Bitcoin & Big Tech
RLT Newsletter
After another blistering two week run higher in SPY following our meager three-day pullback, it looks like some selling and profit-taking may finally be showing up. As I mentioned in my Monday afternoon swing trading video, I took profits on a number of positions, including MSFT, AMZN, and FIVN, which has brought my cash position up considerably.
I know I risk sounding like a total idiot here given the last couple months of price action, but markets do not go straight up forever. They need pullbacks and profit-taking to stay healthy. Once things get considerably overheated, when the declines do come, they are often deeper and more violent than most expect. When it feels impossible for the market to ever go down, that is usually about the time it starts going down.
It is hard for me to believe that with everyone saying “buy memory, buy MU, and you will crush it,” that MU and memory names do not see some kind of meaningful drawdown to flush out the FOMO buyers.
One rule of thumb I like to use is that when I start feeling invincible, when every trade is working and working quickly, it is probably time to tighten stops, take profits, and become more cautious. That mentality has certainly cost me some upside, especially during this vertical market, but risk mitigation and capital preservation are my full-time job. That is a trade-off I am willing to make.
We are seeing RSI divergence on SPY right now, and many of the Trillion Dollar Titans are beginning to look a bit tired. Semiconductors continue to hold up, and the market can obviously remain irrational longer than you can stay solvent, which is why I am not shorting the sector. But with the types of moves we are seeing in ARM, MRVL, and MU, it feels like we are in the midst of a blow-off top.
To be crystal clear, I am not shorting into strength on any of these names. I am simply stating that these hardware stocks are extremely overheated. If we lose leadership from that sector, there is not much left holding this market up, and we could see a pretty decent correction in SPY. When SPY is down only 0.7% on the day and many high-beta momentum names are already giving back double digits, it is not hard to imagine the damage if SPY were to correct 5%. A lot of those momentum names would likely see significant pain as traders rush to the exit at the same time.
The $730 level remains the major support on SPY, and that is still roughly 3% below Wednesday’s close. If we do begin a correction here, I think it could take on a bit of a head-and-shoulders look, where we find support in the $730’s, bounce into a lower high, and then break down.
The amount of buy-the-dip enthusiasm out there right now is incredible. The appetite for risk is ferocious. Fear is going to have to enter the market before that changes, and key support levels breaking down would be the first step toward that.
Do not take the start of this newsletter as me becoming long-term bearish on the market. Of course, a larger top could form, and I will continue monitoring for signs of a bigger correction. But for now, I still view any larger dip as a buying opportunity and will continue treating pullbacks as buyable events until my more important support levels break.
SPY Daily Chart
Charting Amazon & Google
AMZN and GOOGL, two of the companies I trade most actively, are great examples of this mindset. Both remain in strong long-term uptrends and are well-positioned for the AI Revolution.
Both charts are showing somewhat bearish double-top formations on the daily timeframe, but both also have strong support zones below that create attractive risk-versus-reward setups.
Let’s start with AMZN.
If the double top on AMZN plays out, which will be confirmed if it retests the $255 level and fails, I think there is a good chance it eventually works its way back toward the 100-day and 200-day SMAs. Those moving averages also line up with two important gaps, making that entire area a significant support zone.
Trading below the daily 200-day SMA is never ideal in the short term, so that is a natural level to manage risk beneath. I am not calling for that now, but I like preparing trades weeks and months in advance so that if a scenario does develop, I can act with conviction rather than emotion.
Zooming out, AMZN has traded within a parallel channel for the last four years. The lower trendline of that channel lines up nicely with the gap that started this entire move higher as well as the 100-week SMA.
If AMZN were to pull back to that level, sentiment would likely be extremely bearish. Yet it would only represent about a 23% decline from the highs, which is actually a very normal and healthy correction for a stock like AMZN.
If that setup develops, I will look to establish a larger position there while knowing that a break below $210 would be a serious violation of long-term support and a level where I would want to hedge, protect, or stop out.
AMZN Daily Chart
GOOGL, one of my favorite charts and one of my favorite companies fundamentally, is also displaying a fairly solid topping pattern on the daily chart after hitting the 1.618 extension from the 2026 drop.
Wednesday’s decline brought GOOGL into its anchored VWAP from the March low as well as an earnings gap fill. That entire area, down to the 100-day SMA, represents a strong support zone on one of the best-positioned A.I. companies in the market.
If GOOGL falls to its 100-day SMA, that would amount to roughly a 20% correction, which is well within the normal range for the stock. If it breaks below that level, I will hedge because it opens the door to more bearish possibilities and a move down toward the $300 gap, where the 200-day SMA currently resides.
A break below the 200-day SMA would be a much more significant warning sign. It would force me to take a harder look at broader bearish scenarios for both GOOGL and the market as a whole.
GOOGL Daily Chart
Bitcoin
Speaking of bearish scenarios, BTC continued lower this week, which apparently comes as a surprise to anyone who has not been paying attention to my analysis or the chart.
Bitcoin spent most of February through May 6th in a slow, overlapping, choppy uptrend that ultimately stalled right at the 200-day SMA. I sold all of my Bitcoin on May 7th because it seemed to me that history was once again repeating itself.
When Bitcoin forms a slow, overlapping, messy advance after a sharp decline, it has historically been a bear flag more often than not. And bear flags resolve with another leg lower which we are getting right now.
Now we are seeing fear build around MSTR selling Bitcoin and the possibility that they may need to sell more in the future. Much of the bullish price action throughout 2025 was built on MSTR relentlessly buying. If that buyer disappears, or worse, becomes a seller, that fits perfectly with the thesis I have had all along that Bitcoin remains in a bear market until later this fall. This would fit nice and neatly into the four year cycle that everyone seems to forget happens every time.
What is particularly bearish right now is that MSTR itself is currently buying U.S. Treasuries instead of Bitcoin. If Saylor, Bitcoin's biggest public advocate, is not buying Bitcoin right now, that seems like a red flag. After all, he top blasted the chart all of 2025, but apparently 50% off discounts are not his thing.
There is another major problem for Bitcoin right now. Most investors move out on the risk curve and buy Bitcoin to generate outsized returns. But when $200 billion and trillion-dollar companies like SNDK and MU are trading like meme stocks and delivering 100% moves in a matter of weeks, why own a “risky asset” like Bitcoin especially when it is in a downtrend?
Until that dynamic changes, I think Bitcoin remains in this bear market, and the four year cycle continues.
I do believe Bitcoin will enter another major bull cycle just like it has every four years. But for now, I think lower prices are still ahead.
I have held that view since initially selling at $100,000 after the 120-SMA on the three-day chart broke back in November.
BTCUSD Daily Chart
Here is my BTC video from last week where I reviewed all my thoughts on Bitcoin when it was still at $74,000, nearly 20% higher than right now.