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Monday, October 5, 2026

Markets Continue to Trade In Limbo - Time to Regroup

Time to regroup, after a 4 day break - felt more like 2 weeks:  

Treasuries remain stuck in the mud. I may pull the plug on that trade, and wait for a deeper correction, if we don't see short covering in the bond market - this week. I think we could see a deeper correction in equities markets as well - even in the big banks - when they report - next week.   

Small & midcaps rallied on Friday, but the machines are still selling the 20 day SMA. 

$VIX is higher this morning  - that's glaring - after headlines scream, "new intraday highs on the NASDAQ". Intraday highs on a Friday are not bullish. Feels like a repeat of  the week before - a Friday short covering rally. 

$COMPQ (60 min. chart view) Looks more like a retest of the same levels we've been watching for the past several weeks - not a clean breakout. 


This harkens back to my recent Sept. 21st  blog: 

...Buy Yom Kippur", is Still In Play - But The Wrong Sectors Are Leading 


Spoiler: The wrong sector that's leading is the same Mag7 + AI stocks that have been balancing the $SPX on the head of a pin, all year. Last weeks 20% short squeeze in Accenture $ACN doesn't change that.  

Possible catalyst for a much needed correction in the bloated AI sector:  

Today's AI hearing - scheduled for 11:00 AM EST NYC - to be streamed live:   

Former Anthropic researcher Coxon to testify at New York City AI hearing, Bloomberg News reports 

Oct 4 (Reuters) - Former Anthropic researcher Jacob Coxon will testify at a ​New York City hearing ‌on artificial intelligence, Bloomberg News reported on Sunday, citing people ​familiar with the ​matter.
Coxon will appear at the ⁠request of New York ​City Council Speaker Julie Menin, ​who has urged AI whistleblowers to testify as city lawmakers weigh ​a package of bills ​aimed at establishing safeguards around the ‌technology, ⁠the report said. (Reuters)
The rest of the market may continue to trade in limbo, until the next FOMC announcement (a pause already being telegraphed). 
In the meantime we could also see earnings spur a couple beaten up sectors e.g. financials, energy, even miners. 
I was bullish last week, and even added to our positions in treasuries, and midcaps, but unless we see a breakout in the next day or 2, I'm prepared to move to the sidelines - and sit on my hands, until I see a sustainable reversal - rather than the typical Friday short covering.  
Stay nimble 

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Wednesday, September 30, 2026

Cayman Islands Hedge Funds Are Loading Up On U.S. Treasury Bills

The same trade I alerted to earlier in the week [link] - glad I don't have to live on a desolate Island to trade like a hedge fund manager. I hate the heat. No thanks! 

Why 90k Very Wealthy People Live On Island: Few natural resources. No natural source of fresh water.  Constantly battered by hurricanes. No Costco.  

Cayman Islands Hedge Funds Are Loading Up On U.S. Treasury Bills

This is the standout headline I spotted on the X platform this morning:



but this is nothing new. 

Like it or not, hedge funds are a permanent part of the Treasury market 


THE SCALE of the Treasury market is mind-boggling. Some $1trn in securities change hands each day. Trillions more are used as collateral for short-term loans. Financial institutions of all stripes are involved: banks, central banks, high-speed traders, insurers, endowments, pension funds, hedge funds and so on. (economist.com) 

So then, why are the usual suspects (@ barchart), and even CNBC [link], pumping this angle - this morning - on more than one platform? If you've been following this blog for any length of time, then you already know why... 

Now that the sell treasuries (short) trade has run its course, they've flipped the script. 

barchart US Treasury pump on Instagram 

Reminder: Barchart is the same outfit that was seen driving the recent coordinated route in S. Korean semiconductor stocks, and doing rug pulls on US tech, when S Korean markets were closed (holiday). [Read all about how: Chinese Reddit Traders Teamed Up To Help Create The Perfect Storm]   

To make a long story short: US Treasuries are being traded as part of the rotation we've seen pick up steam in nearly every other sector, and that's what I find truly mind-boggling.  


I've since raised the target on the 3X Treasury Bull $TMF - find the updated chart in the same place [stockcharts public hub] and we're already seeing the sellers covering their short positions.  




Seeing Green Arrows 

 





P.S. Other things we're watching - related: 1. Possible setup for another rout in equites, on the return of the usual energy trade - rotation: 



2. Possible shakeout in shares $MU Micron - ahead of tonight's earnings drop 
  



P.P.S. Reminder: I'll be out for a short stretch (not in the Cayman Islands) but I plan to be back in time for the kick off of Q4 window dressing. Wouldn't miss it for the world!  
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