The Efficient Invasion Hypothesis

Fortunately we don't have to pretend that the Arsenal of Democracy is any such thing anymore. That patina of civility has been shattered. The two countries Trump has already attacked in the past year are among the top four oil reserve nations, and the country with the fourth largest oil reserves (Canada) Trump has threatened to turn into the 51st state on several occasions. Next on the list we can add Greenland to the mix of resource-rich countries that Trump has threatened to invade. Greenland has some oil, but more importantly it has rare earth minerals.

Fortunately, the World is turning a blind eye to this blatant aggression, because if the World sanctioned the U.S. as they sanctioned Russia over Ukraine, the Dow would be cut in half in days. Instead, U.S. allies are feckless, weak, and complicit as Trump correctly calculated.

They are like Democrats but in a different country.

So far, none of this military aggression has fazed markets too much in 2026. However, the momentum trades (lower pane) started to rollover this week deja vu of last February. Despite the S&P 500 making new highs this week, momentum stocks have not made a new high since October.

Which means that the AI bubble has now become very narrow in breadth.

This chart shows semiconductors making a new high this week, but Nasdaq 100 (NDX) new highs have collapsed.

As we see, the AI bubble had a huge correction from mid-2024 until April 2025.

Therefore we face one of three scenarios:

1) Continued melt-up on collapsed breadth (new highs)

2) Another big downside correction followed by a more lethal high

3) The AI bubble is ending

Both scenarios (2) and (3) portend a likely bear market in stocks, however option (3) would be substantially more cataclysmic.

This is an interesting chart:

It shows metals stocks making a new high today, however it also shows that Korean (AI) stocks are also making a new high in the same pattern. In other words, the parabolic metals bubble is following the exact same pattern as the parabolic AI bubble.

On the topic of global markets, what I showed recently is that each time there was a BofA sell signal - as there is now - global markets imploded in Q1 - for the past eight years.

Recall that the first year of Trump's first term was 2017 and the market imploded at the end of January 2018 one year into his first term.

What at the time was called "VIXPlosion".

Bitcoin (Crypto) is following the 2022 bear market script. Except it's ahead of schedule.

This week Trump said that he is going to massively increase the defense budget to further arm his overseas aggressions.

Defense stocks went late stage parabolic:

In summary, we don't know which country will be liberated of their resources next, but we know with certainty another invasion is coming. Sooner than later:

In global markets there is tremendous risk, tremendous complacency and of course tremendous cynicism to these blatant invasions.

Which means that my officlal 2026 prediction of a market explosion by the end of January remains on track.

If I am correct then bulls will soon be liberated of the burden of wealth.

Believe it. Or not.