), the rally became weaker and more choppy. The recent low of $731.53 is also a critical level. If it is broken, the trend will officially shift to a pattern of lower lows.

• Support Levels - The Volume Profile shows significant volume support at the $733, $710 and $684.

• Indicators - The trend is weakening as the DMI and MACD made bearish crossovers, telling us that the SPY is now in a downtrend and downside momentum is increasing. The RSI is now below 50, further signaling weakness.

• Breadth - Breadth is weak and not supportive at the moment, increasing the probability of further downside. The McClellan Oscillator and McClellan Summation Index are both negative. There are still Net New Highs, but that number is waning.

• Dispersion - Dispersion (DSPX) is declining from a recent high, suggesting that the market is beginning to focus more on macro factors. This is normal after earnings season ends. A declining DSPX means that stocks tend to move together in a more highly correlated fashion. If a market downtrend begins while dispersion continues to fall, a "sell-everything" decline could be around the corner, as correlations across stocks increase and selling becomes more broad-based.

• Volatility - The VIX Curve is at 1.01x, close to breaking below the 1.00x level. When that happens that often tells us an unexpected event or Black Swan event is around the corner. Investors should wait until this curls up before adding long equity exposure. The VIX is now 21.51, above the 20 level, which should cause many money managers and traders to reduce overnight equity exposure.

• Options Sentiment: The 8 EMA of the Put/Call Ratio (CPC) is a reliable oscillator. When it falls to the 0.7 area, the market tends to be overly bullish (buying Call Options) and due for a pullback. When it rises to the 0.9–1.0 area, the market is often overly bearish (buying Put Options) and due for a rally. It reached 0.7 on June 2nd, which marked the recent top. Now that the market is pulling back, we’d like to see this indicator move higher before becoming more confident in buying the dip.

• Fund Flows - We can see that fund flows have stalled for the moment, suggesting investors are waiting for a better opportunity to increase their buying.

Did a Wedge Drop Occur?

Remember the Oliver Kell Price Cycle?

Friday was a possible Wedge Drop, potentially signaling the start of a downtrend. That is unless price re-claims the 21 EMA (blue) next week. The chart below shows the uptrend in 2025, where you can see that price broke below the 21 EMA a few times and reclaimed it quickly to continue the uptrend.

The Nasdaq 100 (QQQ) had a more drastic drop as it sliced through the 21 EMA and closing on the lows.

The key to this rally are the Semiconductors (SOXX). Similar to SPY and QQQ it broke below the 21 EMA on heavy selling volume. However the SOXX is closer to the 21 EMA, making it an easier reclaim if buyers show up next week.

Conclusion: We had a good run

With earnings season coming to a close, the indexes are breaking below their 21 EMAs, dispersion is declining, and the market is refocusing on macroeconomic factors. As a result, I believe there is a good chance that this rally has run its course. The market may begin a new downtrend or enter a choppy consolidation phase before a bona fide downtrend develops. Either way, it is time to protect profits and regroup for the next major opportunity.

In the Premium Section we’ll provide our updated S&P 500 Cycle Forecast extending out til the end of 2026. The Cycles Composite has been quite accurate this year and believe it will serve as an excellent guide for the rest of the year.

Disclaimer - All materials, information, and ideas from Cycles Edge are for educational purposes only and should not be considered Financial Advice. This blog may document actions done by the owners/writers of this blog, thus it should be assumed that positions are likely taken. If this is an issue, please discontinue reading. Cycles Edge takes no responsibility for possible losses, as markets can be volatile and unpredictable, leading to constantly changing opinions or forecasts. All sales are final.

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