Expecting more downside from here!

 

 

 

While I'm expecting some short-term bullish moves in the days ahead, the longer-term prospects look dim. See below.  

What History Says After the 200-Day Break (by RIA Team)

The 200-day moving average is one of the most widely followed technical levels in markets, and for good reason. When the S&P 500 loses that line, the statistical evidence since 2000 is not comforting for bulls hoping for a quick recovery.

Going back through the seven identifiable sustained breakdowns of the 200-dma since 2000, the data tells a consistent short-term story: the first month is almost universally negative. Not once across all seven events we looked at did the market post a gain in the month following the break. The average one-month return is -5.3%, and the best single outcome was only -0.8%. That is not a rounding error. That’s a pattern.

The picture does not improve much at three and six months. Two-thirds of the three-month windows ended in the red, with an average decline of -3.9%. Six months out, positive outcomes finally show up, but the distribution is everything. The COVID recovery (2020) and the EU crisis rebound (2011) pull the averages up sharply. Without them, the picture is considerably darker. The 2000 and 2008 events remind investors that when the macro backdrop is genuinely deteriorating, the 200-dma break is a warning, not just noise.

The medium-term picture does improve. At 9 and 12 months, more than half of the periods turned positive, and the median return flipped to a gain of +7.0% at 12 months. At 24 months, 71% of periods were positive, with a median return of +19.2%. The long-term recovery argument is real, but investors earned those returns by sitting through average drawdowns that frequently exceeded 15 to 20 percent first.

 

It is all about oil!

 

  

Now about the oil trend. Obviously oil is shooting up to the moon right now and it seems it will continue to go to the sun soon. But if history is any indicator, I think we will see a quick pullback of oil very soon, probably in a magnitude surprising everyone. See the chart below for USO, an oil fund.

USO has gone parabolic. It’s up 40% for 2026, with most of that gain over just the past few days. Its relative strength index (RSI) closed yesterday at 83. Anything above 70 is considered “overbought.”

This the most overbought USO has been since March of 2022. Back then, USO fell 20% right away. Then oil rallied to a higher high before making a more significant top.

The few other times USO has hit overbought levels over the past few years, were followed by immediate declines as well.

As such, I'm betting against it right now. Just like what we did about a week ago to bet a rebound for the software sector that was falling like a rocket, by going against the herd, we quickly got a double. I'm confident we will be a winner as well for the oil betting. 

 

Bitcoin is dead again

 

 

 Now two badly hammered assets: Software and Bitcoin. As a contrarian, this becomes very interesting to me.😂😀

 

 Every circle represents an instance where naysayers announced the end of bitcoin, going back nearly two decades. The green circle marks where we are today…Since 2010, critics have declared bitcoin dead 467 times. And every time, it comes back stronger.

 

"End of the World" feeling may come soon....

 

 

 

 

AI Job Displacement and the New Era of Jobless Growth

 

 

 

 

 

 

 

 

At a breaking point again

  

 

An Armageddon Moment for Software companies

 While the stock market is a sensitive indicator for changes in the short-term, the long-term fundamental changes are often first warned by the bond market. Here is one for the software sector, which may be on the edge of a total collapse in the near future. Be ware of it if you are heave in it in your portfolio!

 

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AI threatens to undo as much as a decade of software investments...

And private lenders could be stuck collecting pennies.

One lender has already hit the brakes. Marathon Asset Management is a major private credit lender. And as of June 2025, the company stopped lending to software companies altogether.

The reason is simple... AI is moving too fast for comfort. What seems like a good, safe deal today could be worthless tomorrow.

That even applies to software companies investing in AI. There's no guarantee those businesses will have an advantage tomorrow. A five-year loan assumes the borrower's product stays relevant long enough to keep renewing contracts and paying interest.

But in the age of AI, there's no guarantee. Features that used to take quarters to build are becoming simple prompts. The "stickiness" lenders used to underwrite is getting harder to prove.

Marathon CEO Bruce Richards framed it as a "Blockbuster Video moment" for software. He said we're seeing a wave in which business models either adapt quickly or get left behind... with near-zero recovery rates for lenders.

Today's tough environment could spell disaster for many creditors...

Throughout 2025, software loans largely matched the return of the overall loan market.

But those same software loans lost 2.5% in January alone... while the rest of the market was roughly flat.

Software loans are coming under pressure because of AI disruption. And financial-services firm UBS expects things to get much worse...

In its "aggressive disruption" scenario, UBS sees U.S. high-yield defaults reaching 4%. Defaults would jump to 13% in private credit.

That's Armageddon territory.

UBS also estimates that as much as 35% of the $1.7 trillion private credit market is exposed to AI disruption risk.

In other words, this isn't a niche problem confined to a handful of bad deals.

Creditors spent years giving cheap debt to software companies... and that system could be about to implode.

 Rob Spivey

 

 

 

This time feels different

  

 

 

  

 

Volatility has returned to the markets over the past few days. Particularly in technology. This is not tech-specific market volatility. What we’re seeing is a broad derisking/deleveraging of momentum trades. Investors are selling anything that’s moved sharply higher in recent months. This includes technology, precious metals, cryptos, copper, nuclear energy, satellites, and even industrial stocks.

At the same time, the broader market has remained surprisingly resilient. One of the clearest signals of this rotation can be seen in the Consumer Staples Select Sector SPDR Fund (XLP). This ETF holds defensive stalwarts like Walmart (WMT), Procter & Gamble (PG), and Coca-Cola (KO) – businesses with stable cash flows and steadily growing dividends. Even during the recent market pullback, XLP has continued to push higher.

Expect to see more volatility in the weeks/months ahead, especially for those who are using high leverage to trade. I heard some crypto platforms allow traders to control 50 Bitcoins ($3.5 million) with only $100 dollars.  This kind of insanity will of course wipe out people's money very quickly with any slight volatility. Don't be one of them!