The Friday session log carried two lines that matter today. The first: “nearest break: Ibovespa 169,451 — 0.52% away, proximity flag.” The second: the human override that held all 548 EWZ shares when the trim vote read 2 of 3. Friday evening the index closed at 169,019 — through the line — while a violent second wave hit US chips: Nasdaq −4.18% for its worst day since April 2025, a trillion dollars off the semiconductor complex, Marvell −16%, Micron −13%, TQQQ −14.3%. VIX rose 40% to 21.51 with the one-day index at 28.7 — backwardation at the front of the curve — SKEW crossed 150, and gold fell 3.35% as the 10-year broke above 4.5% on the hot payrolls print. So this session, run Saturday on the close data, does what the machine says and only what the machine says: the EWZ exit executes as a hard trigger — exempt from the override by the protocol’s own text — the VIX Amber band trims TQQQ one point, and twenty-one thousand dollars of proceeds land in BIL, taking liquidity to 33%. The override cost roughly $800 versus the Friday trim price; that number goes in the record next to the reasoning, which was defensible when made. The hedge bought June 2 at $3.00 sits half a percent from its long strike. Posture: DEFENSIVE.
[v5-19] table complete on June 5 close data, estimates and stale values declared. Three-state regime: CHOP — held by the default rule, not by the tape (Bear test 0/3: VIX 21.51 < 25×2, real yield est 2.15-2.18 < 2.50, kinetic escalation unconfirmed). Hard triggers fired: Ibovespa −15.22% → EWZ full exit [Part 2, override-exempt]. Amber fired: VIX 21.51 in the 18-25 band → TQQQ −1% → BIL +1% [Part 3, automatic]. USD/JPY [v5-2]: 159.96, Zone 3 — no adds TQQQ/IBIT. VRP [v5-16]: 10.02 → −0.13, hysteresis cleared into the CHEAP band — hedge ceiling 1.5%. Correlation gate [v5-26]: 2 of 4 lit (SKEW 152.25, VIX RoC5D +40.4%); the Friday credit print is the swing leg. Drawdown [v5-24]: ≈−7.4% [EST] vs the $239,644 HWM. Posture [v5-27]: DEFENSIVE.
Rejected / Sustained Exits
AMLP / ET — Henry Hub $2.93, Exit Sustained
Henry Hub $2.93/MMBtu — below the $3.50 line, AMLP stays out [v5-3]. Reinitiation only above $5.00 for 2 consecutive weeks. ET (AI Power watchlist) blocked on the same reading.
GLD Call — Deferred, 0 of 4 Factors
Gold $4,354 below $4,600, real yield est 2.15-2.18% above 1.80%, no signed deal, COT unchecked. No call. The GLD ETF position (6%) is governed separately by the [v5-1] clock — full exit at 2.50%.
Two mechanical trades, zero discretionary ones. The Part 2 hard trigger fired: EWZ exited in full — 548 sh @ $34.01 = $18,637, realized −$3,348. The VIX Amber band fired: TQQQ 8%→7% — 30 sh @ $73.05 = $2,192. All proceeds to BIL: 21%→33% (+228 sh @ $91.44), which pre-satisfies the [v5-24] ≥25% condition and the [v5-26] +5% floor in one motion. Eleven positions remain. AI primary ~46% of book — above the [v5-25] 40% vol cap, adds vetoed. The XSP 735/705 hedge is ~0.5% from its long strike — mark Monday.
[Part 2] Ibovespa −15.22% — EWZ EXIT FIRED · [Part 3] VIX 21.51 Amber — TQQQ Trim · BIL 33%
Ibovespa closed 169,019.12, below the 169,451 hard-exit line (−15% from the 199,354 ATH). Hard triggers bypass majority votes and human overrides [v5-22 §4] — the Friday override governed only the discretionary trim. EWZ: 548 shares sold @ $34.01 (Jun 5 close print), −$3,348 realized. Simultaneously VIX 21.51 entered the 18-25 Amber band → automatic zero-sum: TQQQ −1% → BIL +1% (30 sh @ $73.05). Combined $20,829 → BIL @ $91.44 (+228 sh) → 33%. Override accounting: ~$800 vs the Friday trim price, logged with the reasoning. Next rungs: VIX >25 ×2 = Bear protocol · drawdown −8% = mandatory session (BIL condition already met).
| Ticker | Sleeve | Weight | Conviction | Rationale |
|---|---|---|---|---|
| EWY | AI / Tech Primary | 15% |
KOSPI −5.54% circuit breaker — concentration unwind, not a demand break. Vote 2/3 holds. New trigger live: −15% from 20-sess high ×3 (now −7.3%, day 0/3, Amber −10%). Monday = day-2 test. No adds (Zone 3 + vol cap). | |
| SMH | AI / Tech Primary | 13% |
Semis −$1T in two days on Broadcom guidance + positioning. HBM sold out, Taiwan +51% YoY — fundamentals intact. [v5-4] valuation gate: P/E reset lower by the selloff itself. Taiwan May print (~Jun 8) is the validation. Hold 13%. | |
| TQQQ ↓ | AI / Tech Primary | 7% |
Trimmed 8%→7% — VIX 21.51 Amber band automatic [Part 3]. 30 sh @ $73.05 after a −14.28% day (the 3× doing what 3× does). Next rung: VIX >25 ×2 → Bear protocol (TQQQ to 0-3%). Chop floor reached — no further discretionary cuts without a trigger. | |
| GLD | Debasement | 6% |
Gold −3.35% to $4,354 on the yields channel. [v5-1] trim already done; the live line is the 2.50% full exit, ~0.33 away. Hold 6% — held in defensive books as the rule intends, exit only on the clock. | |
| GDX | Debasement | 5% |
Miners beta to a falling gold price — the weak link of the sleeve. Hold 5%; reviewed together with GLD if the 2.50% exit fires. | |
| EWZ ✕ | BRICS / EM | 0% |
EXITED |
EXITED — hard trigger. Ibovespa 169,019, −15.22% from ATH. 548 sh @ $34.01, −$3,348 realized. 8th straight weekly loss (longest on record), BRL R$5.157, Selic repriced. Re-entry mechanical only: [v5-8] BRL < R$4.90 or fresh 2/3 with basket confirming. |
| FXI | BRICS / China | 3% |
Held — China is a separate vote from Brazil and was not part of the trigger. PBoC stable, AI capex narrative intact. 3%. | |
| VGK | Deglobal. | 8% |
EUR ~1.16, ECB hike expected June 11 — the week’s scheduled catalyst. [v5-6] amplify at 1.20 → VGK 10%. Hold 8%; the most resilient sleeve in the drawdown. | |
| ITA | Defense | 5% |
Hezbollah rejected the ceasefire; Israel staying. Brent $92.87 Amber band — hold 5%, no adds. The only sleeve with a live up trigger: rejection-confirmed → 8% [v5-13]. | |
| IBIT | Alt Monetary | 3% |
BTC $61.4K — worst week since February, record ETF outflows, IPO cash competition. Zone 3 blocks adds anyway. Bear state would exit; CHOP band floor is 2% — one rung left before the regime decides. | |
| BIL ↑ | Liquidity | 33% |
N/A |
Raised to 33% — EWZ exit + TQQQ trim proceeds. Above even the Bear target (20-25%) by design: pre-satisfies the [v5-24] 8% condition and the [v5-26] gate floor. Dry powder, not a regime statement. Redeployment requires triggers, not vibes. |
| CEG | AI Power | 2% |
Baseload thesis untouched by a positioning unwind. Adds gated on real yield <1.80% — fails at est 2.15-2.18%. Hold 2%. | |
| [OPT] XSP 735/705 |
Options — TAIL HEDGE | 0.79% |
NEAR ITM |
The week’s best position. Entered June 2 @ $3.00 (6c, $1,800) against the Hormuz tail; paying against the AI tail. Long strike 735 = SPX 7,350 vs close 7,383.74 — 0.46% OTM, six weeks left. Mark Monday from the live chain (options.mark). No profit-taking rule exists — flagged as the [v5-28] gap, decision Monday. |
| Total | 100% | AI/Tech 35% · Debasement 11% · BRICS 3% · DG 8% · Defense 5% · Alt Mon 3% · Liquidity 33% · AI Power 2% · Options 0.79% (at-risk) | ||
Changes from June 5
VRP collapsed 10.02 → −0.13 as realized vol exploded past implied (5D realized 20.2 vs VIX 21.51) — clearing the [v5-16] hysteresis into the cheap band: ceiling 1.5%, protection rationally priced for the first time since inception. The existing spread — XSP 735/705, 6 contracts, $1,800 at cost — sits 0.46% from its long strike with ~6 weeks of runway, plausibly worth a multiple of its cost at Monday’s open. Two decisions wait on the live chain: set options.mark so the book and the [v5-24] card carry the hedge at value instead of cost, and answer the question the protocol cannot: when does a winning hedge get monetized or rolled? No rule exists. [v5-28] candidate — drafted next calm session.
The book enters Monday pre-positioned: BIL 33% means the −8% drawdown line, the [v5-26] gate, and even a Bear declaration would demand little that is not already done. What Monday decides: the live drawdown print, the hedge mark, KOSPI day-2, the Friday credit spread, the FRED real-yield print, and whether VIX starts the >25 Bear count. ECB June 11 behind it all.
Estimated from Jun 5 close prints vs the $239,644 30D HWM. ~0.6pp from the 8% line — which mandates a session within 24h and BIL ≥25%: the session is this one and BIL is 33%. Live reading at Monday’s open is the first datapoint of the week. At −12%: BIL ≥30%, TQQQ to Bear, IBIT to 0.
−7.3% from the 20-session closing high (~8,801). Monday reacts to Nasdaq −4.18% with a weekend to think about it. −10% = EWY Amber review · −15% ×3 sessions = trim to 13% [ERROR-009 recalibration, fixed the morning it was needed]. EWY-in-USD already −12.6% from its high with won weakness stacked.
SKEW 152.25 ✓ · VIX RoC5D +40.4% ✓ · VRP −0.13 ✗ · credit 0.74 [Jun 4 stale — the Friday print lands Monday]. IG OAS above 1.00% = 3/4 = gate: no new risk, BIL floor +5% (already exceeded). On a −2.6% SPX day, widening is the base case.
Amber response executed (TQQQ trim). VIX >25 ×2 sessions = Bear protocol — Monday above 25 starts the count. VIX1D 28.7 over spot says the options market prices Monday as the riskier day. Term structure: VIXMO/VIX3M at 21.5/21.8 — 0.3 from the [v5-17] inversion.
FRED DFII10 prints Monday. The 10Y broke 4.5% with a hike now priced — the pressure is one-directional. At 2.50%: GLD full exit [v5-1], and the Debasement sleeve question (GDX) opens with it. ~0.33 of headroom.
The hysteresis cleared in one violent session. Protection is rationally priced for the first time since inception — the structural opening for the defensive book. Roll/add decisions Monday with live chains; the [v5-22] no-new-risk default does not block hedges.
Hike expected. EUR ~1.16 [Friday AM print, declared]; [v5-6] raises VGK to 10% above 1.20. The week’s one scheduled risk-on path for the book.
R$5.157 now — far. [v5-8] Brazil Rule reactivates adds below R$4.90; alternatively a fresh BRICS 2/3 with the basket confirming. Mechanical paths only — no discretionary re-buy of an exited position.
Q1 +51% YoY. A strong May print into this selloff is the strongest possible counter-evidence to the bubble narrative — and the first input that could turn the [v5-21] AI deterioration count. A miss confirms it.
Pre-committed paths only: VIX back <18 + drawdown recovered → rebuild toward Chop targets · deal signed + RY <1.80 + VIX <17 → Bull sequence · KOSPI/Taiwan confirming → AI primary first. The cash is staged against triggers, not feelings.
Hot payrolls + a hike repriced = a firm dollar against everything but its own bond market. JPY pinned at the ¥160 intervention line, BRL at its weakest since April, EM funding pressure visible in the Ibovespa exit this session executed. EUR is the exception — held up by its own hawkish central bank into June 11. Values as of the June 5 close; EUR declared from the Friday AM print.
One email when a new protocol session is published. Nothing else.
[v5-23] Session close confirmed: TRADES — EWZ EXIT 548 @ $34.01 (hard trigger, −$3,348 realized) · TQQQ 30 @ $73.05 (VIX Amber auto) · BIL +228 @ $91.44 → 33% · positions sum 100% (11 lines) · close-on-signal prints, Jun 5 closes · Google Sheet update REQUIRED (EWZ 0 / TQQQ 347 / BIL 641) · options: XSP 735/705 6c held, 0.46% from long strike, mark Monday · regime CHOP (default rule — Bear test 0/3) · [v5-19] complete, EST/STALE declared, Bagheera MISSING ×3 · [v5-20] nearest break: drawdown → −8% (~0.6pp) 🚩 · [v5-21] AI/Tech flagged session 2 · [v5-22] defensive default active · [v5-24] ≈−7.4% [EST] · BIL 33% ≥ all floors · [v5-25] AI ~46% — adds vetoed · [v5-26] 2/4, credit pending · [v5-27] DEFENSIVE · Friday override cost ~$800 — logged with reasoning · protocol gap flagged: no hedge profit-taking rule → [v5-28] candidate · deploy pending