Lunar Crash

Two weeks ago I enumerated the various risks coalescing in markets - which culminated in a global mini crash led down by Cryptos and Metals.

Subsequently markets bounced, and subsequently risks have grown, along with complacency...

The climax low was on Friday February 6th and has been followed by a global relief rally leading into Asian New Year this week. The various risks I listed were as follows below, just prior to the relief rally. Pundits are of the belief that these risks have dissipated, however I believe they are about to return with a vengeance that will complete the checklist.

First off, this sequence of mini crash followed by Lunar relief rally follows the early 2021 pattern almost exactly, as we see in the chart below. Except instead of a Gamestop pump and dump, this rally featured a silver/gold pump and dump, on a GLOBAL scale i.e. the combined market cap of silver and gold dwarfs Gamestop by several orders of magnitude. And the metals trade is a particular favourite in Asia which is now on holiday. So if that trade re-crashes this week, then Asia is coming back from holiday to a massive margin call.

Then as now, the Gamestop crash preceded the global market top by two weeks, which coincides well with this sequence of events. Also, we see that the 2020-2021 rally was of similar duration, marking its low in early April.

Several of the major risks have grown in magnitude during these past two weeks:

First off, the AI narrative has completely reversed from more is good to more is bad. In other words, ever-increasing AI capex spend fueled the parabolic Tech rally for three years. However, in the past two weeks that same narrative has reversed to panic over the exorbitant level of AI spending and the disruption it's causing in the economy. Which is what we should expect - that what was deemed bullish on the way up, is now considered bearish. This shows a shift in social mood from positive to negative even though the facts are the same. After all, what pundit predicted their entire "ongoing bubble" narrative of ever-increasing AI growth would be turned against them in the first quarter of 2026?

NONE.

Here we see that as of this writing, the S&P Tech sector has round-tripped back to the February 6th lows of two weeks ago. However, the data center infrastructure stocks made a new high. Which is deja vu of last February:

Numerous Hindenburg Omens have occurred these past several weeks, both on the NYSE and the Nasdaq. Which means that as we saw in the chart above, a few Tech stocks are making new highs, but most Tech stocks are simultaneously imploding. It points to a bifurcated market, which is common at a market top.

Most pundits use NYSE Hindenburg omens as their market signal, but my program combines BOTH NYSE and Nasdaq into one signal, and then I use a 5 day moving average to pick up the cluster count.

This is the result, mapped against large cap momentum stocks which are still making new highs. As we see, this signal was precise in marking the END of the pandemic bubble.

On the topic of the metals risk that led the global crash, here we see that silver has made three consecutive weekly lower highs and today returned to the lows of February 6th.

Which is now CRITICAL support.

My hypothesis is that the metals bubble can't be sustained without Asian support which is negligible this week.

My analysis indicates that Bitcoin and Crypto are also getting killed by AI, due to soaring electricity costs.

Bitcoin is currently sitting at critical support which is the high from 2021 AND the breakeven cost for Bitcoin miners. In other words, every new Bitcoin now costs $70,000 in electricity.

Which is a totally asinine cost.

Black swan risk has grown, especially around war with Iran.

Trump is currently repositioning another aircraft carrier to the Middle East, after which he will be good to go. One need not believe that these interim "talks" are for anything other than to confuse the enemy and stall for time. Once the toys are in place, they will get used.

In summary, Lunar New Year, AI panic, monthly options expiration, and Trump risk are coalescing at the lowest liquidity period of the year this week. Which means that Asia will likely return from holiday next week to margin calls.

And then the REAL global selling will begin.