Investment Research Memo 02/05/2026

Published: February 05, 2026

Investment Research Memo: Global Macro & Technical Strategy (Updated)

Market Bias: Bearish / Short
The Core Thesis: The “AI bubble” is bursting, confirmed by mega-cap tech weakness ($GOOGL, $AMZN) and a breakdown in market structure. $BTC has collapsed ~50% from its peak ($97.9k to $64k), acting as a leading indicator for a 20-30% correction in equities ($SPX, $NDX) over the next 6-12 weeks. The market is entering “Crash Wave 3.”
Key Risk/Warning: Historical Trend Line Rejection: The market is topping at a monthly trend line going back 100 years. A rapid acceleration of selling pressure is expected, targeting the April lows or the 200-period MA.

Crypto-Equity Lag Correlation: $BTC is the “canary in the coal mine.” It peaked, distributed, and collapsed while equities consolidated. The thesis assumes $SPX and $NDX will mirror $BTC’s 50% collapse with a delayed but aggressive move.
Fractal Repetition:
- 2000 Tech Bubble: Comparing the current setup to the 10-week decline phase where NASDAQ lost 40%.
- 2022 Bear Market: Expecting a similar kickoff but faster/steeper.
The “Fake Breakout” Narrative: The recent move above the October high (approx 1.2%) was a “bull trap” designed to induce complacency before the rug pull, similar to $BTC’s fake breakout before its crash.

Price Levels:
- Resistance: $97,900 - $98,000 (The “Lower High”).
- Current/Target: Collapsed to $64,000; eventually targeting the 200-EMA.
The Setup: Confirmed breakdown from a distribution top. Currently executing the “second leg down” of a measured move. *

[Image of Bearish Flag Chart Pattern]

Price Levels:
- Resistance: Recent highs (Divergence: Failed to make new ATH unlike $SPX).
- Support/Target: November Lows (Critical breakdown level), Jan/Dec lows (breached), eventually April Lows.
The Setup: Adam and Eve Double Top.
- Bollinger Bands: Price hit the upper band, formed a black candlestick, and reversed.
- Moving Averages: 10-day crossing below 20-day; price broke the 100-period MA. *
Verdict: Aggressive Short

Price Levels:
- Resistance: Back-test of the April trend line (failed Jan 28th & 29th).
- Target: 5,300 (78.6% Fib), April lows, and potentially the 200-week MA.
The Setup: Rising Wedge / Broadening Formation.
- Gap & Trap: The market gapped up, trapped buyers, and is now filling gaps to the downside.
- Momentum: Monthly Price Oscillator rolling over; Stochastic dropping below 80 (sell signal).
- Awesome Oscillator: Red bars appearing, indicating waning momentum. *

[Image of Head and Shoulders Chart Pattern]

Price Levels:
- Support: 50-period MA (Green Line).
- Target: Above previous peaks, surging >20.
The Setup: Bullish Engulfing. $VIX holding above 50 & 200 MAs.
Rule: “When $VIX is above the 50-period MA, bad things happen to $SPX.”
Verdict: Long Volatility

Earnings Weakness:
- $AMZN: Missed earnings, mixed results, stock down ~8% in after-hours.
- $GOOGL: AI spending concerns compressing margins.
- $AMD: Putting pressure on the broader tech sector.
Labor Market Deterioration:
- ADP Report: “Pathetically weak,” less than half of expectations.
- Catalyst Date: Jobs Report delayed to Wednesday, Feb 11th (due to govt shutdown/reopening mechanics mentioned).
Inflation:
- Catalyst Date: CPI Data delayed to Friday, Feb 13th.
- Outlook: Expecting higher CPI and continued wholesale inflation (PPI) pressure.

Bear Trigger (Primary): $NDX closing decisively below the November low confirms the Double Top; $SPX closing below the Cloud and December lows triggers “Crash Wave 3.”
Bull Trigger (Invalidation): A reversal that fills the recent gap down and reclaims the broken trend lines/moving averages (specifically getting back above the April trend line on $SPX).

Horizon	Recommended Move	Rationale
Short Term (1 Day)	Sell Rallies / Fade Gaps	Amazon’s -8% drop will pressure tech. If `$SPX`/`$NDX` attempts to fill the intraday gap, treat it as a shorting opportunity. Watch for a close below the daily Cloud. Don’t chase the initial drop; wait for the bounce to short.
Mid Term (1 Week)	Accumulate Puts / Short `$NDX`	Monitor the delayed Jobs Report (Feb 11) and CPI (Feb 13). The speaker expects these to be bearish catalysts (weak jobs, hot inflation). Look for weekly confirmation of the “Bearish Reversal of Conditions” (red arrow/bar on weekly chart). Target the break of the November Lows.
Long Term (1 Month)	Hold Core Short / Hedge Longs	Position for “Crash Wave 3” (20-30% drop). The expectation is a cascade lower over 6-12 weeks toward the 200-day/week MA and April Lows. Do not buy the dip until major capitulation signals appear (e.g., `$VIX` > 40, RSI oversold on weekly).

Adam and Eve Double Top: A bearish reversal pattern with a sharp first peak (“Adam”) and a rounded second peak (“Eve”).
Gap and Trap: A situation where a stock gaps up (opens higher) to lure in buyers, only to reverse and close lower, trapping the new longs.
Broadening Formation: A chart pattern with higher highs and lower lows, indicating increasing volatility and indecision, often leading to a reversal.
Candle of Indecision (Spinning Top): A candlestick with a small body and long wicks, signaling a potential change in trend.

Ticker	Bias	Key Level to Watch	Notes
`$BTC`	Bear	$64,000	Leading indicator; breakdown confirms risk-off environment.
`$NDX`	Bear	Nov Lows	Tech/AI bubble burst epicenter; Adam & Eve top confirmed.
`$SPX`	Bear	5,300	Catch-up trade to the downside; watching 78.6% Fib.
`$AMZN`	Bear	Post-Earnings Lows	Missed earnings acting as a sector catalyst (-8% AH).
`$VIX`	Bull	MA 50 & 200	Holding above key MAs signals turbulent equity conditions.