One macro spark (trade tensions) and the fragile setup unwound.

It was only a matter of time; you can feel it in the air.

  • Breadth had been below its 5-day MA since late August.

  • Indices kept grinding higher — the “market of stocks” quietly diverging from the “stock market.”

  • FOMO was in full swing: names up 3, 4, 5 days in a row were being chased.

  • Everyone knew it… But no one wanted to leave the party.

The desperation to try to make up gains that were missed was palpable and apparent.

You could read it on the timeline — the hubris was everywhere. The feeling was unshakable; it was a game of musical chairs, and everyone knew the music would eventually stop. But the tunes were so good, you couldn’t walk away — not until the very end.

The rug pull was coming.

💣 The Break

  • SP500 broke at 11:00 AM and further declined after the close, following Trump’s imposition of 100% tariffs on China.

  • SPX lost its 21-day moving average for the first time in a while.

  • The Nasdaq and Russell flipped red together.

  • Bitcoin, ETH, and Solana — all rolled at the same time.

The crypto break wasn’t just sharp — it was record-setting. Roughly $19 billion in positions were liquidated within hours, and deeper analysis suggests the true total approached $400 billion.

So what now?

Now we wait.

The backtracking from Xi and Trump has already started, and crypto is bouncing a little.
This was a much-needed sell-off — the extent and depth of its impact remain to be seen.

We’re going to let the same breadth indicators that were hinting at a downturn lead us back in.

There’s no rush.

We’ve written about this breadth indicator before here in these pages and how we’ve used it to spot turning points and guide exposure.

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