Preamble
Welcome to my weekly market note where I explore what has my attention in markets and share all that’s happening in my trading systems. I am often looking for (and will highlight) notable shifts, extremes, and divergences that catch my eye. I’ve found these can be the whispers that precede the market making an overt statement.
There’s a glossary at the bottom of the note that clarifies some of my terminology. I also host chats about each market note and trade updates in which paid subscribers can follow up with questions and comments. Use the link below to join those chats.
For those of you who want more, I share my daily read of markets and volatility on X @vixedsignals and in Substack Notes. All of that content is free.
Lastly, please read the Disclaimer at the bottom of this note. It’s important.
With that said, let’s get after it…
Performance Snapshot
More details are provided in the K.I.S.S. section
2025 Portfolio P&L: +7.1%
2025 S&P 500 Return: +0.1%
2025 Portfolio over/underperformance: +7.2%
I assume most of you missed the Billy Madison reference in the title of this note, a consequence of my vague, poorly constructed reference, not due to any lack on your part. And yes, I meant to spell it wrong. The whole point is that the oil market came alive to end the week. Unfortunately, Substack doesn’t let you embolden or italicize titles so here I am explaining myself. *shakes head in shame*
Of course there’s a Youtube clip of all the relevant Billy Madison scenes. God bless the internet.
One more thing before we get started: I tried something new this week and added two videos to the note. One takes a look at what I was seeing in the VOL complex and the other details the setup in Crude Oil. You can speed up the playback if you click the “> >” icon in the lower right corner of the video. If you like this format, let me know. I’d like to include more of these if they’re valuable. Constructive feedback is always welcome!
The Bird’s Eye
View from ahigh
The week was about as boring as it gets to start and about as exciting (for lack of a better word) as it gets to end. In the middle, we had cool CPI and PPI prints, talk of positive developments in a U.S.-China trade deal, more weakness in the Dollar, and some warning signs in the VOL market. How I see it…
Stocks: Resilient
U.S. Dollar: Weak
Bonds: Left for dead
Metals: Strong but stretched
Bitcoin: Unloved near the highs
Energy: Wide awake
VOLs: In need of more fuel
The Market’s Mouth
Straight from the source
The end of this week gave us a clear look into how the market is valuing traditional safe haven assets. Below is a 10-minute chart of the 10-Year Treasury Note (orange) versus Gold (black) during the Thursday and Friday sessions.
After the bombing began, bonds were bid for about 15 minutes before rolling over and dropping the rest of Friday. They printed a series of lower lows and lower highs, pushed far below their Thursday lows, and closed well below where they were before the bombing started.
Gold, on the other hand, climbed to new highs late in the Friday session, closed near its high, and its Friday low was well above its price before the bombing began.
The message from the market doesn’t get much clearer than this: U.S. Treasuries were not the market’s flight-to-safety choice.
Under the Hood
Volatility, Correlations, & Dispersion
An uptick in implied correlations (ICs) is still at the heart of the move higher in volatility. The green box in the image below highlights the action this week. As you can see, the blue line (COR1M = ICs) climbed higher all week while VIX (black line)
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