Software (IGV) is being used as a source of funds as investors are rotating out of software & into the hardware/AI infrastructure names

Software remains the “underweight” sector in tech right now

• In a late-cycle environment transitioning toward a potential recession, the focus must shift from "Beta-chasing" to quality, low volatility & defensive growth

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Upward attempts = weak + vulnerable to failure

• Semis holding structure

• Software making new lows

• META/GOOGL not confirming

• Memory lagging badly

• Breadth deteriorating

Inter-market bearish divergence

Expect
Liquidity sweep → rejection

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The max pain price is the strike at which the greatest number of option contracts (both calls & puts) would expire worthless, resulting in the least amount of “pain” for option sellers (market makers) & the most for buyers

1. If the max pain theory holds…

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• We just saw the earnings release for Braze & it serves as a perfect real-time lesson on how to interpret moves that conflict with the broader market

Volume is lower in extended hours, so a small trade can move a security significantly

• If a stock jumps 5% on 100 shares in after-hours, ignore it since it’s a “low-conviction” move

• Futures (like ES for S&P 500/SPX or NQ for Nasdaq 100/NDX) act as a tether, so if futures are up 1% overnight, most stocks will “gap up” at 9:30 AM to match that value

Always ask why since a move based on a CEO resignation is “real, but a move based on a random social media post with no volume is “noise”

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• MU is not just weak — it just triggered a failed breakout → momentum unwind

• You’re no longer trading “MU earnings/AI story”

You’re trading macro unwind + sector rotation + dealer positioning

All 3 are leaning down

1. Bear Case → 50–55%

• $430 rejection → $380 → $350

• Correlation + skew ali…

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• This is not clean bullish continuation or consolidation

• It’s distribution with failed re-accumulation attempts

• It’s supply absorbing demand at progressively lower levels

• Institutions are selling into strength

• Buyers are getting weaker each push

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The key driver are real yields rising

• 10Y yields higher YoY

• Curve steepening

• Long-end pushing toward ~5%

Gold is extremely sensitive to real yields (rates – inflation)

• Yields rise

• Inflation expectations don’t keep up

• Real yields …

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The “Strait of Hormuz” Effect

• Brent crude oil has surged above $103/barrel, sparking fears of “stagflation” (low growth paired with high inflation)

• The President has been highly active on Truth Social, using the platform to drive both diplomatic pressure & market sentiment

• In a controversial post early Sunday, he suggested the US might strike the island “a few more times just for fun” to ensure Iranian compliance, claiming the current terms for a deal “aren’t good enough yet”

• He posted that the Strait should be a “team effort,” calling on China, France, Japan & South Korea to send their own warships to assist the US in securing the passage

• Meanwhile, Director Kevin Hassett stated that President Trump may call an end to the war if Iran can no longer “blackmail”

Anticipation is peaking for Nvidia’s (NVDA) GTC conference, which begins Monday, 16 March

• Social media is buzzing with rumors of a new “inference” chip designed specifically to speed up the process of generating AI results

• While Nvidia remains a darling, there is growing “AI Reckoning” sentiment for software giants

• Adobe (ADBE) shares dropped nearly 8% recently due to uncertainty over its AI leadership transition & missing new annual recurring revenue estimates

Iranian Foreign Minister Abbas Araghchi clarified today that while the Strait is “technically” open, it is strictly closed to all US & Israeli-linked vessels

• Despite Iran’s claims, hundreds of ships are currently stranded

• Tehran has granted “special passage” to certain Indian LPG tankers & China-flagged vessels to maintain diplomatic & economic lifelines

• This is a direct attempt to bypass the US dollar-dominated global financial system

The S&P 500 has fallen roughly 4.2% since the conflict began in late February, as traders weigh the risk of sustained energy inflation against the backdrop of an already sensitive economy

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• The Fed paused rate cuts in January (holding at 3.5%–3.75%)

• Markets are watching the dot plot to see if the projected path for 2026 remains at one or more cuts, especially with inflation hovering near 2.7% & recent government data blackouts causing some uncertainty

made a higher high $455 → lower highs afterwards which usually means buyers exhausted for now

MU earnings typically drop shortly after 4 PM EST

• Analysts are looking for an EPS of around $8.69 on revenue of $19.2B

• The focus will likely be on AI-driven DRAM demand & high-bandwidth memory (HBM) supply constraints through 2026

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• Futures markets are forward-looking, so when geopolitical risk spikes (especially involving major trading partners), institutional & retail traders often reduce exposure to equities — increased risk-aversion, position unwinding & hedging

The speed of the drop matters more than the level right now

• Repeated failure to reclaim prior highs = market doesn’t trust the news flow

• Until price stabilizes after a headline, rallies are suspect

In the short-term, risk-off bias, sell-the-rip behavior, headline-driven volatility

In the long-term, outcome depends entirely on whether rhetoric becomes policy

The Trump cycle never ends gradually

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The VIX is basically the market’s price for 30-day S&P 500 downside insurance derived from SPX options so when traders aggressively buy puts, implied volatility rises → VIX rises

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• It has been a year of political shocks, tariff escalations, policy pivots & repeated volatility events — yet price is sitting near highs

• Markets that survive chaos & still fail to expand cleanly feels like supply meeting demand at the highs

Let’s walk through the past year structurally & what it means now

Early 2025 brought im…

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• Never trade the breakout candle

• Trade the failure or the reclaim

• If price breaks a level & can’t stay above it, that level is no longer support — it’s inventory

You trade the levels, not momentum

• Trends accept levels & traps reject them

• If price proves the move, you’ll still have an entry

• If it doesn’t — you just avoided the trap

A bull trap is a breakout that succeeds in price, but fails in participation

• Price says “go,” but participation says “no”

• Fast rejection → snap back into range

• Slow grind lower that kills premium

• Bull traps = call premium harvest

A bear trap is a breakdown that succeeds in price, but fails in pressure

• Price says “breakdown",” but pressure says “exhaustion”

• Violent bounce to VWAP/value

• Slow grind higher that kills puts

• Bear traps = put premium harvest

Bull traps love

• Prior ATHs

• Range highs

• Upper Bollinger band

• +1σ expected move

• Areas with call OI concentration

Bear traps love

• VWAP / value area low

• Prior demand zones

• -1σ expected move

• Areas with put OI concentration

Ask this for bull traps

• Is price extended?

• Is momentum confirming?

• Did volume expand?

• Did we accept above the level?

If no to 2+ → trap risk high

Ask this for bear traps

• Is price already stretched down?

• Is selling accelerating or stalling?

• Did we reclaim the level quickly?

If selling stalls → trap risk high

Dealers want traders buying

• Calls near resistance

• Puts near support

Your job is to recognize when price moves without sponsorship

• Bull trap = breakout without momentum

• Bear trap = breakdown without pressure

When price moves, but participation doesn’t, you’re looking at a trap

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• Extended above rising long-term MAs

• Printing lower momentum highs vs price highs

• Pulling back from the upper Fib/Bollinger regions

Risk is clearly asymmetric short-term

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Across all timeframes (1m → daily), the primary trend is still up

• Higher highs since April, rising long-term trendline intact, but we are late-cycle within the range, not early breakout

Price is hugging the upper Bollinger band, but momentum is flattening, not expanding

• RSI ~mid-50s → not overbought, but a…

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• Based on 20d & 50d MA loss, daily momentum rollover, rising 200d MA

• This is most consistent with a Type-2 correction in QQQ terms

Strong markets never live below both the 20d & 50d MAs for long unless something is changing

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Earnings are liquidity events, not truth events

Your edge comes from waiting, letting structure reveal intent & trading reaction, not expectation, so think in 3 phases

1. Before earnings (setup)

2. During the reaction (information)

3. After the reaction (execution)

Most people fail because they skip 1 or rush 2

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