The Market In 7 Charts: The Tea Leaves of Excess

Good morning:

Hello from my vacation spot… at the top of a Tahoe mountain…

We’ve had another week.

Now it’s time for another set of charts that tell the story Wall Street might ignore…

While everyone's celebrating new highs and talking about "healthy breadth," I'm looking at the data that matters.

The positioning. The leverage. The technical extremes that historically don't end well.

Let's dive into what the charts are really saying...

The S&P 500 has been riding above its upper Bollinger Band for eight straight sessions.

Eight consecutive days in the euphoria zone.

The last time we saw this kind of extended stretch was July 2024...

What happened next?

A swift 10% correction that reminded everyone that gravity still exists.

This isn't about predicting crashes. It's about understanding context.

When you see a market this technically overextended, driven more by algorithmic momentum and passive fund flows than actual conviction buying, you're witnessing what I call "borrowed momentum."

The rubber band is stretched.

And stretched rubber bands? They snap.

If you're long here, just know what you're riding.

It's mechanical buying feeding on itself.

The question isn't whether this ends, but who's left holding the bag.

62% of S&P 500 stocks are trading above their 200-day moving averages.

That’s the highest since January.

On the surface, this looks healthy.

Broad participation, right?

But here's what the textbooks don't tell you: late-cycle breadth improvements often signal the final inning, not the first.

We've seen this movie before.

Just when everyone starts celebrating widespread participation, macro headwinds return with a vengeance.

Pair this breadth expansion with our Bollinger Band stretch and record margin levels, and you start to see the picture.

Remember, when passive flows are driving everything, they work beautifully... until they don't.

Margin debt has reached levels never seen before in history.

This chart is wild.

Not because of what it means today, but because of what it means tomorrow.

Everyone's trying to beat inflation, chase retirement dreams, and cure FOMO by borrowing money to buy stocks. This isn't optimism…

It's desperation wrapped in leverage.

And leverage works beautifully... until margin calls show up like repo men in the night.

We've seen this before.

January 2021.

Late 1999.

The pattern is always the same: explosive melt-ups fueled by debt, followed by violent unwinds when volatility spikes or liquidity tightens.

Use this as your temperature check.

If you're playing with leverage, make sure you're not the dumb money when the music stops.

The DXY is testing the bottom of a multi-decade ascending channel.

This is a zone that has historically triggered sharp reversals.

We're at a critical inflection point.

Either we see one of the most violent dollar reversals in recent memory (which would crush commodities and emerging market risk)... or we break down, confirming a long-term regime shift toward de-dollarization and unchecked inflation.

The implications are massive.

Oil, gold, crypto, global bonds… everything moves when the dollar moves.

And right now, we're sitting on the edge...

Palladium spiked while platinum finally paused after five straight weeks of gains.

This divergence might seem minor, but it's telling a bigger story about positioning shifts in precious metals markets.

Palladium's surge could be short-covering or automotive catalyst bets, while platinum's pause suggests the easy money in that trade might be done.

Precious metals tend to rotate leadership, and this chart suggests we're nearing one of those shifts.

If you're looking for asymmetric trades, the spread between these metals often speaks louder than gold itself.

Follow the rotations. I remain long Palladium.

WTI keeps getting rejected by its 200-day moving average despite geopolitical tailwinds.

Oil pushed higher on Trump's teased "major statement" about Russia, but it still can't break through its key technical resistance. That's telling you something important.

If crude can't break out despite geopolitical support, what happens when those headlines fade?

The market wants to believe in a second-half supply crunch, but price action is Saying something else.

The longer we stay under the 200-day moving average, the more likely we see a flush lower.

This matters for inflation trades, energy equities, and the Fed's entire reaction function.

Bitcoin hit a new all-time high of $118,000.

But this isn't just a crypto story. It's a dollar story.

Ignore the maximalists and influencers for a moment.

Look at what's really happening here.

As confidence in fiat currency erodes and money supply hits record after record, assets like Bitcoin are reasserting themselves as liquidity barometers.

This breakout amid falling VIX, rising debt, and soaring margin usage isn't about technology or speculation. It's a scream for help from the financial system itself.

If this rally holds or accelerates, it won't be about adoption or innovation.

It'll be about trust… or the lack thereof.

These charts are painting a picture of a market running on fumes, driven by leverage, mechanical flows, and the desperate search for yield in a world drowning in liquidity.

We're living through:

The strategy?

Trade the momentum. Follow the positioning. Watch for the shifts.

We’ll continue to cover this world - live each day at 8:45 ET.

Stay positive,

Garrett Baldwin