Founder’s Note: It’s fair to say one of the reasons we have so much energy exposure in our model portfolios is that we saw the move coming.
As we learned the last time Jason Perz checked in, the move has legs.
Here’s Jason with some insight on what comes next for the broader market… – JC
By Jason Perz
Let’s start with one idea.
If this market is going to bottom… it’s going to happen right now.
We’re sitting directly on 650 in the S&P 500, and this level is not random.
This is where positioning has built up, where open interest is stacked, and where price tends to get pulled into – especially around triple witching.
Markets don’t just drift into these levels. They get pinned to them.
And when that happens, you typically get a decision point.
Either it breaks… Or it becomes the low.
Watch the S&P 500 Here
Look at the structure.
The trend hasn’t broken. It’s paused:
Momentum has cooled, and the market has shifted into a choppy, frustrating environment.
This is where confidence starts to fade. This is where the narratives flip bearish.
But there’s something bigger happening underneath the surface.
We’re sitting right on 650, and there’s massive options interest at this level.
A huge amount of open interest has built up here, which means dealers have been forced to hedge around it.
That creates what we call a “gamma wall.” And when that wall is in place, it can pin price to a particular level.
The market stops trending and starts chopping because flows, not fundamentals, are driving short-term movement.
And that’s exactly what this has felt like.
Now layer in timing.
Yesterday was a triple-witching, which is when stock options, index options, and futures all expire at the same time.
It happens four times a year, and it’s one of the biggest positioning resets in the market.
When that expiration hits, those gamma walls come down.
The hedging flows that have been holding the market in place start to disappear.
And when that happens?
The market is finally free to make a real decision.
Now zoom out. We’re only about 6% off the highs.
In a bull market, that’s noise. That’s a reset.
These pullbacks happen over and over again. They shake people out, create doubt, and force weak hands to sell.
It never feels normal when you’re in it.
But, structurally, this is exactly what a bull market looks like.
The Dollar Is at a Wall
The U.S. dollar is sitting right into a major resistance zone:
And this is where things connect.
When stocks and bonds are both under pressure, money has to go somewhere. Recently, it’s gone into the dollar.
That’s the defensive move. That’s the “I don’t know what to do, so I’ll sit in cash” trade.
But if the market is going to bottom next week, that flow has to reverse.
The dollar can’t keep pushing higher from here.
It needs to stall. It needs to roll over. It needs to give capital a reason to move back into risk.
Because when the dollar weakens, that pressure releases. Money rotates.
Stocks catch a bid again.
The Setup We’re Staring At
The S&P 500 is sitting on a key level. The dollar is pressing into resistance.
The environment feels chaotic, full of whipsaws, and hard to trust.
And that’s exactly what turning points look like.
They’re not clean. They’re not obvious.
They are uncomfortable.
The mistake most people make here is assuming something is broken.
It’s not.
This is what bull markets do. They pull back. They frustrate. They test conviction right before the next move higher.
You don’t need to predict everything. You just need to recognize when the conditions are lining up.
And, right now, they are.
Save the bees,
Jason Perz
Senior Analyst, TrendLabs