Historic V-Shaped Rebound — The Pain Trade Is Still Higher

The speaker begins by discussing an ongoing project to identify top-performing low-cap stocks, specifically those under $2 billion that performed best between 2023 and 2026. The goal is to model the best V4 settings for each, then find universal settings for these potential "monsters." This involves analyzing various factors, including price-to-earnings ratios and cash burn, to create a scanner for successful low-cap runs. The speaker acknowledges the uncertainty of the current market cycle, noting that opinions are split between a bull trap and the beginning of a sustained bull market. The current market is described as event-driven and news-driven, with significant geopolitical events unfolding. The possibility of meetings in Istanbul and ongoing posturing by global powers are highlighted as critical factors influencing market stability. The speaker emphasizes that the world could look very different in the next 12-24 hours, underscoring the immediate impact of these events. There's also a plan to apply similar analytical methods to cryptocurrency, viewing this as a potential moment for speculative plays. A key chart discussed is the copper-to-gold ratio, which historically has signaled the beginning of a market run each time it touched a specific trend line over the past 14-15 years. This leads to a discussion about whether the market is in a late cycle, mid-cycle, or on the verge of an extended bull run, especially given positive indicators like manufacturing PMIs in expansion for three consecutive months and stabilizing job markets. Upcoming IPOs for companies like SpaceX and Anthropic in 2026, alongside the ongoing AI race, further fuel the bullish sentiment. The speaker points out that CTA positioning indicates significant purchases, with approximately $20 billion in US equities expected in the coming week across various market conditions. This suggests a market running hot, nearing "extreme greed" for the first time in a long while. Another important factor is the increase in corporate buybacks, with 2026 expected to see the most on record. The end of the blackout window for buybacks means an increase in market bids, providing significant support, especially as CTA buying power might wane. Earnings expectations for US stocks are rising faster than after the 2017 tax cuts, prompting questions about whether the market is in a bubble, about to pop, or entering its most profitable phase over the next 18-24 months. Current portfolio positioning includes NVIDIA and MicroStrategy showing double-digit profits, while Tesla is slightly down after re-entry. The speaker also mentions V4 releases, which show strong waves of positioning, particularly a long position on FNGU, indicating a desire to capitalize on such market movements. The discussion then shifts to Bitcoin and crypto, which have experienced a brutal two months within a tight range. A comparison is drawn to the 2018 market, which saw a similar price path leading to a 50% collapse. The question is whether the current market is headed for a similar downturn or if it's forming a bottom, with the speaker advocating for a long-side positioning. The presence of a "buy impulse" is noted, though it has since faded. Geopolitical tensions are a major concern, with oil prices at $90 a barrel and markets tense over a potential ceasefire ending. China's desire for open straits and the posturing between Iran and the US are critical. The speaker warns that if talks fail and the situation escalates, particularly regarding the Strait of Hormuz, the dollar could spike dramatically. The possibility of limited strikes after a ceasefire is discussed, with the speaker hoping against attacks on infrastructure and emphasizing the importance of Iran's response. The overarching question is whether this is "the darkest before the dawn" or the beginning of a prolonged period of difficulty, dependent on diplomatic resolutions. The speaker also highlights a peculiar market phenomenon: a massive squeeze in a particular stock, likened to a "Wall Street bets GME 2.0" but seemingly driven by insiders. This stock has seen an "unreal" run, pumping 100% in a couple of weeks, leading to questions about its sustainability and the risks of shorting it. The speaker advises against such high-risk plays, emphasizing the importance of smart, calculated returns. Finally, the speaker touches on the ongoing pressure on Iran, with the US maintaining a blockade. The speaker believes that while Israel might be capitulating, Iran and the US are playing hardball, and the ramifications are uncertain. The focus remains on finding universal settings for low-cap performers and developing a strategy for knowing when to deploy these models to capitalize on investment opportunities. The session concludes with a call for prayer for peace amid the global uncertainties.