Hi Traders,

I can't believe I'm writing this. Please don't tell my dad.

Wednesday morning the Treasury said one sentence about the long end of the curve, and four markets moved on it. The department raised the ceiling on its long-end buyback operations from $2 billion to at least $4 billion, starting September 9. Bonds rallied, gold ran more than 3 percent, and Bitcoin put in its best session since June while one corner of the equity market got sold.

That reaction spread is my method this week. When one catalyst hits, I don't stare at the headline. I sort my board by volatility-adjusted reaction and look at the extremes, and the two names at the ends of that board are this week's picks.

One to Love: The Trade I Swore I'd Never Make

I sent this to our internal chat Wednesday morning.

I am not a fan of Bitcoin, and I'm a card-carrying hater of MicroStrategy (MSTR). My actual plan was to not buy any Bitcoin until MSTR went out of business.

Once the Bitcoin ETFs launched, there was no reason for MSTR to exist. I expect the day they get put out to pasture will be the generational buying opportunity in Bitcoin, and Mark agrees with me 100 percent on that. It looks like we might have to wait a while for it.

Even someone like me has to admit this setup is too good to pass up. Bitcoin spent months with nothing to lean on, down roughly half from its record above $126,000 last October. Then the government announced it's willing to manage the price of its own debt, and the case for owning what the government cannot print got made by the government itself.

Gold ran this play first. It coiled up for weeks and then cleared $4,480 Wednesday, its highest since early June. I think Bitcoin is next in line.

Two things tell me the money agrees. Flows into the iShares Bitcoin Trust (IBIT) were negative by almost $5 billion over three months, but the last month brought in $958 million and the last week added another $197 million. Buyers showed up before the catalyst did, not after.

I'll give you the honest part too. The first leg was a squeeze, with roughly $3 billion in short positions liquidated as price cleared $66,000. Bitcoin cleared its 200-day average Thursday and ran to $72,490 with an RSI near 79, which is not a level I like paying up into.

The one to love right now, and just for a trade, is IBIT.

One to Leave: The Spread Now Has a Ceiling

Here's what fell out of the other end of the same board. While bonds, gold and Bitcoin rallied on the announcement, the SPDR S&P Regional Banking ETF (KRE) sat at the bottom.

Regional banks borrow on the short end and lend at the long end. The gap between those two rates is the business, and the stocks price it accordingly. When the long end gets pushed down, that gap narrows.

Now watch what happened next, because it matters more than Wednesday did. By Thursday the whole move was gone. The 30-year climbed back to 5.25 percent and the 10-year to 4.70 percent, right where both sat before the announcement. Four billion dollars per operation against a $32 trillion market didn't hold.

So why leave the group if the spread came right back? Because we just learned the reaction function. Bessent has told the market he will lean on the long end whenever it runs, and he was on television Thursday saying he has a big tool kit. Regional banks need a steepener that now has a policy response attached to it.

That's a ceiling, not a collapse, which is why this is a leave and not a short. I'm not pressing anything here. But there's no reason to sit long the group waiting for a spread that Treasury has publicly committed to squeezing, when the same money can sit in something with a tailwind.

Watch the long end on both of these. Just don't expect it to behave.

So which one will the crew pick for Monday's Ticker Highlight Show? Tap this link to join for whatever rate you want and get Monday's option trade.

Enjoy the process,

Tim