Big Small-Cap View. Ebbing liquidity stalling rally. R2000 likely finished fifth and final wave off the Apr `25 Liberation Day low which argues for correction to 2555 and potentially as low as 2390. The R2000 violating its 2718 Jan ’26 prior all-time closing high would offer confirmation that a correction has taken hold.
Is liquidity exiting the system? A key liquidity tell will be if Bitcoin can hold above $75k. Currently BTC is retesting its rising 50 DMA after failing to eclipse its falling 200 DMA with the 20 DMA rolling over. A higher dollar and higher MOVE (i.e. bond volatility) index pull liquidity from stocks and risk assets (like BTC) making BTC holding $75 more challenging. Also important is what Warsh will do with the Fed balance sheet, rates and Fed T-bill purchases (see today’s special study). Longer-term we are bullish on A.I., its prospects to temper inflation as well as a resolution to the Iranian War.