I got my head handed to me on Tuesday. Took a long on some no-name biotech that gapped up on news. Textbook flag on the 5-minute chart, volume coming in... looked like a layup. I went in with my standard size. An hour later, my stop got nuked on a nasty wick that erased the entire day's move. Wiped out my gains from Monday. My trading journal for that entry has one word written in red ink: GREED. I saw a frothy chart and jumped in, ignoring that the whole market feels like this right now. It was a painful reminder that when things feel too easy, the trap is being set. And looking at the record leverage growth projected for US stocks, this isn't just one frothy chart—it's the entire market.

Pull up a daily chart of the SPY. Right now, price action is the only truth. Forget the news, forget what the talking heads are saying. The tape tells the story. We're seeing a classic rising wedge pattern forming as we push towards all-time highs, currently testing the $605-$610 resistance zone. For any new trader looking for a chart patterns breakdown, this is one you need to burn into your memory. It looks bullish, with higher highs and higher lows, but it's a classic exhaustion pattern.

Why? Volume. Each new push higher over the last month has been on lighter and lighter volume. That tells me the big institutions aren't aggressively buying up here. They're slowly distributing their shares to retail traders who are getting FOMO and leveraging up to chase the last leg of this move. This is the definition of smart money selling to dumb money. It's a ticking time bomb.

• Key Resistance: $610 on the SPY.
• Wedge Support: Around $592, a break below this is my first major warning sign.
• Volume Profile: Thinning significantly above $600, indicating a lack of conviction.
• RSI(14) on Daily: Sitting at 78, deeply overbought territory.

So am I shorting everything? No. That's a great way to go broke. The market can stay irrational longer than you can stay solvent. Instead, I'm treating this like a game of musical chairs. I'm still dancing, but I'm staying right next to a seat. For me, that means focusing on the best day trading setups on stocks with relative strength, but taking profits way faster than usual.

My bread-and-butter trade right now is a 5-minute opening range breakout on a high-beta name like NVDA or AMD. If it breaks high with volume, I'm long with a stop just below the range low. My first target is a 1.5R profit, where I sell half my position and move my stop to breakeven. I'm not holding anything overnight. This is pure hit-and-run trading. Some of the classic swing trading strategies that work in healthier markets, like buying a dip to the 50-day moving average, are off the table for me. The risk of a gap down is just too high.

This whole environment gives me major flashbacks to the meme stock craze and crypto top of 2021. Everyone with a Robinhood account and a stimmy check was a genius. People were taking out loans to buy coins with dog pictures on them. I remember reading Marcus Cole's on-chain analysis from back then, and he was pointing out how whale wallets were dumping billions in BTC while retail was piling in at the top. This feels exactly the same, just in a different wrapper. The 'get rich quick on borrowed funds' mentality is the ultimate contrarian signal.

The psychology is identical. And when the music stops, the people with the most leverage get wiped out first. It's an old story. The market is a machine for transferring wealth from the impatient to the patient, and right now, patience is in short supply.

My primary thesis is that this leverage-fueled rally is a massive distribution phase before a significant correction of at least 15-20%. I'm seeing major divergences everywhere. For instance, while tech rips, the Dow Jones Transportation Average (IYT) is lagging badly, a classic non-confirmation. It's great that Sarah Chen can point to blowout earnings in cloud computing, but if the companies that actually ship goods across the country are struggling, the economy isn't as strong as the NASDAQ would have you believe.

What would make me change my mind? Two things. First, a massive surge in volume on a breakout *above* the SPY $610 resistance. Not just a small pop, but conviction volume that shows institutions are re-engaging. Second, if we see lagging sectors like transports and small caps (IWM) start to lead the market. That would signal a broadening of the rally, which is a sign of health. Until I see that, I'm treating every rip as an opportunity to sell into strength, not chase.

I'm not here to scare anyone out of the market. There's money to be made. But my job is to manage risk, and my risk meter is flashing bright red. This isn't the time to be a hero. It's the time to be a sniper. Take your shot, get your profit, and get out. So, I have to ask: are you building a hedge against this leverage bomb, or are you convinced the party can go on forever?