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Times like these, you don’t need conviction—you need a proven process. Not every trade will work, and you should always have that expectation. A good exercise is to review what you executed, not just on the most recent signal, but on the last 3-5 signals the fractal math gave. Make sure you don’t stop executing when signals shift, even if that means taking some losses.

Today’s process checklist:

• Keep following the fractal math
• Size according to the exit (TREND break)
• Diversify by using all macro asset classes, different US Equity factors, and sectors—both long and short

To recap this month: the market shifted into Quad 2 at the start of October. AI and growth gave signals to get in. They ran to the top end of the RANGE almost immediately. The market signaled oversold on October 6. Since then it has dipped. The initial dip broke through most TRADE levels and some TREND levels in those plays, but the VIX is holding. You still want to buy the dip—but only in what has shifted. Specifically, MAGS and SPY are the places you want to be exposed rather than SMH and QTUM. Why? The market isn’t acting like Quad 2 at the moment. Rates stopped going up. That’s the overview. Let’s dive into each signal and apply the process to each, as the signal will give specific instruction on what to do now.

VIX

Don’t panic here at a bearish TREND above the top end of the RANGE. Shift exposure to the strongest signals.

MOVE

Bond volatility held TREND, but volatility was squeezing late shorters. We’ll review TLT in detail in the Macro Markets section below.

HYG

A lot of the panic narratives I see right now are around credit, but HYG already had its panic and is now making a higher low in the RANGE. Still a bearish TRADE TREND, but it’s stabilizing.

QQQ

QQQ just broke TRADE. Why was I buying the dip so aggressively? Because it had an 83% chance of touching the top end of the RANGE before breaking TRADE. This was the 1.7 times out of 10 that it broke TRADE. That’s fine. Next time I see the first touch of the low end of the RANGE after flipping bullish TREND, I’ll do the exact same thing. That’s a process. Not to mention I was in on September 16th for the 8% rally, took profits, and am now taking a small loser on the recent add by cutting to minimum (still in bullish TREND) and reallocating to mega-caps MAGS.

MAGS

While MAGS has a much lower sample size, it’s batting 100% when this blue dot appears (same setup as QQQ’s first touch of the RANGE after flipping bullish TREND). Fully allocated here as VIX is holding a bearish TREND.

SPY

SPY isn’t as strong but has a more diversified portfolio (it has stickiness from XLE and XLV where MAGS doesn’t), so adding free capital to SPY is a strong move if you want more long exposure. Again, this newsletter isn’t to tell you what to do but to show you how to use the Similar Set Signal to unlock the full process without relying on me or Keith to tell you what you should do. You have all the tools for yourself to act on any ticker in real time.

IWM

Covered more IWM down to minimum at the low end of the RANGE on this panic attack, which might be over according to the VIX.

AAPL

We’ve been covering Apple for weeks. Did you just have exposure to QTUM and SMH, or were you diversified going into this event?

Sector Signals

IGV

Were you ready to buy the dip in the strongest sectors? Software is not Semis or Quantum computing. Bouncing right where it should.

​Wednesday, October 14, 2026​

SMH

Let’s review what actually happened in SMH. Entered on time and took the position down to half size on the 8% run. Added back at the low end of the RANGE and TRADE to get back to full position, then took a 7% loss. Roughly lost 4% to be positioned for what should have been a Q4 Quad 2 run. I’ll take that risk 10/10 times on this signal. That doesn’t mean you ignore when it says get out. Could it still have a great Q4? Yes. But that’s not a process—that’s hope. I’m completely out and moved capital into MAGS, SPY, and IGV.

I’ll live.

KOSPI

Now why is AI blowing up? KOSPI is having a Quad 4-level crash right now. It’s down 15% this week. In hindsight I should have reduced more SMH on the TREND break, but I was just following the individual ticker. You can’t be perfect, but this is why you exit no matter what when TREND breaks on any ticker you hold. Things like this can happen, and they happen in the blink of an eye.

Zooming that out, the last signal told you to exit AI in July (I did), so taking a 4% drawdown in SMH this week is nothing compared to the positions most are still bag-holding from the bubble peak. Remember: it’s not just what’s happening on the latest signal, but what did you do the last 3-5.

QTUM

Out yesterday. Follow the fractal math regardless if PnL is green or red on the ticker. That’s a process.

SPCX

Bought TREND. Had to reallocate free capital from exiting losing positions. I like large caps that look like this. If it breaks TREND I’ll exit fully. Sitting in a lot of green PnL on this one because I listened to the math and sold some at the top. The market rewards me with another chance to reload. Wasn’t buying the low end of the RANGE because it’s a bearish TRADE.

XLE

Didn’t have any to sell because I was already at minimum positions, but still nice to have in a diversified book.

XLV

Same with XLV.

XLU

We’ll get to rates next, but XLU was a rate-sensitive play already at reduced size due to bullish TRADE. Look at the last three red arrows, then go look at what you executed on those days. Just looking at the most recent isn’t a process—it’s a gamble if you don’t consistently follow the math.

Macro Markets

TLT

Same with TLT.

The question going around is “WHY ARE RATES FALLING WITH RED HOT CPI AND PPI?”

Answer: looks like the market front-ran those prints.

The market doesn’t have to make sense to you. It’s going to do what it’s going to do, and trying to find an answer isn’t a process. Now it’s sitting at TREND outside the RANGE. This isn’t a time to panic. Simply listen to the math. Hold unless it breaks.

DXY

The dollar finally took a breather. Rates down, dollar down means Quad 3. Will that continue? I don’t know, but that’s what I’m seeing in Equities and Macro signals today. Remember: Quad labels don’t matter. They are a simple framework to describe the market. What matters is today’s signals and the signals going forward. Trying to tell the market it’s wrong and forcing Quad 2 positions like QTUM and SMH will get you killed in this game.

Oil

Oil is holding a bullish TREND. Unless that changes, it might be difficult for rates to keep going down.

GLD

Gold likes Quad 3 and it’s up on the day. That’s why you always sell some at the low end of the RANGE. One up day doesn’t change a bearish TRADE TREND, but it’s another collective signal that I’m not adding back more short gold. I have enough rate exposure via XLU, TLT, and GLD.

BTC

So the market is now panicking about credit. Which is why AI is getting hit so hard. What asset doesn’t have credit risk? Bitcoin. Bitcoin also loves Quad 3, so whether the market goes back to acting like Quad 2 or continues Quad 3 behavior, Bitcoin does well in both—hence why it is showing relative strength to Quad 2 longs like SMH and QTUM.
No change in the Bitcoin signal. Don’t get bearish here. Next steps if TRADE fails is to reduce to minimum and bid TREND down at $75K. Remember: you should have been getting long BTC in August at $63K, then adding at $75K on the first touch of the low end of the RANGE after the bullish TREND flip. Same process for every ticker. Your job is to manage risk by diversifying, sizing, and executing the math.

Stop guessing. Start executing a process you control.

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