Post
Post

Republic Research / ARTICLE

Quick read on where we sit heading into a fresh week. Momentum is still strong across the board. We're pushing back toward the highs we saw on April 17th. The S&P, Nasdaq, and Russell are all aligned. On the surface, that should feel great. The problem is what's underneath. Tech is doing all the work. Industrials, utilities, defensives are flat. The TECL is overbought. The SOXL is overbought. Intel's RSI is at 87 with overbought normally considered 70. We've got a handful of semis doing 60% to 100% in a month while the rest of the market quietly trades sideways or slips. That's not a broad rally. That's a single industry pulling the index higher while everything else holds the line. Goldman is now openly calling for a 3% to 5% flush. ( That's your first sign to be long. ) Mechanical institutional selling was around $10 billion last week. Retail is buying every dip. So you've got the smart money lightening up while the dip buyers fund the rally. That's a setup that historically resolves one way. Here's the part worth sitting with. Everyone keeps waiting for the big 30-50% drawdown. It hasn't come. It probably isn't coming. The system can't afford it. We've leveraged short-duration Treasuries from roughly 11% of issuance in 2017 to 22% today. That means more collateral, more rehypothecation, more carry trades, more basis trades all stacked on top of each other. A real drawdown would unwind all of it at once. So every time stress shows up, the Treasury, the Fed, or the Bank of Japan steps in and a V-shaped recovery follows. The recoveries keep getting sharper because the response keeps getting faster. We just lived through it again. Oversold to all-time highs in 23 days. Things like that don't happen organically. Something is being actively managed. That's the environment we're in. Stretched, manic, fragile in places, but every dip gets bought before it can become a real pullback. So how do you trade it. You don't try to short it. You don't try to call the top. You stop trying to time the 30% drawdown that isn't coming. You build a portfolio of things you actually want to own through cycles, you outperform the debasement of the dollar, and you let the V-shapes happen around you instead of getting whipsawed by them. For traders, the playbook is different. Volatility on the leveraged tech names is going to keep coming. Use the 20-day moving average on TECL and SOXL as your line. Above it, momentum continues. Below it, the flush starts. Tight stops. Take profits. Don't fall in love with anything in this group.

Published May 04, 2026Updated May 04, 20266 min read
Quick read on where we sit heading into a fresh week. Momentum is still strong across the board. We're pushing back toward the highs we saw on April 17th. The S&P, Nasdaq, and Russell are all aligned. On the surface, that should feel great. The problem is what's underneath. Tech is doing all the work. Industrials, utilities, defensives are flat. The TECL is overbought. The SOXL is overbought. Intel's RSI is at 87 with overbought normally considered 70. We've got a handful of semis doing 60% to 100% in a month while the rest of the market quietly trades sideways or slips. That's not a broad rally. That's a single industry pulling the index higher while everything else holds the line. Goldman is now openly calling for a 3% to 5% flush. ( That's your first sign to be long. ) Mechanical institutional selling was around $10 billion last week. Retail is buying every dip. So you've got the smart money lightening up while the dip buyers fund the rally. That's a setup that historically resolves one way. Here's the part worth sitting with. Everyone keeps waiting for the big 30-50% drawdown. It hasn't come. It probably isn't coming. The system can't afford it. We've leveraged short-duration Treasuries from roughly 11% of issuance in 2017 to 22% today. That means more collateral, more rehypothecation, more carry trades, more basis trades all stacked on top of each other. A real drawdown would unwind all of it at once. So every time stress shows up, the Treasury, the Fed, or the Bank of Japan steps in and a V-shaped recovery follows. The recoveries keep getting sharper because the response keeps getting faster. We just lived through it again. Oversold to all-time highs in 23 days. Things like that don't happen organically. Something is being actively managed. That's the environment we're in. Stretched, manic, fragile in places, but every dip gets bought before it can become a real pullback. So how do you trade it. You don't try to short it. You don't try to call the top. You stop trying to time the 30% drawdown that isn't coming. You build a portfolio of things you actually want to own through cycles, you outperform the debasement of the dollar, and you let the V-shapes happen around you instead of getting whipsawed by them. For traders, the playbook is different. Volatility on the leveraged tech names is going to keep coming. Use the 20-day moving average on TECL and SOXL as your line. Above it, momentum continues. Below it, the flush starts. Tight stops. Take profits. Don't fall in love with anything in this group.