Alpha Report: A Funny Thing Happened During the Cool Off...

The market is correcting, but not in the way most people expect. As we noted last week, the "boring part" is where discipline is forged. That period of quiet has now ended, shattered by a data shock that confirms our thesis. While first-level thinking sees a steep rally and waits for a price crash, the real story is a hidden correction happening over time, engineered by suppressed volatility and the promise of policy easing - see special topic section for our analysis.

A brief note on timing: We held this week's report to fully analyze the market's reaction to the historic jobs revision. We prioritize signal clarity over speed. Our standard Sunday publication will resume this weekend. Thank you for your patience.

Weekly Alpha Report: September 10, 2025

The market's focus today is on the annual NFP benchmark revision, where survey-based job estimates are reconciled with hard tax-filing data. The stage was already set for a weak number; August's data showed unemployment ticking up to 4.3% with a meager +22k NFP gain, suggesting job growth pivoted in May. This is a red flag with long-term consequences.

The preliminary revision has now been published, and it was a historic shock. The government erased -911,000 jobs from the books for the year through March 2025. This confirms the labor market had cooled far more than monthly prints showed.

However, the market is interpreting this "bad news as good news." The data provides the Federal Reserve with undeniable cover to deliver a hawkish "insurance cut," creating a powerful "buy the dip" dynamic. This rally is not about a strong economy; it's about the certainty of the policy response.

The 3-Minute Alpha Brief

• Updated Base Case: Our macro view has evolved. The "cooler September" we anticipated is playing out, not as a simple drift, but as a confirmation of economic weakness that accelerates the timeline for Fed action. The debate has shifted from if the Fed will cut to how much. This policy-driven mirage, built on a foundation of weak labor data, remains the primary market driver.
• US Equities: The market remains buoyant in some areas, exemplified by catalysts like $ORCL's powerful multi-year guidance which has ignited ancillary sectors like data centers, power, and chips. As stated last week, while the index is a reasonable place for impatient capital, the superior opportunities are forming in the themes we are stalking.
• Crypto Majors ($BTC/$ETH): As anticipated in our September 1st report, the post-ATH consolidation is underway. $BTC remains in a choppy range, testing key support and printing a buy on 1D level (still has a sell signal on 4D). $ETH continues to show relative strength, coiling around the $4,300 level we identified as a key zone while absorbing significant institutional inflows.
• Altcoins: The most surprising feature of this cycle remains the profound lack of retail interest, creating a deliciously contrarian setup. While our guiding strategy has been patience—waiting for a definitive Fed pivot to ignite a broad rally—the probabilities may be shifting. Dare we say alt season, or at minimum a significant bounce, has a roughly 60% chance of having started. However, this is not yet confirmed. The key tell will be Bitcoin's price action: this likely short-lived alt season requires $BTC to reverse the sell signals on the 4D and 1W timeframes and decisively break through the $116k level - or at least maintain strength going sideways. If the bounce stalls and reverts back to $105k, we would view it as merely a bounce - and will stay patient.
• Forward-Looking Sentiment: The market is pricing in the "good news" of a dovish Fed. This "buy the dip" mentality is likely to persist until the first "insurance cut" is delivered. The primary risk is that the market begins to focus on the reason for the cuts—a deteriorating economy—after the initial euphoria fades... and we likely get a correction in late Oct, Nov timeframe - our signals will tell us.