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Editor's Note: After seeing this volatility box today, I'm convinced we're sitting on a binary bomb. |
Tomorrow June 10th at 1 PM ET, I'm showing the strategy that wins roughly 98% of the time when deployed correctly -- and it's specifically designed for the explosive breakouts we're setting up for right now. |
Most retail traders don't even know this exists. The smart money has been using it for years. It's time you hop on board. |
Click here to RSVP. |
Don Kaufman, Chief Market Strategist |
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Okay, so everyone's celebrating the S&P crossing 6,000 like we just won the lottery or something. |
And look, I get it. The charts look pretty, the talking heads are bullish, volatility's low -- everything feels good, right? |
Wrong. Dead wrong. |
We're sitting in what I call a "volatility box" and it's one of the most dangerous setups I've seen in years. Holy crap, people have no idea what's coming. |
Here's what's actually happening while everyone's patting themselves on the back... |
We're Trapped in a Box (And Nobody Sees It) |
Pull up any daily chart of the S&P and yeah, it looks like we're trending up. Beautiful uptrend, right? |
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But that's the wrong damn chart. |
Switch to a 30-day, one-hour view and you'll see what I see. We're not trending anywhere. We've been ping-ponging in a 150-point range for about a month now. |
Basically from 5850 to 6000. |
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Back and forth, back and forth. |
We jumped into this range in mid May and we've been stuck here ever since. |
One month of absolutely nothing. |
The Ball of Risk Nobody Talks About |
The longer you sit in the box, okay, the risk continues to grow. There's a ball of risk being formed and the ball is really, really big. |
Think about it. |
Every day we stay trapped in here, more traders pile into the same positions. More algorithms cluster around the same levels. We just start to continually accumulate more and more open interest. |
What this basically implies is the risk... the longer you sit in the box, the risk continues to grow. |
And when this thing breaks? It's incredibly binary. |
That is the biggest differentiating factor I want you to remember. When I say it's binary, it basically means coming out of this volatility box is nothing more than a coin flip -- whether we're gonna go higher or dramatically lower. |
You have this giant ball of risk, and when it hits a level it hasn't been to, it ignites. |
Why Today's "Strength" Is Actually Weakness |
We're at the top of the box right now around 6000. Does that provide for a higher probability of breakout to the upside? Absolutely. There is a higher probability right now that we could break to the upside. |
But -- and this is important -- there's an incredibly high probability we also sit right back down to the bottom of it. |
Your high point lately has been 6025. You start to get above that, and that's where markets are gonna get crazy to the upside. |
But if we fail here? We could easily see 5850 again, and it seems insane to see 5850 now, but that's the bottom of this box. |
The VIX Lie Everyone Believes |
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The VIX is sitting around 17 and everybody thinks volatility is cheap. |
You think you're buying a 17 VIX? You ain't buying no 17 VIX. |
The VIX works like you would be trading corn. |
Corn where you're trading today is not where you're trading corn 36 days from now, because all of a sudden there's an issue with the crop and the price of corn in the future is considerably higher. |
Well, there's an issue in this crop. You know what the issue is? That number means squat and 36 days from now, they're already pricing the 20 VIX. |
When everybody sees something, that's something ain't that good of a deal. |
The Binary Breakout Nobody's Ready For |
We need some type of exogenous event to break out of this box. And the really crazy thing is you have competing events today. |
In London, the United States will meet with China. I think that's already priced into the marketplace. They're not gonna say anything negative -- if they do, that would be one of the black swans. |
But when this volatility box breaks, things get wild in markets. |
The break of the box is incredibly binary. Whether we're gonna go higher or dramatically lower -- it's a coin flip. But either way, the move will be violent. |
What You Better Do Right Now |
Don't make any snap decisions based on this calm. I wouldn't be trading predicated on what you got here because it's gonna be light until the bell goes off. |
The volatility was actually up a little bit this morning. That does speak a bit to you, alright? |
Look, I don't give two craps about where you think we're gonna go right now, because the one thing we know about volatility boxes is that when they break, things get wild. |
And we're sitting right at the danger zone. |
Your expected move for today is 42 points. |
On a Monday, I think there's a lot of additional expected move because of the present administration. Over the weekend, this administration scares the hell outta the markets, so they actually bolster up the expected move. |
The world right now is on edge, the world is volatile and crap can move 42 bucks. |
But here's the thing most traders don't understand... |
When you have a setup like this - a volatility box ready to explode in either direction - most people panic. They freeze up. They make emotional decisions that destroy their accounts. |
The smart money? They have a systematic approach for exactly these moments. A strategy that actually gets STRONGER when markets go binary. |
I've been using this approach for over 25 years, and it's designed specifically for the kind of explosive breakouts we're setting up for right now. |
That's exactly why I'm going live tomorrow at 1 PM ET. |
I'm pulling back the curtain on how to position when you KNOW volatility is about to explode but you don't know which direction. |
Make sure you don't miss it. |
Click here to RSVP. |
To your success, |
Don Kaufman |
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