Lesson 1
The 5-Basket Framework
Build your dashboard around these 5 baskets. Weekly, review each basket. The convergence tells you the regime. Divergences within baskets create opportunities when they resolve.
📊 Indicators mentioned in this lesson (click for details):
The 5-Basket Framework is a systems approach to understanding the liquidity-driven economy. Instead of reacting to headlines, you track five interconnected baskets of metrics that together reveal where we are and where we're going.
Basket 1: Macro Regime
- Fed Net Liquidity (FED_NET_LIQUIDITY) (WALCL - TGA (WTREGEN) - RRP (RRPONTSYD))
- Global M2 (GLOBAL_M2)
- DXY (Dollar Index (DXY))
- Yield Curve (T10Y2Y) (2s10s (T10Y2Y))
Basket 2: Technicals
- S&P 500 (SPY) trend, breadth, momentum
- Bitcoin (BTCUSD) trend and structure
- Key moving averages (50/200 DMA)
- RSI, MACD for overbought/oversold
Basket 3: Sentiment
- VIX (equity volatility)
- Fear & Greed Index
- AAII Sentiment Survey
- Put/Call Ratios
Basket 4: Fundamentals
- Earnings growth trends
- Revenue trends
- Margin compression/expansion
- Forward guidance
Basket 5: Positioning
- Hedge fund exposure
- CTAs (trend followers)
- Retail flows
- Options positioning (gamma)
The Synthesis:
No basket is sufficient alone. A regime is identified by convergence across baskets. When Macro is tightening but Sentiment is fearful and Positioning is light, that's different from Macro tightening with Sentiment euphoric and Positioning heavy.
Check your understanding
Lesson Quiz
Quiz Check
What are the 5 Baskets in the 5-Basket Framework?
Quiz Check
Macro is bullish, Technicals neutral, Sentiment fearful, Fundamentals stable, Positioning light. What's the likely outcome?