The Warsh Effect, S&P 500 Fatigue, and Stalking the AI Storage Dip
The Warsh Pivot & The Inflation Wager
Photo by Rê Oliveira on Unsplash
The most significant shift last week was the appointment of Kevin Warsh as the new Fed Chairman. Historically a hawk—which is traditionally a headwind for equities—Warsh now appears more open to rate cuts, aligning with the President’s demands.
What matters is not just the intent, but the reaction. The market’s initial response suggests investors still view the new “Money Boss” as a hawk: we saw an immediate sell-off in small caps and rate-sensitive stocks, while defensive sectors held up.
It is too early to call the long-term trend, but every word Warsh says will now move markets. In the meantime, we trust the numbers.
The Macro View: Mixed Signals
M2 (Real Money Supply): December 2025 data shows an increase in the monetary base. It’s not aggressive, but it is expanding rather than contracting. This is my go-to indicator for credit availability over the next 6–18 months, and it currently looks supportive.
Net Liquidity: The shorter-term picture is less rosy. Recent weekly data from late January shows a deteriorating trend, with liquidity pointing downward again.
Financial Conditions: Despite the liquidity dip, broader conditions remain healthy. Banks are not tightening standards, meaning credit remains accessible for corporate refinancing and investment.
Inflation: Expected at 2.36% for January 2026. So far, there are no signs of a resurgence. Notably, the Truflation index is pointing to an incredible 0.9% YoY, well below the Fed’s 2% target.
Reminder: below is the average frequency of Pullbacks, Corrections and Bear markets over the last 50 years in the SP500.
The Verdict: The overall environment supports stocks in the mid-term. In the short term, however, volatility is normal.
S&P 500 Analysis: The "Tiring" Bull
Current Stage: Stage 2 (Advance). Price remains above a rising 30–40 week moving average band.
Momentum: The advance looks “tired.” We are near highs, but momentum indicators are no longer pushing.
MACD: The histogram is negative, showing slowing thrust.
RSI: Hovering at ~63. Healthy, not extreme. This isn’t a “blow-off top”; it is simply fading strength.
Key Support Levels:
~6890 (10w): The first “line in the sand” for the short-term trend.
~6790 (20w): Where a normal correction often finds its footing.
~6660 (30w): The critical test. Lose this, and the risk of a Stage 3 breakdown rises fast.
Outlook: Expect a continued but choppy Stage 2, with a likely digestion pullback toward the 10w–20w moving averages.
PORTFOLIOS
10X MOMENTUM POT: Portfolio Update
Last week, my AFRM stop loss was triggered, resulting in a -13% loss on the trade.
Looking ahead, the stop loss for STEP is very close and will likely be triggered next week. By definition, I never lower a stop loss. Discipline is key.
The Play of the Week: Betting on the Dip With a potential correction looming, I am looking to enter SNDK (SanDisk)—one of the hottest stocks in the market. Buying at current all-time highs would be reckless, so I am setting a “stink bid” to catch a pullback.
The Trade:
Ticker: SNDK
Action: LIMIT BUY ORDER (6 Shares)
Price: $497.00
Validity: Good for the week.
Stop Loss: $445.00 (if triggered).
Why SNDK? SanDisk is the “Speed” to the AI market’s “Brains.”
The Moat: AI processors (like Nvidia’s) need massive, instant data feeds. Old hard drives are too slow; SanDisk’s Enterprise SSDs are the bottleneck solution.
The Catalyst: Since spinning off from Western Digital, it is a pure-play AI storage stock with massive earnings growth (+61%) and legitimate pricing power due to the flash memory shortage.
Let’s see if the market gives us our price.
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Important: This is not investment advice. Please consult a licensed financial advisor before making any investment decisions.
Disclosure: The content has been reviewed using artificial intelligence to enhance readability and ensure grammatical accuracy.
Respecting that AFRM stop discipline even with -13% is more valueable than any single trade. What's intresting is you're stalking SNDK right when momentum fatigue is showing up in the broader index—that's classic asymetric thinking. The stink bid at $497 feels agressive though given how violent these pullbacks have been lately. I'd personally wait for 20w support confimation before scaling in, but I get the logic of catching the falling knife if the AI storage thesis is solid enought. Hope it fills for ya.