To The Moon

Be cautious: this week, both U.S. equities and the two most crowded assets—gold and silver—are sitting in a fragile equilibrium of “high prices + low volatility + high leverage.” On top of that, the headline calendar includes Quadruple witching day, a Bank of Japan rate hike, and the return of the previously paused U.S. nonfarm payrolls release—factors that make a meaningful volatility expansion highly likely. In such an environment, any one-way bet can easily be whipsawed as take-profit and stop-loss orders get triggered repeatedly.​

In these conditions—especially before the Bank of Japan announces its policy decision—the priority should shift away from trying to be “right” on a single directional call. The focus should be on protecting earlier gains and controlling drawdowns, because the cost of directional conviction this week is unusually high.​

The most likely market profile this week is: weak one-way directionality in both equities and gold/silver, but a materially larger trading range. With event risk clustered, cross-asset linkage strengthening, and Quadruple witching day amplifying short-term swings, profits made earlier in the week can easily be erased by a late-week reversal. That is why the trading objective is straightforward: risk management comes first.​

Three categories deserve close monitoring to track how risk transmits across the system: the VIX, gold and silver, and U.S. Treasuries (for example, TLT).; a drawdown starting in any one of them can pull the other two into a cascading selloff. Because of that linkage, heavy directional trend positions are not a good fit for this week; options and hedged structures remain the more practical choices—such as the silver futures calendar-spread hedge discussed later.​

After a Dovish Cut, Treasuries Fell Instead—A Warning Sign for Equities This Week

Last week’s FOMC outcome was clearly more dovish than expected, and it shifted the narrative around the policy path in three ways: first, the Fed has begun expanding its balance sheet; second, Powell’s remarks were more dovish than anticipated; and third, the dot plot showed internal views leaning more dovish than before.​

Bloomberg’s comparison between the swap market’s pricing of the next two years of rate cuts and the Fed’s dot plot suggests that, after the meeting, markets became more convinced a dovish trajectory is plausible.

Yet despite this, rates markets did not rally in celebration of the dovish story. Instead, the market behaved as if it was pre-pricing pressure from “reduced marginal Treasury buying and continued downside in bond prices.” Ten- and thirty-year yields did not fall much after the FOMC; they rose sharply after Broadcom and Oracle delivered earnings that missed expectations.​

Both 10-year and 30-year Treasury yields jumped, breaking the prior downtrend and standing in stark contrast to the dovish meeting outcome. Long-duration Treasury ETFs also sold off significantly, and technically there appears to be no clear support level at the moment.​

This week, the 4.2% level on the U.S. 10-year yield should be treated as a key alarm line. If yields push above 4.2%, equity selling pressure could re-emerge; at the same time, the “gap between Treasury yields and the S&P 500 is widening.” The tug-of-war between elevated equity valuations and high rates is growing more strained, and the larger the divergence becomes, the more likely an event shock forces a repricing through bigger volatility.​

The core contradiction in U.S. equities right now is this: valuations are high, yet expectations of stronger easing still provide a narrative that can keep the market supported. At the same time, yields remain high even after rate cuts, and marginal Treasury demand appears to be weakening—leaving bond prices biased lower. That makes equities resemble “an acrobat holding a pole in wind and rain”: any disturbance can amplify swings, and last Friday’s sharp drawdown is an example—triggered by a sudden intensification of AI-bubble concerns.​

Gold and Silver: The Longer They Rise, the More They Shake—BIS Signals a Double-Bubble Warning

At this stage, adding aggressively to U.S. equity exposure is not a good strategy. Volatility has fallen to historically low levels, and low volatility tends to encourage higher leverage and more concentrated positioning. Meanwhile, equities may not collapse immediately, which increases the odds of high-level, choppy “stop-sweep” price action—especially in an event-heavy week like this one, where large swings can easily trigger stop-losses and take-profits for one-way positions.​

The silver futures discipline discussed previously remains central: treat the 5-day moving average as a key long/short boundary. If price holds above the 5-day line, the bias stays bullish; if it breaks, step aside. But given silver’s very large volatility and strong need to correct, a more directional bullish structure is better built after the BoJ decision is resolved and the market reaction is clearer; for now, the choice is either to wait or to use a calendar-spread hedge.​

What To Do This Week: VIX, Protective Puts, and a Silver Calendar Spread

The first instrument to watch remains the VIX. With the VIX near historical lows, and considering seasonality, the forward setup still looks constructive. The preference is to accumulate small VIX-related exposure on dips to hedge equity drawdown risk—either as call-buying structures or via related ETFs—treating potential losses as the hedging cost of equity exposure, with timing focused on the payrolls day and the BoJ decision day.​

The second approach is to buy inexpensive protection via puts. With the VIX so low, index ETF puts are relatively cheap, making long-put hedges more cost-effective.

Technically, the “bearish trigger” is the convergence area of the S&P futures 20-day and 50-day moving averages; if price breaks below the prior daily low (the same convergence zone), the short-term bias turns bearish. If the index rebounds back above that zone, shorts should be stopped out immediately.​

If S&P futures break below the 20-day moving average and continue lower, that would signal a second, sizable leg down. The base case is that the prior low likely will not break; instead, the market may form a base near the 20-week moving average and then resume the uptrend.

On the upside, if the S&P breaks above the lower boundary of the rising channel, that becomes a bullish signal; after such a break, the stance would not be overly bearish, and strategies consistent with “volatility to the upside” (such as call spreads) become candidates.​

A third strategy is specifically for silver:

if participation in silver futures is necessary, relative value is preferable to a pure directional bet. With the U.S. silver basis weakening and short-term pullback odds elevated, the drawdown risk must be hedged even if the longer-term target still allows for silver reaching 70.

During a pullback, the calendar spread between near-dated and far-dated silver futures tends to converge; therefore, a very short-term bearish calendar arbitrage can be considered: Sell nearby-month contracts and buy deferred-month contracts, such as selling the March contract and buying June or May contract . This structure can profit if silver sells off sharply, and if silver accelerates upward instead, the strategy should not lose too much—but only after fully understanding the risk exposure per two-lot unit, and avoiding holding multiple units without that clarity.​

Execution-wise, the structure can be initiated after the silver front-month breaks below its 5-day moving average. If silver moves back above the 5-day line, immediately stop out the short (sell) leg, and also account for liquidity in the deferred contract to ensure both legs can be executed.

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