Is That Capitulation I See Before Me?

The market is starting to behave more to my expectations now with long government bonds rallying. Resistance area 1 is cleared. The next level is around 139-140 on ZB or $118-$119 on TLT.

The other part I've been waiting for is energy to start leading the market lower. I haven't discussed it much because I didn't take a position. I was going to pick up 0 DTE puts on Friday, but XLE actually hit a new all-time high during the morning. I should have picked up weekly puts for this week, but didn't. So I missed this first move:

The blue horizontal is from the previous all-time high set in 2014. Similar to how I thought bonds could rally whether stocks go up or down, I think energy probably has to go down for stocks to rise or fall too. Inflation expectations have to come down for BigTech to rally and pull indexes higher for more than a few days. For inflation expectations to come down, energy and commodity prices must fall. Most likely, energy and commodities will fall with stocks as the bear enters a new phase.

In conclusion, capitulation is underway. All the major indexes have broken the most generous support lines I have drawn. That could have been an area for a rally to begin, but instead I think it starts a new breakdown phase that will then be followed by a rally back up to this area. The 4000 level could be a new ceiling for the S&P 500 Index. In this phase, I expect BigTech and energy will fall, government bond yields will also fall (bond prices rise), volatility spikes and a tradable bottom is made. Finally, it could happen fast. Two to four more days in a row like today could do it. Since bonds are rallying, the larger downside targets are off the table for now. The $340 target on SPY below would be in play much sooner if bonds kept crumbling along with stocks.