Proflex Market Update - Wk 08

Welcome to another weekly update from Proflex! This is a short week as markets were closed on Monday.

The past week has been a mixed bag for equities, bonds, and crypto markets, with investors treading cautiously ahead of key economic and corporate catalysts. Let’s break it down.

Stock Market: AI Trade Holds the Key to Next Move

The S&P 500 rallied last week, testing all-time highs, but failed to break out, signaling a lack of strong momentum. Market sentiment has shifted into wait-and-watch mode, as no major bullish triggers are in sight until NVIDIA (NVDA) reports earnings next week.

• AI trade remains the dominant market force, and NVDA earnings will likely be the next big catalyst that determines whether the sector resumes its bullish trend or faces a broader pullback.

• Tech stocks showed resilience, but growth stocks lacked strong follow-through buying, suggesting that investors are cautious at these high levels.

• Smaller-cap stocks and value sectors underperformed, indicating a risk-off sentiment in parts of the market.

Bond Yields: Settling Down, But With Major Uncertainty

Bond markets have stabilized in recent days, with the 10-year Treasury yield hovering around 4.5%—a neutral zone that neither supports an aggressive bull market nor suggests imminent downside risks.

However, the bigger story is the ongoing U.S. trade and deficit narrative under the Trump administration:

• Trump’s renewed focus on fixing the U.S. trade imbalance through tariff wars with China, Mexico, and Canada has kept investors on edge.

• There is growing speculation about “monetization of assets” to reduce long-term bond issuance, which—if implemented effectively—could be a game-changer for managing U.S. debt expansion.

• The DOGE initiative (Department of Government Efficiency) led by Elon Musk continues to search for ways to cut spending and limit deficit growth, though market expectations remain low.

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​Key takeaway:

Markets remain skeptical but hopeful that the administration’s policies could stabilize long-term yields, reducing concerns over the debt bubble. The first signs of deficit reduction since Trump’s inauguration are encouraging, but markets remain cautious.

Bitcoin & Crypto: FTX Sell-Off Creates Buying Opportunity

Bitcoin has faced pressure in recent days, driven by the long-awaited FTX creditor distributions, which are set to inject billions of dollars into the market this week.

• Why this matters: These distributions mean many early FTX users are finally getting their funds back—leading to some forced selling as they convert crypto holdings into cash.

• Bitcoin remains resilient, but altcoins are feeling the heat. While BTC has strong institutional demand at current levels, altcoins (such as Solana and other riskier assets) are seeing sharper corrections due to weaker demand.

Our View:

We see this as a buy-the-dip opportunity for Bitcoin, as the institutional adoption trend remains strong, and ETF inflows continue to provide long-term support.

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Proflex community had a great discussion on Crypto Opportunities last week for those who are yet to allocate significantly in this asset class. The recording of the session is available at:

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📢 Join the Discussion in Our Macro WhatsApp Group!​
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Proflex Subscribers – Staying Ahead of the Curve 📈

✅ Jan 13th – A Major Turning Point: We alerted subscribers about a key market bottom, leading to strong recoveries in select stocks.

✅ AI Trade Meltdown (Late Jan) – A Buying Opportunity: Our call to buy the dip in AI stocks is already paying off, as leading chip stocks rebound.

✅ Separating Noise from Signal: In volatile markets, we help subscribers stay disciplined and focus on strategic long-term opportunities.

Best regards,

Raman Bindlish

Editor-in-Chief,

Blockstart Research

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