Stocks Just Broke Down (Live Emergency Update)

Key Concepts

• Braavos Trading System: A comprehensive trading curriculum covering stock screening, entry/exit strategies, trade management, asset allocation, and trading in various market environments.
• Black Friday Offer: A limited-time discount (60%) on a bundle including lifetime access to the Braavos Trading System curriculum, one year of Braavos trading signals, and one year of weekly training sessions.
• Price Action: The study of past market data, primarily price and volume, to forecast future price movements.
• Market Breadth: An indicator of the internal strength of a market, measuring the number of stocks participating in an upward or downward move.
• Relative Strength: The performance of one asset or sector compared to another.
• Leading Economic Indicators: Economic factors that change before the rest of the economy, such as homebuilders.
• Risk-on/Risk-off Assets: Assets that investors tend to buy during periods of economic optimism (risk-on) versus those they favor during uncertainty (risk-off).
• PEG Ratio: A valuation metric that compares a company's price-to-earnings ratio to its expected earnings growth rate.
• Secular Bull Market: A long-term upward trend in asset prices, typically lasting several years.
• Gold-to-Silver Ratio: A metric used to compare the relative performance of gold and silver, often indicating shifts in market sentiment towards risk-on or risk-off.

Market Analysis and Trading Strategy

Stock Market Breakdown and Defensive Positioning

The live session begins with an overview of the current market conditions, noting that while the S&P 500 has experienced a significant rally (40% from its lows, comparable to the start of major bull markets), there are signs of a breakdown. The speakers emphasize the importance of price action and listening to what the market is communicating.

Key Points:

• Strong Rally Context: The recent rally has been exceptionally strong, historically seen at the beginning of major bull markets (e.g., 2020, 2009, 2003).
• Macro Tailwinds: Despite economic concerns (low consumer sentiment, political polarity, high shelter costs, low savings rates), corporate America, particularly mega-cap tech, is thriving, supported by resilient growth and the Fed's interest rate cuts.
• Market Breadth Deterioration: A critical observation is the declining market breadth, specifically the percentage of stocks above their 50-day moving average. Since late July, as the S&P 500 climbed, breadth has declined, with less than 50% of stocks trading above their 50-day moving average in October. This weakness, similar to that seen before the February 2025 top, prompted Braavos Research to adopt a defensive stance starting in October.
• Sector Rotation: Leadership has been clear since April lows in gold, tech, and semiconductors. However, recent weeks have seen a rotation out of these leaders into more defensive sectors like healthcare and health tech, where Braavos has been scaling in since late September.
• Short Trade on S&P 500: The S&P 500 has broken below a key price channel that had been intact since mid-July. This technical breakdown, confirmed by multiple tests of a support trendline (specifically, the seventh test), led Braavos to initiate a short position on the S&P 500 using a leveraged short ETF.
• Nature of the Sell-off: The current sell-off is described as "steady" and "controlled," unlike the panic-driven sell-offs often seen at market bottoms. This suggests potential for further selling pressure.
• Homebuilders as a Leading Indicator: The homebuilding sector is highlighted as a crucial leading economic indicator. Despite the Fed cutting rates, homebuilders are showing weakness and breaking down through key moving averages, confirming the bearish outlook for the broader market. This weakness in homebuilders is a key reason for maintaining the short position on the S&P 500.
• Adaptability in Trading: The speakers stress that trading requires flexibility and adaptability, not adherence to a fixed prediction. Upcoming events like FOMC minutes, Nvidia earnings, and unemployment numbers could shift market sentiment, necessitating a review of the short position.
• Opportunity in Bounces: Even if the market bounces, as long as underlying weaknesses (homebuilding, small caps, breadth) persist, any bounce could be an opportunity to add to shorts, unless a stop-loss level is breached.
• Diversified Approach: Braavos Research does not advocate for going 100% cash or shorting the entire market during corrections. They continue to look for relative strength in specific sectors like healthcare and biotech.

Potential Long Opportunities (Post-Correction)

While currently bearish on the broader market, Braavos Research identifies potential long opportunities in specific stocks expected to perform well once the market resolves higher.

Key Stocks and Rationale:

• TSMC (Semiconductor):
  • Fundamentals: Benefited from AI, with earnings booming and profit margins soaring.
  • Technicals: Strong setup with a basing pattern from January to September 2025, followed by a breakout. Currently testing its 100-day moving average.
  • Potential Target: A 70% move from the trendline break, potentially reaching a $300 price target, assuming a euphoric move in the tech sector.
• Amazon (E-commerce/Cloud):
  • Fundamentals: Quadrupled earnings since 2021 while the stock price has only increased by 30%, indicating significant upside potential if market euphoria returns. Earnings have ramped up significantly since December 2024.
  • Technicals: Broke out before the market correction but was pulled down by broader market weakness. Currently testing moving averages. Expected to chop around and then attempt another breakout.
• Z Holdings (Fintech):
  • Fundamentals: Emerging market fintech with extreme revenue growth and expanding profit margins. A PEG ratio of 0.8 suggests undervaluation for a high-growth company that has moved from unprofitability in 2022 to profitability.
  • Technicals: Hovering below all-time highs, forming a basing pattern, and consolidating after an earlier breakout, allowing moving averages to catch up. Expected to perform strongly when the market resolves higher.

Core Principle: Fundamentals and macro tailwinds identify what to watch, but technicals dictate when to act, emphasizing precise entry points and risk-reward assessment.

Bitcoin Analysis

Bitcoin's price action is analyzed in the context of its relationship with gold and its classification as a risk-on asset.

Key Points:

• Bitcoin vs. Gold: The Bitcoin-to-gold ratio has been flat since January 2021, indicating Bitcoin has not significantly displaced gold as "digital gold."
• Risk-on Behavior: Bitcoin trades more like a risk-on asset, mirroring the S&P 500's performance relative to gold. Since March 2024 (when stocks peaked relative to gold), it has been a risk-off environment, explaining Bitcoin's pressure despite gold's strength.
• Investment vs. Trading: The speakers differentiate between investing in Bitcoin for the long term (considered interesting and a potential buy-the-dip opportunity, especially in gold terms) and trading it.
• Trading Perspective: From a trading standpoint, Bitcoin has experienced a clear technical breakdown, with longer-term moving averages curling down. While a short-term bounce is possible due to oversold conditions (RSI), it's viewed as a relief rally.
• Wait-and-See Approach: Braavos Research prefers a wait-and-see approach for trading Bitcoin, looking for stabilization, base formation, and a breakout above resistance with rising moving averages, similar to its behavior in early 2025 or throughout 2024.
• Potential Support: Price could fall towards the $80,000 support level, with potential liquidation before building a base and resolving higher.
• Long-Term Bullish Case: Despite the current trading outlook, the long-term bullish case for Bitcoin is acknowledged.

Gold and Silver Analysis

The analysis of precious metals highlights gold's recent strength and potential for a silver melt-up.

Key Points:

• Gold's Melt-up: Gold has experienced a significant rally and breakout from a secular bull market pattern, driven by geopolitical uncertainty, outflows from Treasuries, deficit spending, and central bank accumulation. Braavos Research has been taking advantage of this since 2022.
• Overextension Concerns: The monthly RSI for gold has reached 91.64, a level comparable to historical peaks in 1980 and 1973. This overextended reading is concerning for traders, suggesting potential for consolidation or pullbacks, similar to periods in 2006 and 2008.
• Reduced Runway: The current overextension reduces the "runway" for further appreciation, making new trades less attractive compared to earlier in the rally.
• Silver Melt-up Potential: Silver, being more volatile and having a smaller market cap, tends to experience melt-up moves towards the end of precious metal rallies. This has historically occurred in 2003-2004, 2006, 2008, and 2011.
• Gold-to-Silver Ratio Breakdown: The gold-to-silver ratio is showing signs of breaking down below a trendline dating back to March 2021. Historically, such breakdowns have preceded significant price appreciation in silver.
• Silver as a Risk-on Asset: The fact that the gold-to-silver ratio is attempting to break down during a market correction is interesting, as silver is considered a risk-on asset. This could indicate a potential rotation back into higher beta names if the market bounces.
• Dual Signal: A breakdown in the gold-to-silver ratio can serve as a dual signal: a potential trade opportunity in silver and a bullish indicator for the stock market, signaling risk-on environments.

Braavos Research Offer and Curriculum

The live session also details a special Black Friday offer for Braavos Research services.

Offer Details:

• Bundle Components:
  • Lifetime Access to Braavos Trading System Curriculum: A comprehensive trading curriculum covering stock screening, entry/exit strategies, trade management, asset allocation, and trading in different market environments. This is a pre-order product being built week by week.
  • One Year of Braavos Trading Signals: Access to all trades, entries, exits, and behind-the-scenes market analysis.
  • One Year of Weekly Training Sessions: Educational sessions with live coaching from Peter and Nick, addressing key trading concepts and skill development.
• Pricing: Original price of $4,800, offered at a 60% discount during the live session.
• Purpose: Designed to build trading skills and discipline, not for overnight riches.
• Availability: The 60% discount is exclusively available during the live session and will be removed afterward.
• Curriculum Development: The curriculum is under development and will be released in episodes over the coming months.
• Membership: The Braavos membership provides access to current trades, allocations, daily trade alerts, and video breakdowns.
• Mentorship Program: Distinct from the public offering, the mentorship program is a select, one-on-one service for highly dedicated clients.
• One-Time Purchase: The Black Friday bundle is a one-time purchase. The curriculum has lifetime access, while the trading signals and weekly training sessions are for one year.
• Current Clients: Existing clients can upgrade to the bundle, with the price adjusted to reflect their current membership.
• Activation Flexibility: Purchased memberships can be activated later by emailing Braavos Research.

Conclusion and Key Takeaways

The live session emphasizes a disciplined, price-action-oriented trading approach, integrating fundamental and macro analysis to identify opportunities and manage risk. The current market presents a breakdown in the broader stock market, leading to a defensive stance and short positions, while specific sectors and assets like silver show potential for future opportunities. The Braavos Research Black Friday offer provides an extensive educational and signal package for those looking to develop their trading skills. The core message is to listen to the market, adapt to changing conditions, and maintain a clear understanding of risk and reward.