Here's the Deal

Last week, I laid out a few scenarios to watch as we moved into October — historically the most volatile month of the year.

In that post, I also presented a “What If” scenario — what might happen if a more disruptive issue emerged. Well, it didn’t take long to find out what that was: the rare-earth standoff between the U.S. and China.

This is now the dominant narrative for markets, so keep a close eye on how that plays out.

The ripple effects are already visible. Bitcoin sliced through its $118K support like a warm knife through butter — a sharp reminder that a deeper 10–20% market retracement has become far more likely for markets.

Mid-week, I also sent out a post sharing several promising setups. I still like them. Only one name hit its stop, and that was the tightest of the group. While I’ve trimmed some shorter and medium-term holdings, I remain long and bullish, but was and am still positioned for a shorter term correction and ready to strike at a moment’s notice taking a more tactical approach as a trader.

On Thursday evening I sent out a tactical trade plan to the trading group, recognizing the signals heading into Friday.

This is how you handle a raging bull market that’s been stretched to extremes.

It’s easy to say, “Markets are overbought — I’ll sit out.” But the truth is, they’ve been overbought for weeks, and each of those weeks offered big upside moves. That’s how bull markets behave — they keep running until something truly changes. The key is to stay involved with discipline, watching for signals and being ready to adapt when the wind shifts.

It’s hard to explain exactly how it feels when you notice the tide is turning. It’s not a data point — it’s intuition, the kind that comes only after years and more than 10,000 hours of experience. You don’t always know what the trigger will be, but you sense when something’s off.

Then, in a moment, confirmation hits and you recognize it for what it is — and you’re already in position.

That’s precisely what happened Friday morning at 10:57 a.m. EST, when a new dominant narrative took center stage — one that’s likely to steer markets in the weeks ahead.

Geopolitics Takes the Stage as the Main Economic Narrative

In the world of markets, things can turn on a dime — and Friday, they did.

At exactly 10:57 a.m. EST, President Trump posted an announcement that sent shockwaves through global markets:

Within minutes, indices dropped sharply, falling roughly 2–4% by the close.

This move wasn’t just another chapter in the ongoing trade war or the broader effort to “reset” the global economy. It was a direct response to China’s Thursday announcement of new export controls on rare earth elements — materials they dominate in refining, and which are critical to high-tech manufacturing and modern defense systems.

(You can read the Thursday’s Wall Street Journal article about China tightening its already firm grip on rare earth exports [Here].)

When it comes to rare-earth dominance, Trump is right to sound the alarm. But this goes far beyond politics or trade. This is geopolitics, and it’s been building for decades. A slow-burn consequence of a U.S. foreign policy distracted by two decades of ill-conceived overseas wars while China quietly cornered the market on refining the resources that power the modern world.

Now, the bill has come due. The U.S. must secure access to these vital elements to protect both its economy and national defense in the short term and build up the infrastructure within the US to refine these elements. This isn’t about tariffs or political personalities, it’s about global power and who makes the rules for the next century.

This is serious stuff. Throughout history, global conflict has always followed resource competition. Look at World War II: every major battlefield had one common denominator — oil.

Control over energy has always meant control over destiny. Centuries ago, it was food and water. A hundred years ago, it was oil. Today, it’s oil and rare earths.

And history shows us something else: when nations stop trading with each other and retreat behind their borders, conflict is rarely far behind.

Let’s be honest, every U.S. president and Congress over the past 25 years has dropped the ball here. Every. Single. One.

This isn’t a partisan issue; it’s a generational failure. While much of the public debated culture wars and partisan talking points, the world’s real power centers — energy, technology, and resources — shifted dramatically. And while many Americans complain about being left behind or nostalgia for “better times,” we’ve ignored the structural choices that allowed for times to be good enough for us to have the privilege to complain and yell at each other about these issues.

This moment isn’t about “tariffing the world” or trying to score political points. It’s about power, pure and simple.

Who has it.
Who’s losing it.
And what happens next when that balance begins to shift.

Since the end of World War II, the United States has been at the top of the global hierarchy. But China now stands within striking distance of that title, and this is the natural rhythm of history. Every 80 to 100 years, power realigns.

This cycle isn’t new. We’ve seen it before. The scramble for control of critical resources is what precedes every major geopolitical turning point. That’s why the U.S. has worked — under both Trump and Biden — to block China’s access to advanced microchips and related technologies.

If you haven’t been closely following the geopolitical chess match as nations secure supply chains and position themselves for what’s next, now is the time to start.

Don’t mistake this for a “Trump thing.” It isn’t.

This story has been a century in the making, and it would be unfolding no matter who sits in the Oval Office.

This is a wake-up call for those not paying attention.

If you want to understand what’s truly happening, you must look past partisan headlines and emotional news coverage that simply tells you what you want to hear. That’s not information, that’s a drug of choice. It might make you feel better, but it leaves you blind to what’s actually happening.

It’s time for Americans to grow up and to stop acting like spoiled children arguing over team colors while the game itself is changing beneath our feet. The refusal to compromise, the addiction to outrage, and the blindness to long-term strategy are exactly how great nations lose their footing.

The choice is ours. And collectively, we’re botching it. Badly!

Yes, this is still an economic newsletter.

But economics and history are inseparable. Every major war began long before the first bullet was fired. Economic warfare and the rush to secure energy supply lines always comes first.

And that’s exactly what’s happening now.

Signs of Restraint

Here’s the encouraging part: there are clues in the timing that both the U.S. and China would prefer to avoid true conflict, even as rhetoric ramps up.

Both sides have November 1st deadlines for new measures — and meetings between Xi and Trump remain on the calendar before then. That suggests room for de-escalation, or at least strategic delay.

So stay sharp, stay flexible, and don’t let fear dictate your your life or trades. Volatility creates opportunity; but only for those who keep their heads while others lose their minds.

Time to Reassess and Pivot — Not Panic

Friday was a wild one. Markets fell sharply after President Trump retaliated against China’s move to tighten its grip on the world’s supply of critical rare earth materials.

While these are the types of geopolitical sparks that often precede major global conflicts, that doesn’t mean the end of this historic bull market has arrived. In fact, the more investors who believe “this is it” right now, the less likely it is to be the top. That’s just how markets work.

The worst thing you can do right now is panic.

Market crashes from all-time highs have happened exactly zero times in history. What usually happens instead is a sharp drop that finds support, followed by a rebound to a lower high — a spot where everyone relaxes again — and only then, if conditions truly deteriorate, does the next leg down begin.

But that isn’t my base case here — at least not yet.

Context Matters

For perspective: after “Liberation Day,” the S&P 500 (SPY) fell more than 6% from the previous day’s close and 3.5% from its open. On Friday, by contrast, SPY closed down 2.7% from its open from Thursday’s close.

In other words, we’ve seen much worse.

Days like this happen. They’re part of normal market behavior. Especially after an epic six-month, 40% run in the S&P 500 during which stocks became extremely overbought.

Anyone who’s traded through a few cycles knows that one volatile day that shakes out weak hands is no reason to fold your hand and run. It’s a sign to reassess positioning, not abandon ship.

The bigger question now is this:
Is the AI, quantum computing, and data-center trade dead — or is this just another buying opportunity before the next leg higher?

That’s what I’ll be watching closely. I’ll also be tracking whether more recessionary sectors — like Healthcare and Consumer Staples — begin to show relative strength.

Utilities are already and have been red hot, driven by the power demands of AI, streaming, and the coming wave of quantum computing — just as Healthcare was strong for years leading into the last recession, thanks to the Affordable Care Act. Ironically, the ACA ended up being anything but “affordable,” accelerating healthcare costs since its introduction in 2010 and full implementation in 2014. The market, as always, sniffed that out years in advance.

So best to expect rising utility prices over the next several years as well.

Wall Street Legend Echoes What We’ve Been Discussing for Months

This week, legendary trader and one of the true G.O.A.T.s of the investing world, Paul Tudor Jones, came out and essentially confirmed what I’ve been emphasizing here in Here’s the Deal for months:

That statement, coming from someone of Jones’s stature, is a powerful validation of the exact framework we’ve been following — a market pushing toward exhaustion, but not finished yet.

It’s a reminder that you can either wait until a Wall Street legend goes on TV—after a big portion of the gains have already been made—or you can trust the process we’ve been building here together. The difference between those two approaches is often measured in double-digit returns.

This is precisely why I started sharing my research publicly in the first place. For years, I’d get frustrated watching the same pattern play out: by the time the big calls reached corporate media, the move was already at least halfway over.

That delay leaves the average investor with two problems — smaller profits and worse timing. They enter late, make less, and often stay too long because they were late to the party.

That’s not how we operate here. We spot the shifts early, prepare in advance, and act with discipline — long before the headlines catch up.

Inflation Data Expected This Week — Even Amid the Government Shutdown

Although most economic data releases remain on hold due to the ongoing government shutdown, the Bureau of Labor Statistics (BLS) has called its analysts back to deliver this week’s key CPI and PPI inflation reports.

These reports will be crucial in determining whether the uptrend in inflation—which began shortly after new tariffs were announced—is continuing, or if the economy has softened enough that businesses are now struggling to pass those added costs along to consumers.

In short, this week’s inflation data will help answer an important question:
Is pricing pressure still building, or is demand finally cooling enough to slow it down?

Earnings Season Begins This Week

Earnings season kicks off this week, and with it comes a flood of information that will help shape the next leg of the economy and market narrative.

Here’s what to watch:

• Consumer Resilience and Pricing Power:
  Pay attention to what companies say about the strength of the consumer and their ability to raise prices. Inflation, wage pressures, and tariffs are still wildcards, and how firms manage these costs will reveal whether they can maintain — or even expand — profit margins.

• Profit Margins as a Window Into the Economy:
  Margins tell the real story. If companies begin to report shrinking margins, it means they’re having a harder time passing higher costs along to customers. That would suggest consumer strength is weakening.

The first test comes from the banks, which serve as a barometer for the broader economy.

Watch for:

• Evidence of resilient loan demand and stable credit quality

• Updates on deposit trends and net interest income

• Any signs of credit stress among consumers or businesses

Banks are also a window into corporate confidence. A continuation of the resurgence in deal-making, M&A advisory, and trading revenues would confirm that business activity remains healthy despite shifting financial conditions.

In the tech sector, eyes are on TSMC and ASML. Their results and commentary will help determine whether the AI chip boom and semiconductor demand continue to justify the sector’s lofty valuations.

Also worth watching: Dollar Tree’s earnings and guidance.
Their commentary provides one of the clearest views into the health of lower-income consumers, and whether middle- and upper-income shoppers are “trading down” in response to higher prices.

At this late stage of the cycle, earnings season isn’t just about last quarter’s performance, forward guidance will also give a closer peak into the economy itself.

Margins, guidance, and tone will be what to watch.

Markets:

Happy birthday to the current bull market, which officially turns three years old on October 12th. It sure has a funny way of celebrating.

After a couple of head fakes toward $677 this week, markets got smacked on Friday morning — a sharp reminder that volatility in October should be expected.

But let’s keep this in perspective: At this point, Friday’s move was a one-day pullback, and not even a historic one at that. The market remains in a powerful uptrend.

I mentioned last week that you should expect volatility this month — and sure enough, it arrived right on schedule.

So, while the perma-bear crowd dusts off their “1929” charts and shouts for attention, remember that their analysis usually stops at “pRicE gO uP ToO fAr.” Their calls for doom generate clicks and subscriptions, but rarely results.

If this market weakness persists over the next few weeks, pay close attention to when those voices get the loudest. Historically, that’s often when it’s time to buy aggressively.

$SPY ( ▲ 1.53% ) S&P 500:

• Short-Term Outlook:
  I expect weakness to continue early in the week, though a bounce in the first half is likely. I’ll be watching for support around $645ish. If that holds, a rebound toward $660ish makes sense — but I expect that area to act as resistance and push prices back down.

• Medium-Term Support Zones:
  My two main levels for SPY to ultimately hold are $630ish and $600ish, with the higher probability near $600.
  Those are the zones where I’ll have a list of names ready to buy aggressively — stocks that have shown relative strength and technical resilience.

• Lower-Probability Scenario:
  There’s still a possibility that SPY could test $575–$565 for ultimate support. It’s not my base case, but it’s certainly on the radar.

• Early Indicator:
  Keep an eye on Bitcoin. It continues to act as a useful early signal of risk appetite shifts during this cycle.

$DIA ( ▲ 1.28% ) Dow Jones Industrial Average:

$QQQ ( ▲ 2.12% ) Nasdaq:

$IWM ( ▲ 2.78% ) Russell 2000 (Small Caps):

Now is not the time to be afraid when operating in the markets. Instead, it is time to get excited, have a plan, and be ready to execute when the time is right. Keeping in mind that opportunity often hides behind discomfort, fear, and anxiety.

WTF of the Week

With this week’s events, it seems fitting to bring back the WTF of the week with this gem:

So what do you think it is? A dragon, or a tiger?

Or… Maybe you think it’s something else???

Quote of the Week:

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