Good morning — Steve Place here with Convex Spaces.

I’ve been in a quieter period recently, and there’s a very specific reason: I’ve joined Citrini Research, a thematic macro analyst firm.

If you’ve heard of them, you already know the vibe. If you haven’t: they’re currently…

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But odds are you woke up on New Years Day with a little hangover and zero dopamine. Guess you better wait until next year!

We’re terrible at keeping track of time, which is probably related to how we are terrible at thinking about compounding interest.

But we do have days that act as totems. We talk in terms of quarters and earnings, and even though it’s arbitrary, Wall Street uses a Year-To-Date benchmark.

So it’s a paradox. The new year can bring in new capital flows, but it’s not like there’s a new emergent investment theme that’s going to pop up over Christmas.

(Except Venezuela)

There’s also this tendency that I have to immediately consider fading the consensus from 2025.

Which would be AI. But that simply doesn’t track.

We are still in the Coca Cola market. We aren’t seeing a Bubble with a capital “B,” but a series of small bubbles where capital jams into a bunch of stocks all surrounding a narrative.

That’s still the trade. Space and sats are in play right now, and the AI-storage plays like SNDK still have legs.

And there’s still biotech and banks on a run, industrials are at new highs, and overall breadth looks solid.

But if you’ve been playing NVDA, it’s been 3 months of disappointment:

It looks even worse when you consider the relative performance of MU over NVDA:

This is a stock picker’s market.

With the VIX holding under 15 and the dispersion of returns we’re seeing from Megacap stocks, it could be “boring” for passive investors while there are some incredible plays underneath the surface.

Chip of Theseus

Another problem with time is anchoring bias. A big event happens, and even if it was a decade ago, you still operate within that original environment.

It’s how sentiment stayed bearish through the first half of the 2010s, because we were all anchored onto the GFC.

Investors can also anchor onto the vibes of a company and assume that it’s going to be the same every year.

I remember getting smoked on GE becoming a value trap with a reverse split, and I just assume that the stock has sucked ever since. Nope, it’s up 750% from the 2022 lows:

Companies can change. You fire the CEO, bring on different directors, have a “turnaround,” acquire a company at too high of a price, burn through too much cash, lose market share…

Sometimes the turnaround manages to work. Enough overhead gets cut and cash flow improves, and some innovations get the stock moving again.

General Electric has been around for a long time, but the company looks completely different than it did a century ago.

This kind of transformation can take years. Unless you have the government throw you a wad of cash and grease the skids.

I have anchoring bias with Intel. I think it’s the same, vertically integrated CPU giant from just a few years ago.

But with the CHIPS act, the Fed investment, and a ton of fundamental pivots from the past two years…

… and it’s a new company. I wish they would change their ticker.

This matters because the stock is coming into large levels of “resistance” back from 2018-2021. But I’m thinking that these levels may not even matter due to the structural changes of the company.

Wait, How Much?

SpaceX is expected to IPO this year, which means our boy Elon is out hyping it up. That means the numbers can be a little hyperbolic… but it’s still an eyepopping amount.

Here’s the math…

Starship currently carries 100 metric tons of payload into LEO. With 1,000 rockets that’s 100,000 tons that you could put into space.

And the rockets are reusable, that’s not even per-year.

The U.S. is currently sending over 2,300 “things” into space per year. It’s a hockey stick:

The total payload weight is about 3,000 tons per year.

With Elons projections on rocket buildout, that means we could see a 30x-100x increase in space payload capacity.

Another way we’re bad with time is that investors think the stock and a company are the same thing. We’re looking for immediate results in the form of share price appreciation, but it takes time for companies to do things. I know, it’s hard to hear.

The “hype cycle” in the market has been so compressed that a stock can rally and crash before the company can even deliver on results!

We’ve had multiple bubbles pop in the AI infrastructure space… but the AI data centers aren’t even built!

Elon can manufacture at scale, but space capacity still has a while to go before it’s built out.

It’s still early.

Equities are still stuck in the “paint drying with a small markup” trade. It’s a ton of chop, failed moves, and statistical noise.

Welcome to holiday trading. Institutional flows dry up and you get one or two smaller themes that go on a run.

Often it’s a hot narrative that gets some small-cap runners squeezing.

But this time, it’s silver.

It’s Different This Time

In my pre-Christmas post, I shared some thoughts on silver:

As I said above… this trade is still early. Silver just closed at highs, I wouldn’t be shocked of another gap higher and maybe a chase as shorts get blown out.

In fact, Friday December 26th is a trading day, and given the kind of liquidity environment you see in between holidays it could lead to the blowoff we’re looking for.

The call has been a good one (so far) but my expectation on pathing has changed.

I have keen memories of the 2011 parabolic in silver. It was a crazy market and the silver bugs were throwing out all kinds of fake news… like how Interactive Brokers was colluding with banks by raising margins on silver futures contracts.

Or how JP Morgan is stuck short and manipulating the market. That kind of news just got recycled overnight with a fake headline about a bank failure from the silver short.

The fever pitch became a roar where silver bugs claimed you needed to own physical silver, and that the SLV fund had structural issues.

That caused a large premium to be introduced in PSLV (Sprott Physical Silver) compared to SLV:

Once silver faded, the premium collapsed.

And with this recent rally, we haven’t seen a similar kind of markup.

Because this time is different. It always is. The silver market is completely different from 2011. There’s more funds, more liquidity, and a LOT more traders in the derivatives market.

Which is why the backside slide is going to be so difficult to hit.

In a broader context, shorting silver using options is a VERY high-risk and sophisticated trade. If you asked a financial advisor if you should take the trade, they would look at you like you had three eyes.

Yet the total participation and volume in Degen markets have skyrocketed since 2020. Option volumes are up and you have many more people out there trying to nail the short.

Odds are they’re not straight short with futures, and they’re not going to be selling a bunch of calls… they will be buying puts.

The silver VIX spiked up to 75, which has been close to a peak and higher than what we saw during the 2011 parabolic.

If you have a bunch of traders buying puts and trying to play a hard parabolic unwind… then the selloff will be cut off due to derivative driven adjustments from dealers and other market participants.

My best (and incomplete) analogy is what has happened in OPEN:

This stock had a ton of eyeballs on the $10 move, and everyone got beared up with buying puts and looking for the “obvious” parabolic unwind. And then it didn’t hit… it just chopped around for well over a month.

Don’t be shocked when the games start! Silver had a gap down this morning but can’t rollover because it’s so crowded:

The trade setup I shared with Clients is still the best one I’ve got— it is bearish but also captures some time decay and positions us for the eventual unwind.

Captain Icarus

Holiday trading can be a widowmaker for traders. You’re bored, searching for an edge, and you take on a trade with a little too much size in a market that has a lot less liquidity than you think… and then you blowup.

Sometimes that blowup can be public.

“Captain Condor” is a trader that hit the spotlight this year. He’s an options trader that runs a service specializing in selling 0DTE iron condors. This is a trade where you bet on the market to be in a range for the next day.

It’s worked very well this year. I speculate that part of the success of the trade has been the elevated risk premia on longer dated options, which created a kind of liquidity flywheel that helped an edge bleed over into the short term options market.

Captain Condor is such a large trader in a specific niche that we can see the strikes of the trades he takes. They’re massive positions, and because we know the payout of the trade we can see where the paint points are on the trade.

Holiday trading means much lower liquidity available in the market… and the trade got runover.

Twice. It was rough enough that it required a twitter post on Christmas Day

I’m not here to pile-on the suffering… but sometimes it’s better to learn from other people’s losses instead of making the same mistake on your own.

I’ll share those lessons in a moment, but first let me take you back in time a decade…

The Supertrader

Late 2013 to 2016 were the golden age for iron condors. Vol and skew were still elevated but more importantly the market was in a high reversion mode.

Even in the post QE uptrend, the S&P would have normal pullbacks that would get you out of trouble if you were betting on a range.

It was such a good environment that there were traders who seriously leveraged into these trades and became famous.

Like Karen the SuperTrader. Her story made the rounds and she took a couple interviews, talking about her size and how she’s moving from retail into running other people’s money.

The trouble hit in October 2014— this was the Ebola selloff.

This selloff was different, because it was the first proper “V” we had seen in modern markets. In other prior pullbacks there were retests and ranges, but this was different because it was event risk and options were starting to influence markets for the first time.

If I recall the story correctly, Karen rolled down some short calls and ended up getting runover on both sides of the trade.

Even through that, iron condors still worked incredibly well. There was a 6 month period in 2015 where the S&P traded at 2100 the entire time. Easy money.

After the 2016 election, the trade stopped working:

Short volatility got crowded. You had instruments like XIV and SVXY that started to drop the premium available, and call options had their IV tank, which meant you were taking on a lot more upside risk. And while realized vol remained low, there was very little reversion on the table.

The CBOE have benchmark indices, which allow you to track various strategies.

Here’s CNDR, which simulates the performance of a 1-month, 20 delta iron condor:

Had you done this blindly and with no risk management, you’re breakeven over a decade.

Traders like Captain Condor are searching for systematic option trading strategies. A kind of sustainable edge in harvesting risk premium.

And they exist— but they aren’t persistent and the edge shifts to different strategies over time.

The problem with systematic options trading is that it’s naïve - not in a derogatory sense but in terms of lacking context.

Are you going to systematically sell a straddle? What if it’s a 9% vol and tomorrow’s a Fed day?

Here’s the takeaways:

1. Systematic option trading will always evolve to have hidden left-tail risks due to edge erosion or very adverse markets.

2. Adding filters to a strategy will significantly reduce your blowout risk. For example, there are strategies that you probably shouldn’t do when the VIX is at 50.

3. Option traders overfit on vol and not enough on trend. If you sell an iron condor at a 15% vol and the market trades at a 9% vol, you can still lose money if all of that vol is spent moving in a single direction

4. You must understand that volatility and liquidity are different perceptions of the same object. When you sell vol, you’re making a bet that liquidity supply will be high enough so price doesn’t move that much. But if you’re a 0DTE iron condor whale who put on a trade during the holidays, the liquidity risk exists not just from low volume but because other traders will shoot at your position

The Santa Claus rally. It’s all we’ve heard about this entire month:

And with the small rugpull a week ago, traders were screaming that their “guaranteed” statistical edge refused to show up.

The Santa Claus rally has a very specific timeframe— the last 5 days of the year and the first 2 of the next. The window opens tomorrow and goes until January 5th.

Market participants are grasping for Narrative straws. We’re in a kind of news vacuum, where the Fed’s out of the way and the AI hangover has already pushed through with hard pulls in anything with a little too much leverage or not enough perceived upside.

And with all the noise, hype, crashes and commentary… the Nasdaq has now been in a time-based correction for at least two months.

What if the sideways move has built up energy for the next leg higher? It’s sexy to call a top right now, and I’m sure there’s some January liquidity dynamics that could be a good shakeout.

But what if that was it? MSFT, NVDA, META, and AMZN have all had solid pullbacks. Even a normal bounce puts the Santa Claus rally on the board for large cap tech.

Higher is still the contrarian take. Yet I do want to gameplan how sentiment could play out in the Futuretech space as we head into next year.

AI Curves

Humans are linear by nature. We have a hard time understanding the convex nature of things like compounding and Moore’s Law.

Our linear assumptions do adjust as technology accelerates— kind of like riding the tangent on the curve.

Sometimes there is a kind of “step” in our perception of what will happen. This can be from a headline or a new GPT version release:

We absolutely saw this in 2025 with the “buy anything related to AI data centers” rolling bubble that came and went in the second half of the year.

I’m still very bullish on this space. The innovations that are going to come out of this haven’t been pulled through yet.

But there’s one problem— AI is hitting a series of bottlenecks at the same time. Power, memory, GPUs, data centers. The Stargate data center in Abilene won’t be done until summer 2026.

That means the Futuretech exponential curve could have a small divot in it.

In the first half of the year, the AI hype cycle could invert. It’s not because new innovations are completely halted, it’s that the perceived incremental gains from AI tech will be much lower than what’s actually happening underneath the surface.

If we “normalize” this curve, then it lines up with the current narrative cycle:

Yes, I know my MSPaint skills are incredible.

The green hype cycle finished sometime in October. It’s now reverted back towards the actual expectations of the AI bull market, but if we’re hitting physical limits on making better models, then the collective psychology inside the market could throw a tantrum.

That’s the risk. It’s not inflation or the Fed, it’s that we’re going to be a bunch of crybabies if AGI doesn’t show up in the next 3 months.

And there’s one more part of the market that could help reinforce that action… but not for at least a month.

The Vol Crush Finally Hit

Spot VIX has cracked 14 and looks ready to find a new floor. Some of the risk pricing is from holiday trading, so I’m showing you the 3-month VIX above, and it’s also getting crushed.

The market has been resilient since the Tariff Tantrum due to a sticky (and naive) bid in volatility markets. Everyone wanted to own protection and keep one foot out the door, which led to a market that was overprotected to the downside.

If we get a VIX that finally trades into the 12s… it’s not bearish, at least not at first. If we stay in those levels for a full opex cycle, then that’s when hedging is going to pay off.

We’ll worry about that next year. For now, let’s take a look at the Fat Pitch to end the year:

Silver Is Ripe For Reversion

I have somehow have not tried to fade this yet. But we’re coming into rarefied air for silver where a well-structured fade trade should pay out nicely as we head into next year.

I don’t think that we have fully topped out yet. Ideally there’s some kind of exhaustion gap during holiday trading that traps some shorts and starts the unwind.

But we’re close.

For the silver permabulls— congrats, take your victory lap, and don’t get butthurt when I get bearish. I’m not making a bet on the global financial system or money supply or any other macro trade… it’s just math.

Like how silver is very stretched above its 50EMA on a weekly chart:

The last signal I’ve been looking for has been a blowoff in silver options:

The silver VIX is getting close to 60, but it’s been a grind higher and not a blowout.

Can silver top out without a bang? I think it’s possible, but a 3xATR move with vol tagging 70 can work just as well.

If you’re going to short, don’t be an idiot. If you know how to trade uncapped risk with shorts or short calls, then your risk is some kind of overnight “f-you gap.”

If you’ve never tried to fade silver parabolics with uncapped risk, then do not do that. There’s better structures that give you solid risk/reward payout, and now’s a good time to start scaling in.

Our SLV trade is available to our Convex Spaces Clients, to whom I wish a very Merry Christmas.

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The S&P 500 is trying to hold onto some key levels to open the week. There’s price support, the 20EMA, an AVWAP from the November swing lows, all lined up to where price is sitting.

Problem is… this was the setup for Friday. There was no bounce and we’re back into this level, which gives it a much higher odds of breaking down and trapping some bagholders.

Structure for the Nasdaq is quite different:

It appears that we’ve got a lower high currently knocked out in large cap tech, with clear relative weakness against Friday’s lows.

You could make the case for a support hold, but this is setup for some “back and fill” kind of action. Looking under the hood, that’s already hit. NVDA, MSFT, META, and AMZN are already in decent corrections while TSLA, GOOGL, and AAPL try and keep the market from getting killed.

With Mag7 correlations low and clear rotational dynamics hitting banks and smallcaps, we’re setting up for a (continued) chopfest into the end of the year. T

Here’s how I’m playing this market:

Preserve financial and psychological capital. If there’s a swing setup out there, it better be pocket aces because I don’t feel like being tossed around in random price action.

Play Reversion. Don’t chase breakouts or breakdowns. Instead look for names that are stretched (on either side) and look to fade. That means if AAPL or GOOGL get killed on a liquidity pull, that is good for a bullish setup.

Place moonshot bets. There are some solid narratives developing into next year, and many of the option boards are “bored” which means you can pick up some cheap convexity by buying 3-6 month calls.

The Bubble That Never Inflated

Have you ever heard of the “Pumpkin Spice Latte” investment thesis?

It’s where you find a narrative or trade setup that is incredibly obvious. In fact, it becomes so obvious that the investor zeitgeist seizes onto the idea. Often the PSL thesis is an incredibly surface level observation and not rooted in reality, but we are talking about the stock market here.

If a PSL thesis gains enough steam, then it affects pricing and there’s no longer an edge to take, regardless of whether the PSL thesis is true.

With that frame in mind, think about how everyone and their mother is talking about the AI Capex Bubble.

But if prices have already reset, can there be a bubble? If a tree fell in a forest two weeks ago, can it still make a sound?

ORCL has been cut in half since their AI capex announcement. Even if the AI Capex narrative has legs, how much juice are you going to get out of the trade?

How about CRWV bonds:

These are trading like they’re junk. But the AI Capex trade hasn’t had any material changes to the outcome. The data centers are still getting built, and it appears growth is still sticking around.

I’m warming up to the idea that the AI bubble could never happen because we’ve already had a reset. Infra names like NBIS and APLD are getting taken out to the woodshed.

Adjacent names like OKLO had a mini squeeze two weeks ago and have now fully unwound:

My squishy feel on sentiment is that everyone wants to feel smart at the holiday cocktail parties and the best way to do that is to be bearish. You’re the smart contrarian!

But the move has already happened in the markets. We’re close to a point where the PSL thesis has run its course… and many of these names could have solid oversold call buy setups on just one more flush lower.

New Year, New You. And a New Market.

The AI trade is sucking all the air out of the room due to the sheer size of the Mag7 trade. If US investors are focused on indices, then they’re focused on the AI trade. But that wasn’t the best play this year:

Every year a chart like this rolls around showing how disparate returns can be. The Nasdaq is up 20% on the year, which is right on the edge of “unusual.”

What if the trade isn’t “up only Mag7” next year.

What if it’s not even in the US?

This is the relative performance of emerging markets relative to an equal weight Nasdaq, which has been a drag for years. We’re in the middle of a Fed cutting cycle and energy prices are low.

It’s time to pull the blinders off and expand your watchlist. Banks and industrials have started to rip, and international may get us some great momentum setups into next quarter.

One opinion I’m testing out is a market’s sensitivity to upside due to changes in AI and robotics. Capital has flooded into US hyperscalars, but what about the Chinese? What if Asian economies rollout physical AI infrastructure faster due to governance and population density?

Maybe BIDU will finally get that second leg:

The Danger of Being On-Chain

Missing from the matrix chart above is crypto and how it’s one of the worst performing asset classes this year.

Welcome to Wall Street, where the HODLers turn into paper hands overnight and the liquidity flows end up being a risk for the assets.

Bitcoin still has some hangovers. Everyone’s waiting for the Microstrategy squeeze, and I’m sure tax loss harvesting is providing some negative drift, but there are structural elements at play as well.

If you used BTC as a way to move cash around, especially if you operate outside the SWIFT system, then you may not want an asset with a 40% vol. The issuance and growth of stablecoins from Tether and Circle have shaved off some of the marginal demand from BTC.

A good way to view the crypto market is that the value of the token is a function of the utility of the protocol. As perceived utility unwinds, so does the value of the token. This perceived utility could be related to stablecoins, or other layer 1 protocols, or even just price action in the token itself… a little reflexivity gets baked in.

And Bitcoin doesn’t really do much. It’s a self-reinforcing network that stores and moves value.

Digital gold.

Ethereum, on the other hand, still has the potential for skyrocketing utility. That case has been early for years, but price action is starting to confirm this idea:

This puts ETHA and BMNR in play into next year.

Up Next For CS Clients

There’s a chart structure that I’m seeing on a few futuretech names, and I’ll use Planet Labs (PL) as an example:

It’s the “why won’t you die” setup. The stock clears a very large base, and instead of going straight shot higher, it consolidates for a month or two before starting its next big move.

If you can find some of these names and buy some OTM calls, odds are a few will pay and the gains will blow past any of the papercut losses you have the others that don’t hit.

We’re going to look at two names with solid narratives behind them and the “why won’t you die” setup…

… and I’ve got one name that is, quite literally, a moonshot.

If you aren’t a Client of Convex Spaces, we’d love to have you. Subscribe to get the option trade setups.

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Hard reversion, failed breakouts and breakdowns on both sides. Under the surface it’s starting to perk up— the Russell just tagged new highs and sectors like financials and industrials are following as well.

Yet if your primary exposure has been in market-cap indices, it’s been a paint drying kind of week.

This is rotational, and there’s signals embedded within:

Apple appears to be betting on the hardware layer while the hyperscalars battle it out. Google announced their TPUs and it’s been a hard rally since.

Yet anything that appears to be tied to the OpenAI CapEx trade has been punished. Nvidia’s weak, Broadcom just got killed on earnings, and Meta is still licking its wounds from the last earnings report.

Thsi is still the primary narrative in the market. So when Oracle announces, TWO DAYS AFTER THEIR EARNINGS EVENT, that their AI datacenters are going to be delayed, you get a move like this in the Nasdaq:

Is Larry Ellison Building An Overpriced Scooter?

In 2001, the Segway was released to the public. It was going to be the new revolutionary mode of transport for the low price of $5,000.

There were multiple problems with the product. You look like a giant dork riding it and for actual use cases they just didn’t make sense.

And it was early. Cities are now full of e-bikes and scooters with a much smaller form factor than a segway, even though you still look like an idiot on them.

AI models are still on the exponential curve, with each release having some order of magnitude improvement.

But if you’re in HR and just need something to help you get through your emails… that’s already a solved problem and doesn’t require any new frontier research. This is the risk for the AI CapEx trade. The infrastructure buildout will create new models as we aren’t near the limits of physical scale… but who wants to buy the newest models?

I’m not predicting that the AI trade will fall short, but this is the emergent perception that’s building up a new risk premia in large cap tech.

The new models are in the “prove it” phase, and debt issuance from firms like ORCL create a kind of narrative sensitivity where delays are punished, especially when you’re spending money like crazy:

The upside for the hyperscalars is still there. After this next big CapEx buildout, they can offer the same product to multiple customers, and if it turns out that the new models have a breadth of value that makes it more like an F-150 than a Segway, then maybe the Forward P/E on the market will be justified:

Satellites and Scale

The new Space Race is running a similar narrative pattern as the AI trade. You’ve got firms that have blown through a ton of cash getting their satellites up into orbit.

But you only have to pay for that once. And if your sat network provides enough value, then you can sell the same product to multiple customers.

Planet Labs appears to have unlocked that theme:

The company got to breakeven on their earnings and guided up on revenue. This is not the first monster earnings beat, and probably won’t be the last.

There’s some interesting tech coming down the pipe for space, but the way I’m thinking about these stocks is that they’re now defense companies in a domain that the USG is spending a ton of money on.

It’s easy to test. Go on google and search “defense contract award {your favorite space name}” and you’re bound to find some recent news.

VSAT won a defense contract in October.
SATS has ongoing contracts with the Navy.
IRDM just inked a deal with the Space Force.

The United States isn’t finished being hegemon, and the space trade allows the military to have “map hacks” against its adversaries. There’s a reason Russia can’t make any inroads in Ukraine, because we can see down to the individual soldier where the troop buildups are.

And it’s how the US can blow up small drug boats.

Missiles and Macro

If you’re a poor fisherman in the Southern Caribbean and you’re running a boat with 4 Mercury outboards each worth $30k…

… you’re going to have a bad time.

Venezuela is in play. The US just seized an oil tanker as a way to enforce sanctions, and don’t be shocked if Maduro is out by next summer.

But let’s talk about the drugs. The US now has aggressive surveillance on any cartel traffic. This includes the Pacific, Caribbean, and overland.

Take away the externalities of drug overdoses and societal costs, and just think about the numbers. China sells the precursors to the cartels, who then traffic the drugs into the US in exchange for dollars.

Those dollars are then laundered through CCP money laundering networks, like the entire city of Vancouver.

The US spends about $200B per year on illegal drugs. A good chunk of that cash doesn’t stay in the US— it’s laundered out. And in exchange for that spending, the US receives a commodity with zero consumer surplus and a ton of negative externalities.

Due to the size of the market and trade, the drug war is part of the trade war. Which means if enforcement does hit, then slowing the spigot of USD exiting the country from drug sales could end up having larger macro impacts into next year.

Blow up enough boats and the Fed can cut.

Up Next

We’ve got another EV play lined up, an oversold peptide call buy, and taking a fade on the strongest stock over the past 3 years.

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You can do all the research in the world. You can slap every single indicator on your chart to line up the perfect entry.

Yet when it comes to the hard right edge of investing, where the outcome is unknown, you need to trade stupid.

Sometimes, many times, the best edges are when the setup appears exceptionally stupid.

It’s why momentum trading works, because the “mid” take would be to wait for a pullback for better prices, because you are scared of buying the highs.

It’s why the contrarian trade is rarely that because too many midwits are thinking the same thing, and they have to get blown out of their position before edge actually shows up.

And it’s why some of the stupidest ideas end up working out the best.

I say all of this to give you a little mental priming so I can ask this question:

Why Not Adobe?

If you’ve been neck deep in the AI market narrative, you know that Adobe has been the clown in the room. If you can have GPT edit your photos from you, why do you need to buy a license for Photoshop?

LINE GO UP!

Company leadership recently raised full year rev and earnings guidance. Apparently not by enough to make the market happy, but the “mid” take here doesn’t seem to be lining up with what’s actually happening at the company.

And to tie it all together, the stock has seen failed followthrough on the recent downside pushes:

It’s still in a downtrend, and there’s some trapped “value investors” from earlier this year. But I wouldn’t be shocked if the stock is hilariously underowned due to a naive understanding of how AI will affect the company.

Does FutureTech Needs More Time

This daily chart of OKLO is typical of how the AI pick-and-shovels trade is playing out. Great run in October, then a crash and unwind into November opex, and now some signs of life with some decent momentum.

Is it time to load up the boat? I still think it’s too early to tell. Here’s an example with CRCL after its IPO parabolic:

After resetting, the stock went into a range and had a hard bounce, which was met with aggressive sellers and bagholders looking to exit. The narrative was played out and valuations were too high, leading to a grinding bear market and a roundtrip to the IPO trading levels.

The Futuretech trade is going through a wheat/chaff moment, where the players that have sustainability (and maybe increased backlogs) will continue to push higher while others get taken out to the woodshed.

As a not-so-hypothetical example, maybe the memory play is still early, and while the chart of SNDK looks extended, it’s still just a 30B company:

Meanwhile, RGTI doesn’t actually sell anything and may need to raise capital to keep their science experiments turned on:

If you have your AI basket watchlist, you can start monitoring the relative strength/weakness within the subthemes. The ones that hold up into 2026 have high odds of momentum continuation.

Breaking Down the Knifecatch Setup in IWM

Post Tariff Tantrum, the indices have been a grind higher with a couple “one-shot” bear markets thrown into shake off the excess. There’s been harder resets under the surface, but the high-correlation-run-you-over kinds of trades have lasted a day or two.

There’s a trade setup that I love to take in this kind of environment. During a downside liquidity break, you don’t know if it’s going to be a durable low, or if we’re going to finally see the market get killed as too many are leaning one way.

Either way, it’s practically guaranteed that price will not be “sticky.” Price will rapidly move away from price.

This is where it gets fun.

The options market has been incredibly sensitive to these kinds of liquidity events. The VIX spikes and the offer lifts on out of the money puts because nobody wants to pick up nickels in front of a steamroller, they at least need a dime.

On the call side, you have investors that start selling calls in their positions, and the degen call buyers are nowhere to be seen. This leads to calls becoming a little cheaper.

This is where the “knifecatch” setup comes in:

Here’s how the trade works:

1. You buy some cheap calls

2. You buy some kinda-expensive puts that are close to price

3. You sell some more-expensive puts that are further away

It’s a combination of a put spread buy and a call buy.

So if the market gets killed, you make some decent profits, and if the ATM skew starts to get sold into a hard pullback, then you get an extra kicker from the spread you bought.

If the market rallies, then the skew drops which helps blunt the losses from the put spread, and the cheap call option is now making bank on some kind of a rally.

The only risk you have is if the market goes in a range… but when we have a downside liquidity break the odds of that happening are quite low.

Two weeks ago, I built out this exact trade setup for the Russell 2000 (IWM). Assuming no adjustments, the trade is up 24% without taking a whole lot of heat.

I’ve unlocked the post so you can see the entire thing:

Threshold Trading With The Russell

I’ve got a confession.

I talk a lot about index weightings, especially with the S&P 500 and the Nasdaq. When the Mag7 move, the market will get taken for a ride.

That’s what happens when your favorite index is market-cap weighted.

Just like the Dow. Right?

I’ve been in the markets for a long time, and while I don’t often look at the Dow, I have a pretty good feel for how it trades. But it’s not cap-weighted. It’s price-weighted.

I never knew this because any time I saw the specs for the Dow, I just assumed that price weighted simply meant the value of the company.

That means if you have a company with a $500 price but half the valuation of a $10 stock, it doesn’t matter. It sounds stupid until you remember that a century ago they probably needed a quick and dirty method, and it stuck.

So what about the Russell 2000? It’s easy to think it’s “equal weight,” but just like the S&P and Nazz, it’s market cap weighted.

You just don’t know it because they reset the weightings through a “reconstitution” process. There’s some plumbing involved and you may be able to find some seasonal edges in anticipation that event…

But here’s where it gets interesting.

This is the top 20 stocks by weighting in the Russell. You’ve probably heard of some of these names. And the reason they’ve got a higher weighting is because they’ve had monster runs this year.

Here’s the research I’ll be doing into the new year. I want to see the shape of the weighting distribution to find out what is “statistically significant,” and then I want to place a “threshold” alert whenever any individual name crosses above, say 0.20%.

The reason you’d look at this kind of alert is that if broad markets are getting killed, you can start hunting down some relative strength plays hidden under the surface.

Polymarket Death Maps

The betting markets are hitting escape velocity, and Kalshi just had a $1B funding round at a $11B valuation.

And you can bet on anything. It’s the wild west. You can bet on sports, politics, words in statements and government overthrows.

The dystopian side of this has already hit.

A few years ago I had the idea for a short story about private military contractors that helped the uber-wealthy monetize their “death odds” whenever they spiked. If you have someone plotting an assassination attempt, and the decentralized markets start to see some action, then you take the other side of the contract and then go hide out in a bunker until the contract expires.

We haven’t yet gone that far, but holy shit we’re close.

This is Polyglobe, an app that overlays prediction markets and geopolitics.

That’s right, you can bet on the frontlines of the Russo-Ukranian war.

And it’s going to get weirder. People in intel agencies will start leaving footprints in the markets, which is then a kind of “meta-intel” for both sides of the battle.

And soon, AI agents can buy a contract and then deploy autonomous drones to guarantee the outcome of the battle.

I don’t want to debate the ethics of it all… instead let’s look at another part of the globe:

WTF Is Going On In The Caribbean

Venezuela appears to be in play.

The USS Ford carrier strike group is now in the Caribbean and the US is taking out drug boats every week.

Current odds are a coin flip that Maduro will be ousted by the end of next year. It’s still a guessing game… but I think there’s an edge to be found in the “old school” stock market.

Venezuela has lots of oil, but terrible infrastructure. Some of that is due to US sanctions, other parts from it being a nationalized industry run by absolute idiots.

But if their oil fields get access to the free markets again, then I’m anticipating that oil services stocks are going to have a good 2026.

Up On Deck

We’re going to take a look at an energy stock that has all the right tailwinds— US policy changes, international partners, and some upside convexity that’s not priced into the stock.

We’ve also got a structure on how to play some of the futuretech names, and another look at a moonshot trade that looks ready for a fast double.

If you aren’t a Convex Spaces Client, we’d love to have you on board.

Read more

Sometimes you see traders and lower information participants get super beared up, anchoring off of one headline. Like how everyone wants Bitcoin to trade to $75k to force Microstrategy to sell, which means instead we get a face-ripping rally:

What about stocks?

There’s not a whole lot going on. Just a bunch of nerds arguing about the benefits of TPUs (GOOGL) vs GPUs (NVDA).

The markets are adrift, in a choppy, noisy range that only has edges at the extremes:

I wouldn’t be shocked of a little selloff here. Nothing crazy, just enough to fill a gap and a little more to get traders positioned on the wrong side of the market.

But it’s not bearish. It’s a boring market, and tough to short.

You’ve got a spot VIX at 16.5 going into holiday trading. And while the market vol has been in the 16s… the past 5 days are back into the single digits.

And if you want to know why the liquidity flywheel keeps a bid in stocks, you can read more here:

Fire and Forget Options Trading

Here’s a fun secret: the market makers aren’t out to get you. In fact, they don’t care about you.

It’s cliché to talk about trading in casino terms, but I did see a great concept this week about EV on both sides of the trade.

When you’re a “dealer,” your edge is from spreading your bets across many different outcomes as possible. You want as many people at the roulette table betting on every single number, because the aggregate payout relative to the risk you take gives you an edge.

You can have a few lucky players strike it big, but you still maintain an edge and the dopamine hit of the big payout keeps people at the table.

When you’re a retail trader, your EV goes down the more numbers you bet on. Concentrated bets work more in your favor rather than a “spray and pray” method.

There’s some nuance to this idea, but the idea still holds that if you’re going to be on Red 5, it needs to be an absolute lock. Because unlike a casino that has random chance, you can skew the odds in your favor… but the casino doesn’t care if you get paid because they’re managing all the other (terrible) bets.

Market makers also don’t care about you because you are trading a completely different market with respect to timeframe. Citadel is too busy gobbling up orders on 0DTE options to care about some call options you bought 6 months out.

When you combine these two— bet concentration and timeframe— you can build out a solid edge by buying longer dated, out of the money call options on stocks that you think are going to go up.

These tend to be smaller bets initially, but if you’re right your exposure increases. And there’s no conspiracy to keep price levels suppressed, because the dealer on the other side of the trade hedged off the counterparty risk weeks ago.

We’ve got two “fire and forget” bets that are working well for us.

Rocket Mortgage (RKT) is taking a shot at the summer highs, with some juicy tailwinds surrounding the Fed balance sheet and more (potential) rate cuts. If it manages to stick, then this can run to $25 into next year. Our March $22 calls are about a double from calling them out on November 23rd.

Unity (U) is another one with a monster base and an AI layer trade. Sellers have shown up at $47 for years, and this may be the time the breakout finally sticks.

The April $60 calls are up a bit, but we are shooting for the moon on this one.

Up On Deck

With lower volatility comes lower correlations, and it becomes more of a stockpickers market. We’ll let the nerds fight it out over who has the best AI semiconductor architecture and go into some spaces with fewer eyeballs but clear-as-day accumulation.

If you aren’t yet a Convex Spaces Client, we’d love to have you. You can subscribe here.

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I’m sure you can blame holiday trading and low volumes for the walkup higher, yet that is (and continues to be) cope, because you can’t bet on trading volumes only price.

This is a trading range. We’ve been in a trading range. When you get near the lows of a range, it feels like the entire bid is going to be pulled, then all of a sudden buyers show up.

The VIX spiking above 25 helped. So did the GOOGL gap higher.

Now we’re at the upper end of the range, and now all the prairie dogs are peeking their heads up again to see if the coast is clear.

And it’s possible. I’ve got a scan that looks for stocks with a 10% weekly gain. It’s been listing about 50 stocks, and it’s currently sitting at 200 stocks.

The nature of the bounces aren’t all the same. Some are coming from soul-crushing lows, others are trend continuation patterns.

And the distribution has shifted. The best way to show this is to look at three indices and compare the recent pullback relative to recent structure:

When you look at the average stock, this was a much deeper correction, with clear extension lower from the October liquidation lows. It got ugly out there, magnified by hard resets in momentum darling spaces like nuke, quantum, and AI proxies.

And the price action in crypto has put a knife in risk appetite.

But if you’re just playing the Mag7, it’s been a hiccup:

Due to the relative outperformance of megacaps, this has kept “Johnny Passive” away from panicking and making stupid decisions. All of the churn and correction happened under the surface, attacking the higher risk spaces in the market.

Maybe that was the bear market. At the November lows, the average Nasdaq stock was flat for the past 4 months. A time based correction.

I’m not expecting “rip roaring” market action yet. If we make new highs without an exhale I’ll be looking to fade it.

For now, I’m expecting the range to keep going and emotionally exhaust market participants as everyone is trying to guess at what the next Narrative will be in the markets. And it’s incredibly noisy out there, with complicated market narratives about Japanese sovereign debt… not much with meat on the bone.

Give it another week or two, where everyone throws up their hands and say “we’ll wait until next year to play the breakouts” and that’s when things start to move.

Bitcoin Will Disappoint Everyone

In mid-November, I made the call to to start looking for a low in crypto. The bottom fell out of the market two days later.

Bitcoin managed to come down into the magic lines I found from the market structure of March - May trading range. Playing the bounce worked through Thanksgiving week, but as soon as Asian markets opened on Sunday, BTC got killed.

With the rugpull, expectations are now for a retest. There’s also rumblings of Strategy doing a forced BTC liquidation, which could hit around $75k.

If you’ve got too many traders positioned for the same levels into the same catalysts, what happens?

They’ve got to get runover. This afternoon, BTC should have been killed with liquidations and shorts pressing. This is the first evidence that a higher low could get carved out, which would disappoint so many traders and force liquidations.

Playing the Silver Blowout

We’ve got another gap and go in the silver markets. When price starts to act like this, it’s best to just ignore what the silver bulls are saying because they are the “tin foil hat creature from jekyll island fiat hayek” people.

Which is fine, but into extremes they turn into apes that put the Gamestop bagholders to shame.

Silver is stretched, but we aren’t in the “shit’s getting weird” territory yet. It’s currently having the same path as the gold parabolic from earlier this year. The market would walk up, start to accelerate, but the options market didn’t have a peak yet.

Here is VXSLV, which is the VIX for the SLV ETF:

If Silver wants have “the move,” then we should see silver options blow out to about 60%, probably higher on shorter dated options.

Once that happens, it’s time to start looking for a large fade. This is when you must ignore the silver bulls, because they will be SCREAMING about how central banks are panicking and hoarding silver, and the debt deficit spiral is finally hitting Japan and will bleed over into the US with higher rates… and the victory laps about finally nailing it after waiting 14 years for the next bull run are going to be incredible.

Because if we get a range expansion with a 60+ vol, the reversion will be incredible.

Do you know what narrative the silver bulls are going to run with? It just happened today.

More Water, Same Pipe

The Federal Reserve is ending its balance sheet runoff.

And you’re bearish stocks?

Chinese AI Info Ops

This year’s market history will revolve around the Tariff Tantrum, but the news that kicked off the Q1 pullback was when Deepseek dropped their model to the public. It wiped out half a trillion in NVDA in a single day:

Deepseek is back at it, announcing a new model on November 28th. On the Friday after Thanksgiving. When the market is only open a half day and there’s not much liquidity.

They wouldn’t conspire to try and cause a drop in the markets, right? They just picked a random Friday?

Sure. Let’s roll with it.

It wouldn’t work. Here’s a quote from their recent whitepaper, sourced from X:

“due to fewer total training FLOPs, the breadth of world knowledge in Deepseek-V3.2 still lags behind that of leading proprietary models.

That means even if Deepseek has caught up on the model side, the primary constraint still is how many GPUs can you stuff into a data center.

It’s still early.

This chart shows the rolling 2-hour rate of change for the Nasdaq. The percentage change was the most negative we’ve seen since the April Tariff Tantrum.

It felt like someone was a forced seller and turned on the “hit the bid with no concern for liquidity” algorithm.

Quants are pretty good at sniffing this out, so the liquidity thins out and the bags are dumped.

It was a sell program, not a market panic. Yet given the vibe of the selloff, it’s enough to get my attention.

I’ll be making the case that the current market risk is positional, not due to any near term fundamental risks. I’ll also show you that we are close to a “normal” reset, and the current conditions don’t suggest a massive unwind, but rather a market correction that will be more time based than the indices getting killed.

This past week’s low doesn’t have to be the bottom of this recent correction. Stocks could have one or two more pukes before there’s a full reset.

Yet much of the bloodletting has already happened.

Chum In The Water

This is S5FI, an indicator that shows the percentage of stocks above the 50 day moving average. It’s one of my favorite long-term indicators for timing extremes.

A moving average is adaptive, so it rises alongside price, and it will eventually get taken out.

This also takes an “equal” look market breadth, and it shows that while the S&P 500 is only off about 5%, about two-thirds of the index is below its 50 day moving average.

This is not shocking to market participants that have been dialed in, but if you’re Johnny Passive that checks your balance every once in a while, then you’ve got an 8% drawdown after a 58% rally from April.

That means most longer term players are not forced sellers, and the Mag7 are doing some of the heavy lifting so everything is resetting underneath the surface.

The bearish thesis would be that the market can’t bottom without everything being taken to the woodshed. That would be fun, but we don’t have the background market context for that kind of liquidity pull.

8% drawdown. After a 50% rally.

What Market Are We In?

With the S5FI hitting 30, that’s a normal, vanilla pullback. We are arriving into that zone, meaning that you can still have a few shakeouts before the market starts to resolve higher.

If the indicator cracks 20, those are market corrections that traders will remember, but most of the investing public won’t.

Anything under 10-15 and those are the corrections with names, like hurricanes. Tech Wreck. Tariff Tantrum. Fiscal Cliff.

This selloff does not feel like a hurricane. More like a hangover.

Overhedged. Again.

The last time stocks had a proper rug pull was in October 10th, jamming the VIX above 25 and sucking in fresh hedgers.

If you bought November hedges, then it’s a kind of cruel fate that the market roundtrips to the Oct 10 lows, but you completely lose on those hedges.

We’re back again with the VIX catching 25 again, with new hedging in place. If we don’t get another round of the scaries like we saw on Thursday, then I’d expect the market to auction higher as vol unwinds a little more.

Exit Liquidity

If we do manage to have a bounce, I expect the first round of obvious short levels to fail miserably. But into those covers, there’s plenty of inventory that could be motivated to sell:

This will be the tension I’m watching. The market just had a failed breakdown and had a new round of protection bought that keeps a bid in the market. If we keep seeing selling that has the nuance of a sledgehammer, then they’ll just take the market to the woodshed.

But the tension is two-sided. We’ve had a reset underneath the surface, and the VIX was oversensitive yet again.

Base case for the market is still upside drift but still in the context of a range. The early shorts get smoked but the second or third spot could be a great short or to layer on some bearish exposure.

Most of my focus has been on positioning… what about the big ugly narrative?

The Debt Nothingburger

Price action often leads narrative. We came into November with a ton of resolutions with Tariffs, China trade deals, and Fed cuts.

When there’s no good news left to get priced in, that’s a signal. Because then late, low-information investors come in and give an out for those who bought the wall of worry but don’t have any equity risk premium left in the trade.

Then price moves around a bit, we see a decent selloff, and then everyone in the markets starts looking for reasons glom onto.

There’s some rumblings about the Fed, and some volatility in rate expectations into December could be priced in.

But this is, yet again, about AI.

If you consider the hottest momentum sectors in October, they all had some kind of AI attachment.

Infrastructure, Power, Fiber, Turbines, GPUs, and so on.

They all had a hard reset. And on the large cap side, think about the names that have taken it on the chin the hardest…

AMZN, DELL, ORCL, and META

What’s coincident with these names is that they’ve all issued billions in new debt to help fund their AI buildout. They have incredibly high sensitivity due to any shift in the AI narrative.

And we’ve seen one. Some of it is perceptual, where OpenAI dumbed down their models a bit and we haven’t seen another tech reveal that restarts the hype cycle.

The big question is whether the companies can satisfy their new debt obligation from reaping the rewards of next year’s AI cycle. Because if they can’t, then equity owners are the first to get kicked in the teeth.

And it doesn’t help when the credit default swaps for ORCL are skyrocketing. In fact, I think selling a basket of AI related equities in the tech space is an incredible hedge against fading the ORCL CDS move.

But I just don’t see how this round of debt matters that much.

Here’s some numbers that ChatGPT hopefully didn’t make up:

Oracle’s bond package was $18B, with coupons ranging from 4.5% to 6%. If the math is right, then you’re looking to pay out about $1B per year.

They guided $67B in revenue for the next 12 months. ORCL already has a ton of debt on its books, but marginally it doesn’t seem too big.

The same holds true for AMZN and META, and the sketchiest leverage would be in smaller names like CRWV. The biggest near term risk seems to be in the smaller space or in private credit, so I’ve got Blue Owl’s equity (OWL) on my screen, because I’d expect shorts in that name to sniff out any accelerating problems before other markets.

The market is starting to show some smoke, and the options market is hedging for fire. But as time goes on and panic subsides in the AI debt markets, then you start to carve out a bottom in the market.

And with a good chunk of stocks under the surface already well reset from their highs, it’s time to start looking for new positioning.

For Convex Spaces Clients, we’ve got a few relative strength setups that look ready to bust out into new all time highs. We’ve also got a few names that have been runners in the past and are ready for a reload.

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First, this is the sequence that we had in the S&P 500 on Thursday and Friday:

With the post NVDA earnings gap up, a big seller came in and carried out price-ins…

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For the past month, the market has been churning inside what’s become a brutally frustrating trading range. It feels awful, but structurally we’re still only ~5% off all-time highs.

This is classic corrective-range behavior:

• Shake out weak hands

• Fail the breakout

• Fail the breakdown

• Repeat until everyone is mentally exhausted

Breadth remains weak, with only ~35–40% of S&P components above their 50-day moving average. Momentum names have already retraced heavily, and now the “generals” (AAPL, MSFT, META, GOOG) are finally starting to wobble.

We’re closer to the end of the correction than the beginning.

Fear Is Real, But It’s Not System-Wide

The people who are truly uncomfortable right now are traders who bought the past 20 days of price action. Everyone else YTD is still sitting on gains.

This isn’t systemic fear—it’s positional pressure.

Momentum AI names? Already corrected.
Large-caps? Only recently starting to reflect fear.

Overall, this looks more like risk reduction than a full-blown unraveling.

Volatility Is Acting Odd—And That Matters

The VIX’s behavior around the 9am CT turn was unusually sharp. After dropping post-settlement, it snapped back higher, lifting implied volatility across the board.

Key detail:
Spot VIX ~24
10-day realized vol ~16.5

Also, expiring VIX futures created a rare convergence setup where November futures and spot aligned almost perfectly. The straddle setup sent to clients last week delivered a clean 100% winner—because this is exactly the type of environment where volatility can move violently with little warning.

Bottom line:
This is a derivatives-driven tape, not a macro-driven one.

The Mag-7 Debt “Tantrum”

Meta, Amazon, Oracle—several large tech names issued new debt to fund AI infrastructure, and equity markets didn’t take it well. The pushback isn’t about creditworthiness—it’s about:

• Negative convexity from new bond supply

• Cross-asset hedging pressure

• High rates increasing sensitivity to financing decisions

• Knee-jerk reactions to already-elevated valuations

Add in CoreWeave’s big summer debt raise and Blue Owl’s recent weakness, and you can see how the credit/equity relationship is distorting sentiment.

Still, relative to their revenue bases, these debt levels are small.
This is more mood-driven than fundamental.

Why Nvidia Earnings Could Trigger a Market Rally

Here’s the key insight:

Nvidia weekly options are massively overpriced.

Weekly IV: 119–130%
Historical earnings moves: much smaller
Correlated Mag-7 results: already known

This has created a giant volatility dislocation:

1. Traders bid NVDA weekly IV to extreme levels

2. Market makers gladly sell that volatility

3. To hedge, they buy cheaper vol in SPX/Nasdaq

4. This pushes index volatility higher (keeps VIX stubborn)

5. After earnings…

6. NVDA IV collapses → market makers unwind hedges

7. Index vol collapses

8. S&P and Nasdaq bounce 2–3%

None of this requires Nvidia’s numbers to be spectacular.
The mechanical vol unwind alone can spark the rally.

This is the most underappreciated driver of the current tape.

How to Position Without Burning Emotional Capital

Choppy ranges destroy confidence because bottoms rarely form cleanly.

Better approach:

✔️ Use limited-risk bullish structures

Call spreads, call calendars, diagonals.

✔️ Avoid short-dated calls

IV is too high—they won’t pay enough.

✔️ Avoid naked puts

The market may still test liquidity lower.

✔️ Scale into directional ideas

Being a week early is better than guessing the perfect tick.

I break down the exact structures—META included—in the members-only training.

Korean Retail Traders Are Quietly Moving Tech Momentum

A surprising datapoint:
Up to 30% of Ionic’s market cap at its peak was owned by Korean retail traders.

Their speculative behavior is different from U.S. traders and can drive huge swings in early-stage AI and quantum-themed equities.

I’m tracking these flows more closely—especially via social-signal analysis.

Ticker Q&A Summary

Unity (U)

Long-term base + AI positioning. April OTM calls still attractive if the broader market stabilizes.

Costco (COST)

Strong name, but early to short. Best setup: retracement → put calendars post-earnings.

Enphase (ENPH)

Residential solar struggles with high rates. Needs reclaim → pullback → breakout above 40 to build a base.

AVGO

Watching for a stop-run under 325 and potential failed breakdown—a classic high-probability setup.

Gold Miners

Gold may stall, but miners benefit from wide margins (high gold + low oil). Selective names look strong.

META

Structurally oversold. Good candidate for bounce structures—size appropriately.

Timestamps

(From transcript)

• 00:00 — Opening / overview

• 01:00 — Sentiment & correction context

• 02:00 — Trading-range structure

• 03:00 — Mag-7 scan

• 04:00 — Volume nodes & pivot structure

• 05:00 — Bottoming dynamics

• 06:00 — Liquidity pockets & EMAs

• 07:00 — Emotional vs financial capital

• 08:00 — Fear rotation & momentum unwind

• 09:00 — VIX behavior

• 10:00 — VIX vs futures pricing

• 12:00 — Hedging structures

• 13:00 — Mag-7 debt impact

• 15:00 — CoreWeave + Blue Owl

• 17:00 — Nvidia earnings theory

• 19:00 — Weekly IV distortion

• 20:00 — Volatility bleed-through into SPX

• 22:00 — Expected NVDA move

• 23:00 — VIX convergence trade

• 27:00 — Book rec

• 28:00 — Korean flow influence

• 30:00 — Positioning for bounce

• 32:00 — Member pitch

• 33:00–42:00 — Unity, COST, ENPH, AVGO, Miners, META

• 42:38 — Closing

The total crypto markets have shed over $1T in market cap over the past two months. It’s ugly but not an absolute bloodbath compared to other historical rugpulls.

We haven’t seen a “Mt. Gox” event, much less an “FTX” event. Just a systematic unwind that is bleeding out bagholders.

DeFi markets are an experiment of sentiment extremes. We either see a massive hype cycle with gainsposting on twitter, or overleveraged accounts get blown up.

Crypto is a maturing market… not the same wild west trading we had a few years ago. The recent speculative excesses have begun to wear off, and the DeFi-TradFi rails change the liquidity structure of the market that make it much easier to buy the dip.

And that buyable dip is coming. Soon.

Perspective

It’s not 2013. Or 2018. Or 2021. It’s more… boring. Which is what happens to markets when more liquidity is introduced. With the introduction of ETFs and treasury companies, more liquidity rails have been added from Wall Street.

It’s a blessing and a curse. In bull markets it helps to stabilize the drawdowns, but you don’t see the same kind of “up only” markets from a few years back.

It’s maturing. Similar to how the volatility profile of a stock changes when it trades at $1B compared to $100B.

In the past two corrective cycles, Bitcoin has pulled back about 33%, and the token is approaching that same measured move, which is why I’ve got eyes on a potential snapback rally on the entire crypto ecosystem.

But first, let’s dig into the narratives driving this selloff.

Crypto Is Excess Risk Liquidity

It’s a momentum market. Momentum runs both ways.

What’s happened to other pockets of momentum?

They’ve all been killed.

Quantum stocks have been kicked in the teeth, with 50% off its highs.
AI Infra stocks like are down 40% or more.
Futuretech Plays like have been cut in half.
And the China Internet breakout hasn’t hit, with clipped by 30%.

If you’re primarily a trader in DeFi assets, just understand that you aren’t special. This is how markets operate. They go up and down. If you want the “up only” glory days then you’ll need to take a time machine back to when crypto liquidity was much thinner and could be pushed around by smaller buyers.

“Liquidity” in this sense can also be viewed from a macro lens, and there’s probably some hangover from the Federal Reserve keeping rates elevated, which through a series of convoluted steps causes risk assets to correct.

Stablecoin Demand Reduces BTC Demand

This is a bitter pill to swallow for any kind of maximalist, but the demand for dollar-denominated stablecoins are massive. Liquidity used to pile into BTC for transactional utility, but if you’re conducting trade, you really don’t want to own an asset with a 40% vol.

USD has a vol of 5%, which is much easier to manage.

Yes, I know all of the “advantages” for owning a currency that’s limited by mathematics. But a LOT of people around the world want access to dollars, and the USG is more than willing to give it to them as the stablecoin issuers become a new marginal buyer of US treasuries.

TradFi-DeFi Derailment

Crypto ETFs sound great until investors panic. The liquidity flywheel that was working well earlier this year has started to unwind.

A structural issue is that crypto trades 24/7 while liquidity access in ETFs is available only during market hours.

So you’ll have a hard selloff overnight, and the gap down will induce more redemptions, which forces the ETF custodian to sell more spot, which causes crypto to drop even more…

And it gets worse when you look at the treasury companies.

Eyes Are On Treasury Unwinds

Bitcoin can’t bottom until Saylor stops cringeposting.

Stop it. Just stop. This isn’t helping. If anything, it paints a giant target on your back.

Because every fund on Wall Street knows the holdings of . It knows where the pain points are, and I’m certain a few large traders are trying to find a way to induce some kind of negative convexity trade where crypto treasury companies end up being forced sellers.

Unlike the ETFs, treasury companies don’t necessarily have forced liquidations through redemptions. So far, that seems like a smart play… but there is always the risk of dilution.

Some of these treasury companies trade at a premium to the assets they own, and I think the convergence trade has created some of the negative feedback effects in the crypto markets.

Stupid Leverage

On Friday, October 10th, there was a forced unwind on some crypto exchanges. The stock market had a decent selloff which reduced liquidity supply in the crypto markets… but there was an incredible trade where some players pressed the screws on fragile crypto exchanges and caused a forced deleverage in the crypto markets.

Because the ledger is public, we can track how many accounts are getting liquidated.

The perpetual futures market has induced instability in the crypto market, where traders are opening wallets to try and nail the dip on leverage hoping to score it big, and then blowing out when it doesn’t work in their favor.

It’s Different This Time

Bitcoin has seen some ugly drawdowns in the past, and many participants are wondering if we’re going to have another Big One.

It’s possible, but unlikely.

The liquidity profile of crypto markets are completely different than the past. The “plumbing” is much more robust. There’s hedging markets both on chain and on Wall Street.

The correction that crypto markets are experiencing a more like a momentum market resetting rather than the end of a giant digital experiment.

That means it’s time to buy the dip.

The question is, when, and how.

Math Lines

Now that we’ve nailed down the squishy narrative angle, let’s take a look at the structure of the markets.

First, a little magic trick:

That blue line, where BTC aggressively bounced in early November, is a monthly pivot level. We’re talking “old school pit trader” calculations.

That retracement high is the 20 exponential moving average.

No rocket science involved.

It’s shocking how well traditional technical analysis works on a “modern” market. It may not guarantee an absolute high or low, but some pivots, moving averages, and volume by price does an incredible job of creating the pathing of how price moves.

On first glance of the BTC daily chart you immediately anchor onto the 75k level given the violence of the move after that. It also coincides with the breakeven price of holdings, which suggests to me that we aren’t going to hit it. Too many people want that price.

Instead, we’ve got a clear support level here, which saw responsive price action (both higher and lower) in late 2024 and spring 2025.

Underneath that is a low volume node around 86k, and if that doesn’t hold then the 80k-75k test may be up on deck.

Disparity

Looking at the distance from the 50 EMA, we’re coming into a key stretch level that has been a statistical reset point over the past few years. It could get worse, but we’re not in the same kind of macro and liquidity environment from those stretches.

And we’ve seen other instances where BTC jams 50% under the 50, which were COVID and the 2018 tech wreck. It’s possible, but not probable.

Other Layer 1s

ETH

Ethereum is arriving at a massive pivot zone around 2800. We’re not looking for precision within a single dollar, this is still a wide range. Yet given the speed the token has seen into this area, it’s reasonable to look for a turn.

SOL

Similar to ETH, where a major zone is coming into play.

We’re Close… How to Trade It?

This is not a recommendation to go “full port” with leverage into your favorite crypto assets. This is not even a call that a bull market has started. It’s about reversion and positioning. If you get enough participants liquidated, if fewer people are on board, then you have higher odds of a bounce.

If you’re a long term investor, yeah, you can probably scale in or at least run some dollar cost averaging to build out a position. Don’t overdo it, and don’t be an idiot.

But what kinds of creative trades could we look at to get us a little more juice?

Trade Setup #1: MSTY

With closing in on parity so it’s effectively a straight up BTC trade without any of the fancy premium that the stock has sported for the past year.

Here’s some easy math…

IBIT, the bitcoin ETF, currently has an implied volatility of about 60%.

MSTR has an implied volatility of 104%.

That means if you’re going to sell options, if you’re going to try and extract some yield out of these trades, then it selling options on MSTR is going to be a better bet.

is a YieldMax ETF, and they own Strategy and then sell covered calls against it. If you own the ETF, you get access to some of the gains from the covered calls in the form of a dividend.

As an example, they’re kicking out a distribution of 0.1475 on a cost basis of 7.55, which is about 2% in a week. Combine that with some reversion in BTC and MSTR, and it seems to be a straightforward bet.

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✅ Transcript Summary (Convex Spaces Morning Market Update)

Market Context

• Market has been heavy, but the broader structure still looks like a range reset, not a major trend break.

• NASDAQ is retesting the October “rug pull” zone and sitting on a Swing-Anchored VWAP + 100EMA confluence, which could produce one more shove lower.

• % of S&P 500 stocks above their 50-day MA is around 36%, a healthy reset inside a rising long-term trend.

• Surface-level: some megacaps are holding (AAPL, AMZN, TSLA), some are breaking but approaching support (MSFT ~480), some are deeply oversold (META).

Equal-Weight View

• Equal-weight S&P and equal-weight NASDAQ continue to nose under support.

• Under-the-hood damage is already substantial; breadth reset is advanced.

Interpretation

• Not calling a bottom—calling the start of a bottoming process.

• “One more rug pull” is still on deck, but the market is stretched enough that upside mean reversion has edge.

Meta-Specific Notes

• Meta tends to bottom through a process—multi-week resets like taper tantrum, last summer, etc.

• After this overshoot down, a natural bounce could push price into the 620–632 zone, where:

  • declining 20EMA catches up

  • Swing-Anchored VWAP sits

  • prior structure lives

Setup Philosophy

• You want to be early, not perfect.

• Expect chop → bounce → chop.

• Use a structure that:

  • benefits from time decay

  • allows adding on further weakness

  • doesn’t require immediate directional precision

✅ META Trade Setup (Weekly Call Calendar at 625)

1. Structure

A call calendar using next-week short calls and the following week’s long calls.

Sell:

• META 625 call – exp: Nov 28, 2025

Buy:

• META 625 call – exp: Dec 5, 2025

Cost: ~$3.18 (reasonable fill)

2. Why this works now

• Nobody wants calls right now, so upside vol is underpriced.

• You capture:

  • Short-term IV decay on the short call

  • Directional upside via the long call

• The trade is bullish, but not a leveraged chase.

• Profit zone centered around 625–632, where key technical levels converge.

3. Expected Pathing

• Meta rebounds into 625–632 → calendar pays nicely.

• If it chops sideways → time decay works for you.

• If it sells off → you can add lower-strike calendars (ex: at 615) to build a double-calendar for a bigger base.

4. If It Rips Immediately

• A one-day squeeze above 650 would hurt (you go net short temporarily), but:

  • declining 20EMA

  • VWAP overhead
    make a straight-up melt unlikely.

5. If Meta Dumps Another -10 to -12 Points

• Add the same structure at lower strikes (e.g., 615).

• Creates a double-calendar:

  • Increasing theta

  • Wider profit envelope

  • Stronger bounce-play gamma into December

6. Hidden Benefit: Forced Long

If META doesn’t reclaim 625 next week, you are left with:

• Long December 625 calls for ~3.18 cost

• B/E ~628

• Totally reasonable upside target into December.

This becomes a cheap swing long if the calendar portion collapses.

✅ Bottom Line

Out-of-the-money weekly call calendars on META (and ORCL, AMZN) offer asymmetric reversion-to-mean upside with controlled risk.

• Plays the bottom-formation process

• Benefits from chop

• Lets you scale into further weakness

• Doesn’t require bottom-ticking

Primary Target Zone: 625–632
Primary Mechanism: Time decay + modest bounce
Edge: Underpriced upside volatility + technical reversion point overhead

You know the kind. Where traders are ground into dust chasing statistical noise while larger players start to re-position into the next market leaders.

And it’s been a good call…yet when the market can’t catch a bid after a strong Friday bounce, it’s tough to bet on range because it means you have to be bullish and fade the market when it looks like the bid is about to be yanked and we see a 3% down day.

Yet breadth looks OK, and some key names are resetting after their short term excess.

The best example right now is AMZN. The news hit today that they’re going to do a $15B bond sale, their first since 2022.

Traders got beared up in the early session, and I have a feeling that many are looking for the earnings gap fill, similar to what happened to ORCL.

Instead, it knocked out a higher low. Combine that with the catalyst, and how AMZN should have tanked, and that’s telling me we’re getting higher odds of reversion in the markets.

We’re close to carving out a low, but we could have one or two more rugs before a bounce.

Like what I’m seeing in the Russell 2000 index:

We’re right on the edge of a liquidity cliffside. When we see a large gap in volume, there’s a tendency for a swift move through into the next level, which would be right around 228.

If you have one more push below that, then you have the market testing the swing AVWAP from the April lows around 224.

But if the lows hold here, then you’ve got an easy short cover rally up into 240.

It starts to sound like a zen koan:

“The market could go up or down.”

That doesn’t seem actionable, does it?

Given where we sit, and the cliffside the Russell faces, we’re not going to stick around at this price level that long. It’s not sticky, and soon we will see a fast departure away from it.

That’s where the options market comes into play. You can structure a bet that profits on a fast move in either direction.

For Convex Spaces clients, we’re going to build out a trade that takes advantage of the fast move that’s about to hit the markets, and I’ll step through all the trade adjustments and why we get an extra edge in the options market.

Under The Hood

Before I get to the trade, understand that the Russell is not going to have the same kind of trade action as the market-cap weighted indices.

The big sectors are tech, healthcare, financials, and industrials.

Healthcare is basically biotech, so we can look at XBI for a feel for that trade:

It’s been a surprisingly healthy market and showing a ton of relative strength. If we do get a liquidity rugpull in the markets, then this will most likely get taken out and test the lower end of the range around 107.

But it’s possible we just see a shortsqueeze as it’s stubborn near the highs.

For financials, most are regional/commercial banks, and we can look at that with KRE:

Regional banks are rolling over with an ugly day today. The sector had some nasty writedowns back in October and we’re back near the lows. Either we get a support hold and bounce, or we probe down to either the HVN or the summer support levels.

Then you’ve got smallcap tech, which is full of the usual degen candidates like IONQ, REGTI, SOUN, RIOT, and APLD. There’s no straightforward ETF to track this, but if you know what the price action looks like on these names, you know that they’re deeply oversold and either have a short covering rally or they’re about to get kicked in the teeth with one more washout.

In aggregate, there’s a ton of fragility at current prices. Either a bid shows up, or we grab lower levels… and into those levels I’ll want to be more aggressive for a reversion trade.

On the volatility surface, we’ve got a healthy negative skew:

This can help us get a bigger advantage on a complex options trade.

That leads me into this trade setup:

IWM Goofy Strangle

1. Buy +4 IWM Dec 230/220 Put Spreads

2. Buy +2 IWM Dec 240 Calls

Here’s the thinkorswim orders:

BUY +4 VERTICAL IWM 100 19 DEC 25 230/220 PUT @2.84 LMT
BUY +2 IWM 100 19 DEC 25 240 CALL @3.83 LMT

You take these on a 2:1 ratio to start with a delta neutral trade.

Here’s the risk profile:

Don’t view this trade as a single position, it’s really a combination of three separate trades.

You’re buying out of the money calls with a 23% vol
You’re buying slightly out of the money puts at a 27% vol
You’re selling deeper out of the money puts at a 30% vol

This helps you capture some additional benefits from the skew.

Adjustments

Here’s how I view the trade. You’ve got the long put spread:

And then you have the long calls:

The adjustments on the trade hit on a big move in either direction.

If the market jams back up above $240, then I can start closing out some of the 220 short puts to start leaning a little more bearish on a retracement short.

And then if the market pulls down to $225, then I will roll the $230 put lower to the $225 put, which takes cash off the table and gets me leaning a little more bullish.

Ideally I am looking to capture 30% of the cost of the trade, ideally a little more.

Given how this is a short theta trade, it makes sense to scale into the setup, so you can enter at current prices and look to add about 20% lower on the total cost of the trade.

“This Is Hilariously Complicated”

Which is true. The alternative here is to be patient and wait for either 224 or 240 to get hit, then fade the move with straight up puts and calls. And there’s nothing wrong with that.

With that in mind, I’ve got a dead simple BTFD trade that I think offers some solid risk/reward.

XLF Call Buys

Maybe just avoid the tech wreck altogether and play the big banks. We’ve got the April AVWAP in play, along with the 200MA, prior price support, and a gap fill down at 50.65.

Ideally on a gap down or one hard flush, pick up the Jan $53 calls. Into that dip, they should be going for 0.75.

You buy some, add a little more at 0.60 because we’re early, and then scale half position at 52.40.

The team is down by 4, there’s a few minutes left in the game, they’ve got two timeouts, and they have to march down the field to score and win.

For some teams, it’s a lock.

Casual fans will think it’s due to an all star QB, like Brady or Mahomes.

But there’s another factor in play… and you see this a ton with college teams…

The Prevent defense. Defensive coordinators will make this call because the last thing they want to do is get beat deep for a fast score. So they’ll have their players back off the ball an extra 10-15 yards and make sure that nobody ends up behind them.

Yet when I see this formation, I know what’s going to happen next.

The QB will throw a slant route for 15 yards. Then a quick out for another 7. Then they’ll clear out the middle but have a curl route for the tight end, and that’s where they call the first timeout.

All of a sudden, the offense is 30 yards out from scoring into the 2 minute warning.

Can the strategy work? It can in specific situations, but when you are playing “not to lose,” then often you don’t end up winning.

For my non-American readers, this is like “Parking the Bus” in soccer, where you stack every player behind the ball as a way to preserve the score.

Institutional market participants have been playing Prevent Defense since April. The market has stayed overhedged and underexposed, which has allowed equities to slowly markup into higher prices.

And every little shakeout, every little wick lower has been met with an incredibly sensitive options market where traders fly back into hedges.

Because you can’t sell your exposure in NVDA, no, that would be bad because your clients would be pissed that you don’t have that trade on. Instead, you think you can just take some downside risk off the table, causing the VIX to jam back up to 20.

With Friday’s rug pull, the markets do feel a little shakier than normal. My base case is still reversion and chop, but if you take a look under the hood you’ve got AAPL and GOOGL right under their all time highs. AMZN and NVDA have reset to prior ranges which could act as support, and META is oversold enough that it could bounce easily.

I take no pleasure in saying this, but the pain trade is still up.

Strategy’s Convergence

The stock formally known as Microstrategy has been kicked in the teeth this month.

Turns out, leverage runs both ways.

The company ran hot as it issued convertible debt to buy bitcoin, which in a bull market causes the stock to trade at a large premium relative to its bitcoin holdings.

But as the crypto craze never really hit this year, the stock is seeing forced sellers, and the premium that the company once had has nearly been erased.

There’s rumblings that Strategy will be forced to sell BTC under certain levels, causing a price cascade in the crypto sector. I’m not so sure.

For BTC, the bottom doesn’t seem to be in yet, but we are approaching price and sentiment extremes where if you get one more good selloff it will be into levels that make sense:

This is the price distance from the 50EMA, which is approaching full reset conditions. It could stretch lower, but this isn’t 2021. We don’t have a huge hangover from the crypto bull craze, and risk assets overall appear to be fine. Crypto is also a much more liquid market, which means we should expect volatility to be reduced.

If you want to see how I’m trading it, watch Friday’s video at the 29:00 mark:

Meanwhile, Wall Street’s Stupidest Stock Is Relatively Strong

Last week everything got hit. Nuke, quantum, AI, you name it, there were massive liquidations across the board.

But Opendoor (OPEN) still looks good!

I’m not a true believer in the company. It’s an interesting business model, and it could work, but OPEN bulls are screaming like it’s going to cure cancer. They go on and on about the TAM and how it’s going to revolutionize the US housing market.

This is where I get bearish. Not because I disagree with the thesis, but because it’s just so damn cringe. It has the same flavor of sentiment that we’ve seen in other over-loved retail stocks like GME, LCID, and other stocks that have turned into a bagholder paradise.

But the chart, the actual market structure of the stock, looks pretty good!

I don’t want to get stuck with being a bagholder, and if the market does truly go risk off it’s easy to see how the name could finally crack 5 and drift down into the single digits.

Or… it can clear 10 and all of a sudden a new short squeeze hits. And given we’re headed into the holiday season where liquidity drops, retail squeezes tend to hit harder and faster than what most expect.

That’s the starting off point on my trade thesis, and I’ve got a great setup for our Convex Spaces clients.

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We opened into a sea of bad vibes, but the market itself is perfectly functional. The S&P is only ~3% off all-time highs, the Nasdaq is ~5% off, and we’re testing the rising 50-day moving average for the second time.
Nothing about this setup screams “top.” What it does scream is “over-hedged investors waiting for an excuse to be miserable.”

A lot of the anxiety is coming from traders stuck in broken momentum names — quantum, nuclear, Reg CF trash fires, speculative AI proxies — not from the indices themselves.

If you’re passive, things look great.
If you’re trying to nail bottoms in garbage, it feels awful.

Breadth Is Fine. Leaders Are Resetting. Rotation Is Everywhere.

Zoom out.
Apple is a hair from ATHs.
Microsoft is holding support.
NVDA just tagged prior range lows.
Google reclaimed its failed gap-down.
Tesla is… Tesla.

Health care and energy are green. Banks look fine. The surface-level chop hides underlying stability.

This is a stock picker’s market, not a crash.

Why It Feels Worse Than It Is

Because you’re probably long the wrong names.

Broken AI infrastructure?
Crypto miners masquerading as data centers?
Quantum SPACs?
Nuclear memes that ran to the moon?
Those pockets are unwinding after a hyper-extended October.

The AI trade isn’t dead — it’s just rotating into inputs (turbines, cooling, energy infrastructure) and out of the speculative proxies.

XLE continues to look like it wants $100.
XLV refuses to break.
Large banks may quietly become the next beneficiaries of AI-enabled margin expansion.

The Only Question That Matters: Can Rotation Hold If Tech Gets Hit?

If Apple or NVDA get blindsided with an ugly headline, correlations will jump to 1.
If that happens, can energy and health care hold the market together?

So far, yes.
XLV didn’t even blink today.
Energy is printing new weekly highs.
This is the quiet part of the cycle where boring sectors matter.

What Worked Today: Capitulation Trades & Forced Covers

This morning’s capitulation-reversal setup worked beautifully — if you caught it in premarket or the first 15 minutes. After that, the trade was dead.

Midday was driven by:

• forced covers

• short-term bears overstaying

• options-related unwind into Friday’s weekly expiration

• monthly OpEx next week adding fuel

Every 30-minute candle closed green — textbook forced-buying structure.

A Tactical Hedge: MAGS Straddles

If you’re nervous, one of the cleaner hedge plays is MAGS, the equal-weight Mag-7 ETF.

Because correlations within the Magnificent Seven have collapsed (Meta down, Apple up), the ETF is muted.
If correlations snap back (i.e., a real rug pull), the straddle underprices the move.

ATM Dec straddle ~ $4.80
You win on:

• an upside breakout

• a downside correlation shock

• anything that breaks the current low-vol chop

Cleaner than trying to hedge individual names.

A Spicier Hedge: Short-Term VIX Structure

The November VIX futures contract (expires in 4 days) is trading nearly 1:1 with spot.
If you think the market won’t crash next week, VIX should pull towards ~17.

Idea:

• Buy the VIX 20 put for ~$1

• Target 17 on spot VIX into Wednesday

• Expected payout ~$3 (200%)

• Pair it with a cheap SPX put fly as a disaster-backstop

This is advanced stuff — but the structure is sound.

Where Relative Strength Lives: Energy, Health Care & Weird Robotics

Names like SanDisk, Bloom Energy, AMD, Micron — they’re seeing real flows.

Rapid Micro Biosystems (RPID) got a segment highlight:
A health-care automation/robotics name with a razor-blade model and real adoption inside pharma labs.
Very much a “broken 2021 SPAC that might come back from the dead” pattern.

Weekly chart argues higher.

Crypto Corner: A Sneaky MSTR vs. Bitcoin Implied Vol Play

Bitcoin is back inside its 2024 range.
MicroStrategy has fully reverted to parity MNAV.

But here’s the edge:

• Bitcoin ETF (IBIT) IV ~ 46%

• MSTR IV ~ 75%

If MSTR is trading exactly in line with BTC, the higher IV is mispriced.

Enter MSTY, a yield-max ETF that sells covered calls and call spreads for you.
If BTC stays range-bound or grinds up slowly, MSTY’s yield outperforms Bitcoin options selling.

Yes, it sounds insane.
Yes, the math checks out.

Meanwhile in Shipping & Energy Services

Shipping is heating up.
Energy offshore names bottomed around May/June.

Tickers mentioned:

• STNG (Scorpio Tankers)

• NAT

• Tidewater (TDW) – bullish

• Noble & Valaris – longer-term turnarounds

• GLNG – natural gas shipping theme

Mintzmeier’s shipping thesis pairs nicely with global LNG flows.

Gold: Still Just a Range Trade

Gold didn’t act like a fear hedge today — it sold off with everything else.
Fade extremes.
Sell credit spreads on both sides.
Wait for a real macro catalyst (deficit spiral, real rates rollover, etc.).

Money-supply-adjusted gold price is near 2011-level extremes — upside capped unless we get a 1970s-style panic.

Bottom Line: The Market is Fine. You’re Just Zoomed In Too Far.

This isn’t the end of Western finance.
It’s a hangover after a monster AI rotation.

Give it time — the AI trade isn’t done.
Neither is the bull market structure.
Energy and health care remain the quiet winners.
Pick stocks carefully.
Zoom out.
Stop trying to catch falling knives in garbage.
The playbook hasn’t changed:

Buy dips in strong names.
Sell rips in weak ones.
Hedge intelligently.
Stay patient.

Section Timestamps

00:00 – 02:00
Market open commentary, S&P/Nasdaq pullback context, vibes vs. reality.

02:00 – 04:30
Why traders feel bad (broken momentum trades) vs. passive investors feeling fine.

04:30 – 07:00
Breadth, major tech resets, rotation themes across sectors.

07:00 – 09:30
Energy & health care strength, AI rotation, failed breakdown setups.

09:30 – 12:00
Short-term selling pressure, forced covers, options-related flows into expiration.

12:00 – 14:00
Support retests, 50 EMA behavior, concerns into next week’s VIX expiration.

14:00 – 17:00
MAGS hedge thesis; straddles and correlation breakdown logic.

17:00 – 23:00
Deep dive on VIX futures, VIX puts, pairing with SPX put butterflies, advanced hedging structures.

23:00 – 26:00
Capitulation trades, broken tech momentum, relative strength in standout names.

26:00 – 29:00
RAPID (RAPD) robotics/healthcare play; pharma testing automation.

29:00 – 34:00
Bitcoin ranges, MSTR MNAV parity, mispriced implied volatility opportunity, MSTY yield-max thesis.

34:00 – 40:00
Peanut gallery: biotech (MIST), insider analysis, warrant structures.

40:00 – 45:00
Cisco, Oracle, earnings setups, shipping & offshore energy opportunities.

45:00 – 48:30
UNH, healthcare technical levels, sentiment overhang, volume profile magnets.

48:30 – 50:30
Gold range trading, macro gold vs. money supply chart.

50:30 – End
Closing thoughts: market is fine, AI trade intact, energy/healthcare leadership, pitch for Convex Spaces.

Imagine that you’re a passive investor with a 401(k). Employer matched, of course. You’re not paying too much attention to the markets because you’re too busy creating value and watching sports.

Your exposure to the market is from checking your balance every once in a while, or seeing where the Nasdaq is trading.

Up 19% YTD. Not bad, considering you’re expecting about 8% annualized. And the Nazz is up 50% in about a 2 year period.

Do you have any reason to sell your stocks? Any reason to panic?

Look at the chart above and check the Anchored VWAPs against key pivots. The average buyer is still up big.

Now switch characters. You went all in on the AI trade, buying infrastructure names like IREN and CRWV. Power plays like Bloom Energy (BE):

And the last momentum darling, SNDK, finally took a hit:

Your belief system of how the market is doing is a function of the market that your watching.

Unleveraged index investors are doing great. Late players to momentum trades think it’s the end of the world.

In reality, we’re seeing a hangover from some of the speculative excesses during the Aug-Sep rally.

Trading the AI Blackbox

It’s a rotational market. The Mag7 have the look of a failed breakout:

Meanwhile banks, healthcare, and energy all look healthy.

It’s all still part of the AI trade. I know that this is reductive but that’s the narrative we’re going to see into next quarter.

You have AI inputs, and spaces like nuclear and infrastructure were part of the big bull runs in the fall. But we’re now seeing that these data centers are going to require natural gas. Lots of it.

Then there’s the outputs. There’s not much of a value proposition in generating AI cat videos, but the effects of applied AI are still lagging the technology and have yet to be reflected in the fundamental reports of other parts of the economy.

Big banks are seeing some leverage expansion due to deregulation, but they also can make better decisions, cheaper, which leads to improved margins.

Here’s the problem I’ve been chewing on… given the weighting of large cap tech, can we have rotation to other sectors without an NVDA selloff clipping the broad markets?

In other words, can GS and JPM manage to rally if the Mag7 names get kicked in the teeth?

That’s what the current price action feels like. And for the next few weeks, we could see the market start to test if there’s fragility in this kind of rotation.

Fed Up

Uncertainty pulls liquidity, which leads to volatility.

A month ago, it was a lock that the Fed was going to cut in December. Now we have the Federal Government telling us that the shutdown has broken the data reporting that the Federal Reserve relies on to make their “data-dependent” decisions.

Odds are now a coin flip.

We may have (yet again) a dynamic where the best risk/reward long is when we approach max uncertainty. You don’t buy after the report, you buy a week or two before when everyone on Bloomberg is hand-wringing and the VIX keeps a persistent bid.

A Unique Spot In the VIX

One “green shoot” in the market was the small unwind that the VIX had into the close:

Remember, you can’t trade the VIX, it’s a statistic. It’s telling us that there wasn’t a ton of panic buying in SPX hedging into the end of the day.

But there’s an interesting dynamic that we don’t see very often:

The way VIX options work is that they don’t trade based off of spot VIX, they trade off the VIX futures market, which rarely trades equivalent to spot.

In a calm market, the futures trade above spot, and vice versa for a panicky market.

Yet into the close today, the VIX futures were trading at nearly the same price as spot.

That gives us a very fun trade that can serve as a hedge through the weekend session, just in case things get loose.

Our VIX trade today is available to our smart (and very attractive) Convex Spaces Clients

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The market’s a little red right now, and that’s fine. What I’m seeing is traders getting way too zoomed in—tick by tick, opinion by opinion—arguing over whether AI has “topped.”

It hasn’t. But the hype cycle definitely has.

This is what happens when everyone’s already in the trade. We hit a peak narrative—too much anticipation, too much positioning—and the easy money dries up. That’s not bearish. That’s just how liquidity works.

If you find yourself overanalyzing every tick, step back. Use range bars instead of minute charts. Normalize your data by volatility, not time. When you do that, the market starts to make sense again. You’ll see how quickly things move through low-volume zones and how they gravitate back to high-volume shelves like magnets.

Right now, we’re probably setting up for a normal ABC correction—a pullback to the 20 EMA to shake out some bagholders. It’s nothing dramatic. Just the market resetting its bearings.

Narrative vs. Liquidity

There are really two markets running in parallel: one driven by liquidity, the other by storytelling.

From a liquidity standpoint, we’re still over-hedged. That’s actually bullish—it creates a mechanical support layer underneath prices.

From a narrative standpoint, though? The AI trade got too crowded.

Amazon, Oracle, and NVIDIA all did the same dance: announce big AI partnerships, gap higher, issue debt into that euphoria, and then fade. Classic “buy the rumor, sell the news.”

It doesn’t mean AI is dead. It means we’re digesting the mania. This is the pause before the next leg—not the peak of the mountain.

Rotation Is Happening Under the Surface

If you’re staring at the Nasdaq waiting for confirmation, you’re missing where money’s actually going. There’s quiet rotation everywhere:

• Biotech (XBI) and Healthcare (XLV) just exploded after the FDA finally canned a few bureaucrats slowing the sector down.

• Banks (XLF) are ripping as the supplemental leverage ratio rules loosen up—basically letting the big guys lever up again.

• Energy (XLE) looks like it’s about to break out of a multi-year base.

AI isn’t the problem. It’s the bottleneck.

For two years, that bottleneck was chips. Now it’s electrons—actual power. The data centers in Louisiana and Texas don’t run on vibes; they run on natural gas, coal, and BTUs.

If you believe in AI, you should probably believe in XLE going to $100 next year. The bottleneck trade is physical now.

Silver: The Quiet AI Metal

Everyone talks about gold as a hedge against chaos, but silver might be the real asymmetric trade.

It’s an industrial metal used in solar panels, energy storage, and data center infrastructure—the hardware backbone of the AI economy. If the next wave of AI buildout is powered by electrons, silver is the wiring.

Gold? Probably due for a fade. The gold/silver ratio looks rough, and miners are starting to outperform the metal itself. That tells you where the smart money’s already rotating.

This Is a Stock Picker’s Market

The “Mag 7” are tired. Range-bound. Over-owned. And that’s fine.

Underneath, there’s a stealth bull market happening in energy, banks, healthcare, and even some boring infrastructure names that suddenly look sexy again because they touch data centers.

I’m watching:

• Akamai, Datadog, and Appian on the software side.

• Expedia and Las Vegas Sands as the travel complex rebounds.

• GSAT and VSAT in satellites.

• WMS (Advanced Drainage Systems) — yes, drainage pipes are now a data center play.

It’s a bizarre mix of themes, but that’s what rotations look like. You can’t buy “the market” here and expect it to work. You have to buy what’s actually working.

How I’m Trading It

• Don’t chase breakouts. This is still a range market.

• Fade extremes—trade from the outside in, not the inside out.

• Sell premium into over-hedged conditions.

• Stay patient for new leadership confirmation.

I’m looking for catch-up trades (AMD vs. NVIDIA), relative strength plays in banks and energy, and some contrarian silver exposure.

This is the part of the cycle where traders who only chase hype get chopped up—and traders who rotate early get paid.

The Big Picture

The AI narrative hasn’t ended—it’s evolving. The next winners won’t be the ones building chips, but the ones powering them.

If you zoom out far enough, you’ll see it: the shift from digital speculation to physical necessity. The “AI trade” isn’t going away. It’s just leaving the metaverse and showing up in the real world.

Timestamps

• 00:00 – 02:00 | Market open: Red session, traders too zoomed in, AI narrative peaking.

• 02:00 – 05:00 | Using range bars and volume normalization to remove chart noise.

• 05:00 – 08:00 | Volume-by-price and path dependency—how markets test support/resistance.

• 08:00 – 10:00 | Range expectations and over-hedged liquidity dynamics.

• 10:00 – 13:00 | Blow-off tops in AI megacaps (Amazon, Oracle, NVIDIA).

• 13:00 – 16:00 | Infrastructure unwind: CoreWeave, IREN, ENBIS.

• 16:00 – 19:00 | Sector rotation into biotech, healthcare, and banks.

• 19:00 – 22:00 | Energy and natural gas as new AI bottlenecks; XLE breakout.

• 22:00 – 25:00 | Silver as the “AI metal”; gold likely a short-term fade.

• 25:00 – 29:00 | Stock-picker’s market: software, travel, gold miners, satellites.

• 29:00 – 40:00 | Live viewer Q&A: Meta, Enbis, Gold, AMD, SMH inflows, Oklo, EOSC, Hertz, Roku, Palo Alto, Rivian.

• 40:00 – End | Wrap-up: rotation thesis, client offers, and next show announcement.

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