Happy Friday. Back from Austin, back at the desk, and I’m happy to report: pretty much every indicator flipped green while I was away. Classic. The one week I skip the weekly upload.. the first one I’ve ever missed and the entire macro landscape decides to turn.
This week’s issue is also Episode 50 of the Macro War Room. Fifty weeks of signals, spreadsheets, rebuilds, backtests, and late nights. Thank you for being here.. new subs and OGs alike. Let’s get into it.
Zooming into the last two years confirms it: risk-on since May 22nd, undisturbed by the recent chop.
For anyone who wants a more aggressive option, the Arsenal SPY engine is available on the dashboard (coming soon). The backtest is excellent.. Sharpe 0.86, Calmar 0.83, max drawdown of 10%, but the trades per year are noisy. Sometimes weekly rebalancing. That’s not how I run my portfolio. But it’s there for you if that’s your flavor.
Bitcoin Trend: 50% Long, System-Driven, No Ego
Bitcoin is currently at a 50% allocation via the Arsenal BTC engine. That’s where I sit personally.
Here’s the nuance worth calling out: the Arsenal BTC engine rarely goes to a full 100% long position. By design. Most of its time is spent at 50%. That’s the conservative-by-design tradeoff that gives it a Calmar near 3 and cuts max drawdown roughly in half versus the 8th Rule.
For those who want a more aggressive BTC sleeve, I’m running an extended parameter sweep over the weekend to potentially release a fully bullish variant that sizes to 100% more often. Stay tuned.. if it backtests clean, it launches for subscribers.
The 8th Rule currently shows a full 100% long signal. I still support the indicator. It’s still on the site. But my portfolio isn’t following it anymore, the Arsenal drawdown profile is just too hard to ignore. The math is the math.
Ethereum remains bearish on the Arsenal engine. I’m holding my existing ETH position (carried over from the 8th Rule’s 50% signal) but not adding.
The Data: All Green Prints + Peak Disbelief on Bitcoin
This week was the cleanest macro print we’ve seen in weeks.
This week’s releases.. all beats:
Retail Sales ✅
Pending Home Sales ✅
Flash Manufacturing PMI ✅
Flash Services PMI ✅
Consumer Sentiment ✅
Unemployment Claims (in line) ✅
PMI has been in expansion since February. Earnings season has been extremely strong. The macro backdrop is firing.
Next week is the bigger one. FOMC meeting (Fed almost certain to hold.. 99.5% probability, with a 0.5% chance of a hike, of all things), GDP, PCE for inflation, and ISM on Friday.
June has a 5% chance of a cut priced in. Markets largely shrugged off Kevin Warsh’s testimony this week.. the SOFR/Fed Funds spread was unmoved, which is the real tell.
Stress Dashboard is clean:
MOVE index (bond vol) has fully collapsed.
VIX back under 20.
TGA spiked modestly.. expected, it’s tax season.
No stress in the plumbing.
On-Chain & Sentiment: Bears Leaning Into the Grinder
The on-chain picture continues to quietly firm up:
Long-term holders are still buying. This is the tell you want.
Short-term holders are selling into strength.. textbook distribution from weak hands to strong.
Retail volume is basically zero. The crowd isn’t here yet.
STH average UPL (incl. Coinbase) has come off the lows and is grinding higher.. another signal the medium-term bottom is likely in.
Adjusted NVT ratio appears to be coming off the lows.
And then there’s this: one of the most historic negative funding rates for Bitcoin ever. At all-time highs. Shorts are pressing size into a rip.
You don’t need a Bloomberg terminal. You don’t need 20 monitors. You need a systematic process. I can go AFK for a week, check the dashboard at 9:15pm, and the system tells me exactly what’s changed, what votes flipped, and whether I need to act. That is the edge. Not more screens.
Final Thoughts
Everyone wants to know if we can go higher from all-time highs. The answer, based on the data.. macro, on-chain, stress, sentiment, is yes.
The hardest part of investing isn’t avoiding drawdown. It’s also avoiding the cost of not being in the market while it rallies. Both sides of the coin carry risk. Cash can lose you just as much as a bad long.
That’s exactly why the systems exist. MRE v5.0 keeps us on the right side of macro risk. The Arsenal engines keep us properly sized on the asset level. The 8th Rule is still there for those who want more aggression. Your portfolio, your choice.. but the frameworks are built to remove emotion from the decision.
And if things do roll over? The signals will flip before it gets ugly. That’s the whole point.
Episode 50 is in the books. Fifty weeks since the spreadsheet days. Thank you for being here.
For this week’s full video breakdown:
Stay sharp. Stay systematic.
— Durden out.
✊🧼
Disclaimer: This content is for educational and informational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any asset. Trading equities and futures involves substantial risk of loss, including the potential for loss exceeding your initial investment.
Past performance, whether backtested or live, does not guarantee future results. Backtested performance has inherent limitations: it is designed with the benefit of hindsight, does not reflect actual trading, and does not account for all factors that may affect real-world execution.
The author is not a licensed financial advisor. Always do your own research and consult a qualified financial professional before making investment decisions. You are solely responsible for your own trading decisions.
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