Quick note before we get into it.

A lot of the research you've been reading from us lately comes from Randy Dunham. Randy runs analysis on our desk.. he's the one buried in decades of market data, stress-testing the numbers everyone else repeats without checking, and turning it into something you can actually trade around.

Today's a good example of why I trust his work.

A new Fed Chair gets sworn in tomorrow. There's already a scary stat going around about what happens next. Randy didn't take it at face value. He pulled the dataset apart, found out why the popular number is misleading, and rebuilt it from scratch.

Here's what he found..

This Friday, Kevin Warsh takes over the Fed.

The market has known it's coming for weeks. Priced in, supposedly.

It almost never matters. The reaction shows up anyway.. just not where traders are looking for it.

You've probably seen the scary number making the rounds. The average S&P drawdown in the three months after a new Fed Chair is -12%.

Let that sit for a second. Then ignore it.

That number is built wrong. It reaches back to 1930.. to Chairs who ran a completely different institution. The Banking Act of 1935 rebuilt the job from the ground up. Dropping a 1930s Chair into the same dataset as Powell is like comparing a shift manager to a modern CEO.

So I had Randy on our desk recut it from 1935 forward.

Average drawdown: -10%. Median: -8%.

Lower than the headline. Still real. Still the line between a pullback and a correction.

But here's the part that matters. The drawdown isn't the whole story.

Three-month return after a new Chair, post-1935:

Average: -0.19% Median: +1.45%

That's not a crash signal. That's a coin flip. The market genuinely doesn't know how it feels until it's spent some time with the new guy.

And we found exactly when that time runs out.

Map the average path.. 20 days before a new Chair, 60 days after.. and one thing jumps out.

It drifts higher for the first few weeks. Then around day 30, it rolls over. That's where most of the damage lives.

Why day 30?

Because that's right around when most new Chairs hold their first FOMC meeting.

Maybe it's the policy. Maybe it's just the market getting used to a new voice. The effect is the same. Volatility wakes up at that first meeting. For Warsh, that's the date to circle.

And this isn't happening in a vacuum.

Warsh walks in right as we enter the weakest stretch of the calendar.. the summer slowdown.. in the weakest kind of year. Midterm election years. Going back to 1950, the average midterm-year gain is under 5%.

New, untested Chair. Seasonal weakness. Midterm chop. All converging at once.

So the move is to brace and get defensive, right?

Not so fast.

A month ago the S&P fired one of the rarest momentum signals on record. The 10-day rate of change pushed past 9.8%. That's only happened 22 other times since 1950.

Every time, the forward numbers lean hard bullish. Better than 80% odds that 6, 9, and 12 months out are positive. And several of those fired in midterm years too.. 1962, 1970, 1974, 1982, 1998, 2002.

So both things are true at once.

Long-term trend: up. That's your ally. Short-term setup into Warsh's first meeting: real headwinds.

That's the whole puzzle.

We've watched this exact rotation run before. The 2025 tariff selloff. The Iran scare in February. Capital leaves risk-on, crowds into defensives, then comes back. Same script every time. TTI members are already seeing the first signs of it in this week's Hit List Report.

Here's where most people get it wrong. They pick one. They flip short into the volatility, or they ignore it and stay fully risk-on.

The answer is neither.

The seasonal data points to specific defensive corners that don't just hedge the chop.. they tend to outperform through it. Opportunities, not insurance. Enough exposure to capture the rotation if it accelerates. Not so much that defense takes over the book.

And it is certainly not the time to flip short on this market.

Profits Over Prophets,

Hamilton

PS — We didn't guess at this rotation. We watched it start. The early risk-off shift showed up in our flow data two weeks ago, and Blueprint members already know how we're positioning around this. When Warsh's first meeting hits and volatility wakes up, they'll be ready for everything. Everyone else will be reacting. [See what the Flow Score is pointing at right now →]​