Into the Extreme: Exploding Rates and Cracking Internals

Friday, March 20, 2026

Don here…

Gold just breached the lower edge of its expected move for the third straight week. That kind of liquidation in metals only happens when major banking institutions need to raise capital.

The S&P 500 sold off nearly 2% on triple witching Friday. Interest rates exploded. Bonds tanked alongside equities. And gold dropped over two and a half standard deviations below its expected move.

Every asset class sold off at the same time. That tells you something is broken in the financial plumbing.

Here is what really concerns me. The S&P 500 is only 7% off all time highs. A correction does not even begin until 10%.

Nvidia, the largest constituent in the S&P 500, has shown virtually no sell side activity. If mutual fund holders were liquidating, Nvidia would be getting crushed. The fact that it is holding up means the real selling has not even started yet.

The VIX is elevated but not making new highs. I call this the scary movie proposition. The first time you see it, you scream. The third time, you already know what is coming. The market has seen this film before, and that means true capitulation is still ahead of us.

Financials finished the day nearly flat while the S&P 500 dropped almost 2%. In a real capitulation event, everything sells. The lack of correlation across sectors tells you we are not there yet.

Meanwhile, the 10 year yield jumped a full tenth of a percent in a single session and is approaching 4.5%. Money is not flowing from equities into bonds. It is leaving both.

Here is what I walked through in tonight’s video:

  • The S&P 500 has now stayed inside the expected move for 10 consecutive weeks, an anomaly that signals violent moves are directly ahead
  • Gold is in liquidation territory at 2.5 standard deviations below expected move, the kind of selling that only comes from banks raising capital
  • Tesla butterflies I bought for 50 cents closed at $1.18 and $1.50, returning over 140% in 24 hours
  • A Toll Brothers spread bought for $2.75 closed at $6.00, a 100% return in roughly a month
  • Volatility futures are in backwardation but only by a single point, meaning the fear premium has room to expand significantly

Click here to watch me break down the sell side activity, the metals liquidation, and exactly where the next violent move is coming from

To your success,

Don Kaufman
Chief Market Strategist, TheoTRADE

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Published by RJ Hamster

I was born on 6 August 1956 in San Francisco, California to Janet and (the late) Richard Hovis. I grew up in Santa Monica, California where I attended elementary, junior high school, and high school (graduating in 1974), in addition to involvement in sports and recreation (Little League +, the Boy’s Club ++). Further, it was in elementary school – St. Augustine’s By-the -Sea Parish School that I found, and made the choice to truly journey with God. I attended Arizona State University from 1974 to 1977 – seeking to become an architect, however, I was not accepted, and, as such, I graduated with a Liberal Arts degree. Upon graduation from Arizona State University, I attended Cal Poly San Luis Obispo and studied City and Regional Planning at the Master’s level. I successfully completed one (1) year in a two (2) year program – I did not complete the Master’s degree in City and Regional Planning – due to personal reasons. I returned to Santa Monica where I started (October 1979) my career as graphic designer with Exxon Company, USA. I spent five years with Exxon Company, USA. While working with Exxon Company, USA I was accepted into architectural school – Sci-Arc in Southern California, however, I did not attend preferring to stay with Exxon.. In 1982 I married Laura Flosi and in April 1983 we had our one and only child – Lauren Alain Hovis – a gift from God. We moved to Phoenix, Arizona in 1984 from Los Angeles, where I went to work as a graphic designer with Kitchell CEM (from 1985 -1987). From 1987 – 1995 I was an independent contractor, and a registered representative in mortgage finance, financial management, graphic design, and drafting. Further, I attended the University of Phoenix and successfully obtained a Master’s in Business Administration (MBA) in 1982. I was also a member of the Scottsdale Jaycees, where I became very involved in community events and projects. In 1994, I accepted a cartography position with the Defense Mapping Agency in Reston, Virginia. As such, I relocated from Phoenix to Reston. In 1998, I was accepted and worked as a Visual Information Officer with the Central Intelligence Agency. In 2002, I worked as a Support Officer until my retirement (due to a need for shoulder surgery) in September 2018. Away from my Federal Government service, I have been involved in various organizations and activities in Northern Virginia. In November of 2011, I married Rebecca Ouellette in Santa Monica, California. I reside in San Tan Valley, AZ with my two hamster - Jess and Timothy, our fish, our lizard - RJ Lizard., and our cats - Pearl and Grey. As to hobbies, I enjoy playing sports, attending sporting events, mentoring individuals from financial management to hamsters, building models, photography, travel, multimedia design, managing partner for RJ Hamster, and jazz – smooth jazz to a samba or a bossa nova. Love and God Bless, Peter – aka RJ Hamster Jo hi

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