Today’s Market Update: Dollar Relief, TLT, Crypto Strength and SHADOW Hits a New High
Today’s update is quick because most of the larger thesis remains intact.
We are beginning to see some of the DXY relief I have been expecting. The dollar could still make one final push higher, but it looks increasingly close to rolling over. USD/JPY is also approaching the area I have been watching, and I continue to think roughly 160 is the upper limit before meaningful pressure for a reversal builds.
TLT Is Following the Expected Path
At the same time, TLT continues behaving almost exactly like the shape I have been drawing.
I still expect a zigzagging move, potentially toward roughly $83–$83.50, rather than an immediate straight-line breakout.
That is also why I moved out of short-term Treasuries and into the 5- and 10-year, while separately accumulating TLT as a trade. The five-year has remained very sticky around 5%, which continues to make that position attractive to me.
The bigger TLT move, in my view, comes when equities eventually have a significant selloff. My first larger target would be somewhere above $100. If a deeper recession follows, I could see TLT eventually reaching roughly $125–$127 before I would want to exit as the policy response turns inflationary again.
The important point is that this is a multi-month trade, not a day trade. I am being paid more than 5% while I wait.
Bitcoin Is Showing Real Relative Strength
Yesterday I said crypto was outperforming on a relative basis even though Bitcoin itself was down.
Today we are seeing confirmation.
The QQQ was down while Bitcoin was actually positive. For a high-beta asset like Bitcoin, that is meaningful relative strength.
Bitcoin briefly broke below its 50-day moving average, reached roughly $79,600, never touched the 365-day moving average, and then recovered.
That gives Bitcoin room for another push toward roughly $84K–$85K.
I still think a deeper test remains possible. The 365-day moving average around $78.5K continues to make sense to me, with another important confluence around $76K where the 21-week and 50-week averages are converging.
But right now, Bitcoin continues to hold up better than I would have expected given the macro environment.
Ethereum Finally Hit the 50% Retracement
Ethereum has now done exactly what we had been waiting for: it reached its 50% Fibonacci retracement.
Even more importantly, that area lined up with the 50-week and 21-week moving averages, and buyers stepped in almost immediately.
It can certainly retest that area, but this is precisely why I keep emphasizing the 50% retracement. Markets repeatedly come back to these levels even when, during the rally, it feels impossible that they ever will.
Solana has not quite reached its 50% retracement yet, but it did defend its descending 365-day moving average. If that breaks, the next major confluence is very close to the 50% Fib.
Crypto Magnet SHADOW Keeps Improving
The SHADOW Portfolio also reached another milestone.
We have now seen Bitcoin long, Bitcoin short, Ethereum long and Ethereum short all trigger.
Both short strategies are currently 100% winners.
Ethereum remains the standout. Officially it is 11 wins and five losses, but including the five off-book winning trades caused by earlier technical problems, the true performance would be 16 wins and five losses.
Bitcoin long remains the weakest strategy at two wins and three losses.
Solana still has not fired either long or short, which continues to be something I want to investigate once we complete this observation period.
Most importantly, after 28 trades, the overall SHADOW portfolio has reached a new P&L high.
We are now up roughly 78 basis points over 41 days, despite the system trading completely unsupervised and despite the extremely choppy environment.
The goal was never to create some ridiculous 500% annual strategy. If this system can ultimately generate something like 8–10% annually, while using relatively little capital and allowing the idle cash to earn another 3% or more, that becomes very interesting to me.
The latest Ethereum short is a good example of what I want from the system. It entered the short, captured the decline, exited near the low, and avoided the rebound. Had it stayed in the trade, it would already be underwater.
That is exactly what I want from an automated strategy: take the opportunity, take the profit, and leave before greed becomes part of the equation.
Bottom Line
The dollar is beginning to show the relief I have been waiting for, TLT continues to behave according to plan, and crypto is demonstrating impressive relative strength.
Bitcoin remains the strongest of the major crypto charts, Ethereum has finally tagged its 50% retracement, and Solana is approaching its own major technical support.
Meanwhile, the SHADOW Portfolio has now reached an all-time P&L high after 28 trades.
There is still a lot more data to collect, especially around Solana and Bitcoin long.
But so far, for an entirely automated strategy operating in difficult markets, I continue to like what I am seeing.
