Bottoms are Events, Tops are Processes

Bottoms are Events, Tops are Processes September 8, 2026

TECHNICAL STRATEGY More Breakdowns in Consumer Land Jonathan Krinsky, CMT WHAT YOU SHOULD KNOW: ( Gasoline futures (RBOB) are up ~30% since early August, national retail diesel prices are nearing $6/gallon, and one-year inflation swaps are back to their highest level since mid-June. Regardless of your views on the inflation rate, we can probably agree that consumer prices in absolute terms remain broadly elevated relative to the last few years, and perhaps this is finally catching up to the discretionary sector. As we discussed over the weekend, the sector is flashing an ominous signal with a negative y/y return despite SPX up ~18% y/y. Whether it's apparel, leisure and travel, or homebuilders, the sector continues to show more vulnerabilities. Further, the equal-weight SPX ex- AI suffered its worst day in two months, and is in its worst drawdown since May. We continue to think a correlation one downside event is brewing. AI was the standout again today, and while that trade has had a nice three day bounce, we are mindful that in 2000 the SOX crossed back and forth its 50 DMA ten different times before ultimately breaking down for good six months after the peak. Bottoms are events, tops are processes. ■ Inflation Swaps Rallying. 1yr inflation swaps back to June levels, and have been a good leading indicator for CPI. Gasoline futures up 30% in a month, and diesel prices ~$6/gallon. ■ Don't Call it a Comeback. SOX getting the AI bulls excited again, yet it still hasn't reclaimed its 50 DMA despite a ~9% rally over the last three days. ■ Bottoms are Events, Tops are Processes. In 2000 after initially breaking below the 50 DMA in early April, the SOX crossed back and forth above its 50 DMA ten more times before ultimately breaking down in September '00. So it essentially had a six- month topping process, getting back within 6% of an all-time high twice in June and July '00. ■ Equal-Weight Cracking. S&P equal-weight ex-AI suffered its worst day (-1.39%) in two months and lost its 50 DMA. It's in its worst drawdown since May. ■ More Consumer Cracks. Equal-weight consumer (RSPD), apparel, travel and leisure, homebuilders all continue to break lower. ■ Private Equity/Credit Stalling Out. After a nice rally from early July, the private equity and credit managers stalled out, and are now rolling over again.

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Source: Bloomberg and BTIG Analysis

Source: Bloomberg and BTIG Analysis

BTIG, LLC Jonathan Krinsky, CMT (