This Is A Big Deal…

Today's number, guys, is one of those shocking ones you don't see very often. 15 years of correlation breaking now in 2026. So, what is it and why should we be paying attention as the bonds market starts to show some concern about what's going on?

With the S&P 500 hitting a massive put wall and of course the NASDAQ coming under fire once again, there's a lot of big what looks like sells in Wall Street and we need to talk about it in today's special edition. Guys, if you love stocks, commodities or cryptos, don't go anywhere. We've got a lot to discuss right now together. See you soon.

Well, welcome back everyone to a massive video because today we need to talk about what just happened over the last week. Financials down, big tech not looking so great, and Wall Street doing some funky things. So, let's kick things off with a great chart here from D_Bossa where we talk about the divergences and possibly the bonds market starting to show signs of withering in 2026.

First up, what has been good may not be anymore. Since the advent of, of course, chat GPT and all of these AI bots, you guys can see here that software companies have not been fairing well. And on the surface of it, we all know this already. But what is interesting is that the overall correlation for the last 15 years has been massive. And this tells us that there's something a little bit sick in the markets, although the general market itself hasn't really gone and collapsed just yet.

Now, what is that sickness? Well, it all has to do with tech and maybe the way they're spending and more importantly what they're doing with their free cash flow. For 2026, we now see that all of the major tech stocks are down led by actually Microsoft software and 16.75% down overall. So, you can really see here that some of these tech stocks are starting to enter into what we call technical bare markets. If you actually look at their previous highs and where they are now, yeah, some have actually gone into it.

Now, why is this a concern? Well, just as we're seeing the big tech stocks falling off, what pretty much makes up 37% of the S&P in terms of overall waiting, we are getting huge retail imbalance. And you can see this chart here from JP Morgan and over on global macro markets, I think it's investor over on X. Now, you can see here that retail flows themselves have been just astronomically skyrocketing here in 26 as everyone tries to pile in just to get the next big game.

Now, what's that doing? Well, firstly, as we've been talking about in this channel for quite some time, it's been giving amazing opportunities in tons of different sectors. It's just tech that hasn't been very good. And we've seen that really as a transition since last September when we updated our thoughts based on, of course, the overall Federal Reserve cut.

Now, what other concerns are starting to appear? Remember, 2026 is not the same as 24 or 25. Well, of course, we've seen huge skyrocketing levels here in student debt in terms of people not being able to pay them back. Delinquencies of 90 plus days has skyrocketed in recent weeks. And more importantly, we are starting to get a little bit of an uptick in mortgage stress, which is of course the big one, and some credit card stress starting to get closer to breaking through again.

Now, why are we paying attention to these delinquencies? Because of course they tell us whether the American consumer is strong or weak, how much free cash flow is available and more importantly whether you know we are going to see a slowdown in one-third of the US economy. So let's talk about the other kind of two-thirds the services but more importantly what the US economy has become which is an AI data center tech bro kind of universe.

Now why is that important to understand? Well, of course, it all has to do with the free cash flow, guys. And it turns out that yeah, we went from having extremely good free cash flow just a few years ago to maybe a lot less free cash flow. In fact, most of the companies, Meta Oracle, Google, Amazon, Microsoft, they're all actually going to the market now, as we saw last week in one of our reports, 100-year bonds now being floated by Google. And this basically tells us that they're in spend mode, which is good for the GDP for now, but that they don't have as much free cash anymore. So effectively, they're not, let's say, the cash powerhouses and maybe not the safest place like they were being considered just a few years ago. And this is, of course, having an impact into the bonds market. This is from Al Clutch and I think it's a pretty cool chart.

Now, let's check out the reason why this is all happening. Well, this chart I thought probably exemplified it the most. And basically it is a chart between what we've got here which is meta the annual buyback from FJA over on X and versus the capex spend. And what you can see here is that we're starting to lose buybacks in the market. And while capex is great and can lead into of course potential profit in the future. You've got to remember that this market has been bought up over time because of buybacks. So, we've now actually really kind of officially, I guess you would say, lost the buybacks from the big tech companies. And when you have 37% of the overall S&P being kind of the tech companies, you can kind of get an idea now why the markets are falling off.

In many ways, the buyback story is probably one of the biggest ones along with people saying, you know what, is AI really going to bring actual profit at the level of the cash burn? And you know what they say about new tech? It does take some time.

Let's now move through to quarter free cash flow. Great chart here from Peter Berisen over on X. And you can see here guys that we have this massive movement where free cash flow funnily enough is not bad in Microsoft but overall in many of the other companies here it's been dropping off quite a lot. So you can see here Meta's is absolutely going right back down and Oracle which we've been watching CDs on. We've got a chart on update for that. Uh it really does show here that we have a problem starting to appear where a lot of these big tech companies once flush are now starting to need to get some debt on.

Let's look at tech spreads. You can see here the Bloomberg chart here over from Muhammad Alrain I think it is over on X is basically showing us the same story. Effectively what's happening is we're getting a spread widening. The tech bond spread is now accelerating away from what has been the US high-grade spread. And you'll notice here for a long time, guys, big tech was considered safer than high-grade US bonds. So now that's all changing. And tech now leads in terms of going above high-grade US bond spreads. So this is a fairly big chart and I actually think that we often say when you see a little bit of problems in the bonds market, you need to be paying attention. It's not what I would say catastrophic right now, but considering we're only about 1 and a half% away from all-time highs, maybe 2%. We do see now the bonds market starting to get a little sniffle. It's maybe caught catching a partial cold at this stage.

We're also seeing the same thing here from another Bloomberg chart here. And this is basically Yuri Matso over on X and it shows that Oracle is expanding as well, guys. And this is a big deal because this is one that we watched back in 2025 and we started talking about it saying, well, if this starts to accelerate too much, it's going to be a big problem. Now, you can see here that Oracle share price since this has happened has dropped off massively. Yet, just recently, yep, you guessed it, the CDs are starting to blow out, almost hitting a new high and getting back to that 160ish level. So, it's a story that will continue to cover because these bonds markets, they matter when it comes to big overall widespread selloffs, which we're not quite seeing just yet. It's all focused on that tech side.

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Let's have a look at the S&P 500 component correlation. This is showing us the same thing. Effectively, the market is not the same as it was the last couple of years. The tech stocks are not good, and it looks like the rest of the stocks are still holding fairly well. And you can see this exemplified from this chart from daily chart book showing emerging markets breaking to the upside, showing that we've got defensives starting to, of course, take over from the cyclical stocks. And of course, value also finding better strength than growth. Now, this is what you would call usually a late cycle market or at least a uh market that is turning more defensive. And we're seeing very similar things here in this volume leaders chart that we talked about the other day, which basically just shows us that the market itself has been, of course, in a bit of a distribution for a while.

Now, let's move over to total put call ratios. And of course, one of the big stories here has to do with what we're seeing in terms of the overall puts. Now, you might think, well, it's time to sell the market, jump out, run away. But Subu Trade has bought here some pretty big stuff. And I think the thing is that what we're seeing is effectively a channeling market on the technical side. Not broken to the downside yet. So, not in what we would call a waterfall style market. And we do have the latest NASDAQ put levels, so you guys can see it just coming up. But we do also have heaps of people going negative. Now, when that happens, it's notoriously been around the base of a pullback or small drop. And look, sometimes it can accelerate through, but it does tend to be a pretty interesting signal cuz remember, a lot of the other stuff looks really scary. It's probably just not at breaking point just yet. It's just scary. Demand for hedging trading volume is bearish. Puts are surging and again you can see here this chart here from TT3 over on X and Bloomberg is really showing the CBOE data is going back up. Now when you notoriously get to these levels they can be of course signals that markets are potentially starting to turn.

All right, now let's have a look at the S&P and get into the charts. Then we'll go to the options flow lead indicators and the rest of the stuff here. And the first one we need to talk about is the S&P because it's weird. We've got advanced decline line going up big time and we have the market just hovering around that full-on support level. Now, notoriously when you see advanced decline line go up, that usually means there is a newer high on the S&P at some point in the future. Now, it may still drop more before that. Not saying it won't, but it has been a pretty interesting statistic. And you guys can clearly see now we're in a very easy rangebound style market in terms of those general thought processes.

When you go over to the futures market, you can see here the options high lows. You can also see that the weekly 20 which is often considered mean reversion has now been hit. And I think what we're watching is really more so of a tale of two stories. The S&P maybe not that interesting right now. Even though it's hit the support, it's probably down to the stock selection. And we've been mentioning this for quite some time. Stock selection, stock selection, sector, sector, sector, rotation, rotation, rotation. You guys have seen it here if you've been watching for the last couple of months. Some crazy moves, but just not in tech. And tech is of course concentrated, which is why the index is kind of dropping a little bit as well.

Now, let's have a look at the S&P. You guys can clearly see just around 6770 to 6,800 is where the put wall is. If we drop that, we could of course drop quite considerably on the markets because effectively we would be breaking into what we call negative gamma and that can make and force hedging that goes on very quickly. We also see here on the Q's the NASDAQ is hitting 600 which is a pretty big put wall as well. So we're clearly at that level again which is the key for the bulls and the bears and if we drop those levels then you could be starting to see a bit of a panic sell.

Now what about IBIT? Well, it's a bit different on Bitcoin. Bitcoin's actually recovered relatively well over the weekend. It's sitting at about 70K at the time of this recording. And you can see here going back above 40 on IBIT is a fairly big deal because it measures to do that. Then it's starting to turn more into the positive gamma. So maybe it's starting to show a little bit of hedging style characteristics. That's been a while since it's done something like that.

Nvidia, yeah, it's kind of just up down all around. I wouldn't say it's the weakest. I wouldn't say it's the strongest. Obviously, we've talked about that technical many times here. and Tesla one for the options still sitting kind of between 420 400 and we know 400 is now the biggest put wall. So really that's pretty much where the support is. 420 is kind of like a a nothing number at this stage.

So let's jump on over to the lead indicators. What have we been seeing? Well, the American consumer has actually dropped off to a level of first support. So effectively you can see here that people have been dumping discretionary and buying staples. And we've seen that on the charts. Staples have been doing really well. We haven't seen too much bond movement in terms of the general spread blowouts other than tech. So I guess we don't have those freakouts just yet, but we have seen financials come under significant pressure.

Now if you actually have a look at financials, you guys can see here they're down to that alert level that I've set. So this is interesting because basically you're losing potentially tech. You're losing well we've already lost the mags and many many metrics. We're losing potentially financials. Those are the types of things that you don't really want to lose because of course they show a defensive market. And again, I don't think it's news to anyone here that's been watching. We've seen defensive flows for weeks and weeks and weeks now. But yeah, very interesting level. These levels better hold otherwise, you know, we're starting to change trends towards the downside uh on some of these markets.

US yields also dropped through the floor here off everything that went on last week, which is, you know, of course, a negative sign for potentially the economy in the future. And you can see here the need for potentially more rate cuts is starting to come into the 2-year as well.

What about oil? Well, oil held pretty well. It went back up to the resistance, dropped back off, and of course, it's been quite volatile, but in general, still holding an upward trend, and you guys know that my favorite recently, things like energy and oil services, I mean, they've just been skyrocketing. So, it does show that there's that uh that kind of different play out there similar to utilities.

Nvidia time. Well, you guys can see here we have uh the high and the low. We don't really see anything uh too weird in this chart. I mean, weeklys of course show rejections each way. It's kind of like a dogey and no breakout past 195. So, we didn't get that positive gamma event. So, that's why the market's doing what it is.

US dollar just sitting there. Nothing much going on that one for this week, guys. And gold, the hedge of the world in many ways. We can see here it's picking up again. So, gold is a little bit different to silver. And as we've mentioned, we kind of felt like it might hold a little bit better than silver, but silver did come down close to that 618 fib. So, it's doing okay. I think silver is a base pattern. Yeah. If you haven't watched it before, go back about a week and a half ago and you'll see a great report there from Nordus uh over on X as well. And they actually have a cool cross-correlation chart with silver between previous crashes. So, I think silver's still a little bit struggly, but it did find that slight bull base. So maybe we can go back to the the previous little high there about $90 or so.

Let's move over to Tesla. Rejection off the most traded zone. Probably no surprise to anyone that uses the VPS. And it's just basically hit that level. And software is consolidating after getting a ton of interest in it over the last couple of days. You can see the volume here is massive on that one.

Some other things to note, Nvidia has weakened versus semiconductors consistently now for months, which does show that the once leader is of course starting to kind of, you know, consolidate or maybe even significantly weaken. And I think it's very important as well to note that Magnificent 7 did break below the support last week, signaling that big tech doesn't look very good. And while it could find some support around 60ish on the mags, uh, for now, I mean, that's kind of like a sell in terms of the way that the pattern looks now. You could claim it's a head and shoulders. I'm not really too interested in selling mags anymore. I think the story is starting to play out now, but a lot of people are chasing that one and obviously moving towards it. I think probably soon we'll be looking for structure, just haven't got it just yet.

Utilities, you guys can see here we've got some jumping up kind of movements. Again, markets are super defensive. Utilities going crazy and this one's spiking in volume as well. Quite a nice trade and one that was picked up by many members actually in our market masters club in terms of uh they've been sharing those charts and of course finding it in the platform. So, it's pretty cool.

NASDAQ, congrats to you guys. You got some good eagle eyes out there, guys. NASDAQ, you can see here we have kind of consolidation. Obviously, we do not have a drop underneath the 24,000 number, which is very, very important if you're going to get more bearish. And for now, it's kind of just consolidating. So, I wouldn't say it's super bad or super good. I'd say the bonds market is starting to uh kind of teeter a little bit.

What about Bitcoin? Well, this is, I guess, encouraging for the weekend. Uh because we have here a bit of a trend change on small time frames for Bitcoin to the upside. And of course, if it manages to get through 72, that could really start to get Bitcoin fired up again. And I know a lot of people are negative on it, and maybe rightfully so, but it did complete some of the technical patterns. It completed the longer-term flag that a lot of people had. It completed getting down to the demands, which are proper, versus this one, which was bit questionable. And it obviously completed a monster volume day, which basically shows massive liquidation. Obviously, mass fear as well because guess what? It was in the press everywhere. People were like, "The age of Bitcoin is over." So, yeah, it does have those right ingredients. We'll see whether we continue to get a bid, though. And again, not a solicitation to do anything. It's just basically showing you some of the charts and my thought processes around it.

All right, guys. Well, that kind of does it for the week ahead. Obviously, we still do have earnings, but I'll bring that up in the next video. I think I really want to summarize this is we are starting to see some serious cracks starting to appear specifically in what tends to be kind of like the worrying thing which was the once great leadership of tech although they're spending tons of money to build out AI we really are in an in kind of like an economy here that's all on AI can AI get it done and uh what it needs to do is it's going to need to present some profits otherwise these guys are going to smash some of these big tech companies. And you can already see the kind of ramifications in the tech stocks, particularly software.

In general though, I don't think the markets have fallen through their key levels just yet, other than the Magnificent 7. But that will come as no surprise to anyone that's been watching the show for a while, as we haven't really seen tech as a great level for yeah, it seems like forever, but it was probably about four or five months now, wasn't it? So anyway, this is a little worrying that we're getting this kind of leadership during a rate cutting cycle because it does bode bad for structure or badly for structure. We'll keep on top of it and you have a fantastic week ahead. I'm looking forward to seeing you tomorrow. Bye for now.