'I'm Mostly In Cash'; Trader Calls Next Drop For Stocks, Bitcoin, Gold | Kevin Steuer

Key Concepts

• Swing Trading: A strategy focused on capturing price moves over a period of days to weeks.
• Confluence System: A technical analysis approach identifying areas where multiple indicators (e.g., Fibonacci levels, moving averages) overlap to signal support or resistance.
• Asymmetric Bets: Trades structured to limit downside risk (e.g., 3–5% stop-loss) while allowing for significant upside potential.
• Deflationary Signals: Market indicators suggesting a slowdown in economic activity and price levels, contrary to general inflation expectations.
• Exit Liquidity: A term describing retail investors who buy into a hype-driven asset at the top, providing the "liquidity" for institutional investors to sell their positions.
• Fibonacci Retracement: A technical tool used to identify potential reversal levels in a price trend.

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Market Analysis and Current Trends

Kevin Stewart, managing partner at stockta.com, highlights a significant shift in market conditions compared to 2025. While 2025 was characterized by a broad uptrend and all-time highs, the current environment is defined by volatility, geopolitical tension (specifically regarding Iran), and a potential pivot in Federal Reserve policy.

• Deflationary Indicators: Stewart’s algorithm recently flagged the US Dollar (UUP) and a deflationary ETF (BNDD) as strong signals, while crypto and agricultural commodities showed weakness. This suggests that inflation may be cooling faster than the Fed anticipates.
• Oil and Geopolitics: Stewart argues that oil has likely peaked for this cycle unless there is a direct military escalation in Iran. He notes that the current trading range for WTI is $63–$90, and the trend is currently showing lower highs and lower lows.
• S&P 500 (SPY): The market is currently stalling. Stewart identifies 693 as a critical support level for the SPY. A break below this could trigger a more significant sell-off. He notes that much of the S&P's performance is currently driven by a small group of tech/AI stocks, while the broader market remains flat.

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Trading Methodology and Risk Management

Stewart emphasizes that successful trading requires a disciplined, personality-aligned strategy rather than relying on "hope."

1. Pre-game and Post-game Analysis: Stewart treats trading like professional sports, performing extensive analysis before the market opens and reviewing performance after the close.
2. The Trading Journal: He maintains detailed journals to track every trade, which helps in identifying patterns and emotional biases.
3. Risk Management:
   • Stop-Losses: He strictly limits losses to 3–5% per trade.
   • Tranching: He enters positions in stages (quarter positions) to manage entry risk.
   • Objective Exits: He uses technical confluence points to set exit targets, removing emotion from the decision-making process.

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Asset-Specific Outlook

• Gold: Having broken below the psychologically significant $4,000 level, Stewart is not a buyer. He views the metal as needing to stabilize and establish a series of higher highs before it becomes a viable trade. He expresses concern that if gold falls below $3,400, the long-term bull market structure could be compromised.
• Bitcoin: Currently trading at its lowest levels since September 2024, Bitcoin is showing signs of being oversold (RSI at 29). However, Stewart remains cautious, citing the potential for "whale" liquidation and the risk of leverage-heavy entities (like MSTR) facing liquidity issues. He is waiting for tech sector stabilization (IGV/QQQ) before re-entering.

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Political Influence and Midterm Elections

The discussion touched on the impact of the 2026 midterm elections and the current administration's influence on markets.

• Prediction Markets: Using the platform Koshi, traders currently see a tight race between a Democratic sweep and a split government.
• Market Impact: Stewart theorizes that a split government (gridlock) might actually be beneficial for bond yields, as it would make passing large spending bills more difficult, potentially slowing the growth of the national deficit.
• Trump’s Role: Stewart notes the unprecedented level of presidential involvement in the stock market. He suggests that if the administration fails to secure legislative wins, there is a non-zero probability of political frustration leading to unexpected leadership shifts.

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Synthesis and Conclusion

The primary takeaway is that the current market environment is significantly more challenging than the "everything rally" of 2025. Stewart advises retail investors to avoid "catching falling knives" and to be wary of chasing headlines, which often serve as exit liquidity for institutional players. The key to navigating this period is patience, strict risk management, and waiting for clear technical signals—specifically, a series of higher highs and higher lows—before committing capital. Stewart remains mostly in cash, prioritizing capital preservation until the macro-volatility surrounding the Iran situation and Fed policy settles.