🚨 I’ll be live at 11:30 a.m. ET with Jack Carter🚨
We’ll discover the dollar strength, energy names back in play, whispers of China stimulus, elevated premiums from geopolitical tensions and more [tap to join us for Market Masters]!
Before we even get into the unwind cascade, there’s an important backdrop shaping everything that’s happening. For the past year, the smartest guys in the room have been making a fortune on something called a “dispersion trade.”
It’s been the quiet engine behind the massive spreads between winners and losers in the market. When these trades start to come apart, they can trigger forced unwinds that ripple across asset classes — and that’s exactly why understanding the cascade matters so much right now.
When markets start breaking down from overleveraged positions, most traders either freeze up or make emotional decisions they regret later. I’ve built a framework specifically for these situations — the unwind cascade.
It has three distinct phases, and knowing where we are inside that sequence can mean the difference between protecting your capital or watching it vanish.
So let’s walk through how I’m positioning as the next sequence unfolds.
Phase 1: Flight to Quality — Building Your Financial Bomb Shelter
We’re still in Phase 1, where leverage breaks and capital doesn’t ask questions — it sells first and figures things out later. Money flees to the safest, most liquid assets it can find, and we’re seeing that reflected in global liquidity indicators as funding stress rises around the world.
The U.S. dollar remains the ultimate safe haven, which explains the recent surge, and Invesco DB US Dollar Index Bullish Fund (UUP) is one way to participate. Treasurys are another, with iShares 20+ Year Treasury Bond ETF (TLT) offering exposure as fear pushes capital toward government bonds.
Big caps have held up surprisingly well amid the selling. In times like these, markets don’t want speculative growth. They want fortresses like Apple (AAPL) and Microsoft (MSFT) with durable balance sheets. And because the spark for this unwind is geopolitical tension and energy pressure, defense names like Lockheed Martin (LMT) and oil majors like Exxon Mobil (XOM) naturally benefit.
Your priority in Phase 1 is defense. Cut loose the speculative junk and absolutely avoid high-leverage exposures. Be careful trading leverage — there are names out there I wouldn’t touch under any circumstances. Safety comes first.
Phases 2 and 3: When Volatility Explodes, Then When Opportunity Emerges
Phase 2 is the volatility spike, and this could play out in the next few weeks. This is where volatility doesn’t just rise — it can blow out quickly as dispersion unwinds feed on themselves. It’s also where psychology becomes a major player.
Panic creates bad decisions, and even simple things like gap ups don’t behave the way traders expect because fear distorts normal market mechanics.
This phase offers opportunity, but only with small, defined-risk bets like short-dated VIX calls or put spreads on the Nasdaq 100 (QQQ). These are tactical trades, not core positions. For many people, watching from the sidelines while holding Phase 1 assets is the smarter move.
Phase 3 is where the storm breaks. Volatility starts collapsing, and the market separates quality from garbage again. This is when you can move from defense to offense, picking up assets that were unfairly beaten down.
Selling puts on high-quality companies becomes especially attractive as elevated premiums pay you to wait. And if VIX spikes toward extreme levels, ProShares Short VIX Short-Term Futures ETF (SVXY) can become a compelling way to play the unwind back toward normalcy.
Internationally, funds like iShares MSCI South Korea ETF (EWY) may offer opportunity if geopolitical conditions stabilize after the volatility cycle completes.
The roadmap is clear: Go defensive first, stay patient through the volatility spike, then get ready to act when fear peaks and opportunity finally emerges.
Jeffry Turnmire
Jeffry Turnmire Trading
I host my Morning Monster livestream at 9:15 a.m. ET each weekday on YouTube, and then 30 Minutes of Awesome at 5 p.m. ET each Tuesday!
Please check out my channel and hit that Subscribe button!
You can also follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+6TdDE7-F6GlhMmJh
Important Note: No one from the ProsperityPub team or Jeffry Turnmire Trading will ever message you directly on Telegram.
I’m just a regular dude in Knoxville, Tennessee: a husband, father, civil engineer, urban farmer, maker and trader.
I’ve been at this trading thing with real money for 20-plus years, and started paper trading over 35 years ago. I have a knack for making some epic predictions that just may very well come true. Why share them? Because I like helping other people — it’s the Eagle Scout in me.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. 1 Rare Signal’s Handed Me My No. 1 Stock of 2026 — See It on SaturdayÂ
Whenever this rare signal flashes, a parabolic move has always followed… 100% of the time!
This Saturday, I’ll show you the ticker that’s floating this unbeaten signal as well as how I’ll go after it on Monday.Â
Save You Seat for Saturday’s Class!
