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Don Kaufman here. |
Most traders spent Friday morning glued to their screens waiting for Jerome Powell's Jackson Hole speech. I was too busy making 162% on earnings flips to give two craps about what the Fed chair had to say. |
While everyone else hung on every word from Wyoming, I was watching one number that screamed "explosion incoming": 6450. |
The SPX closed at 6466.91 on Friday. |
The Dow hit an all-time high with an 846-point rally. And I called it before Powell even opened his mouth. |
Here's exactly what I saw that everyone else missed. |
The 6450 Level and Expected Move That Revealed Everything |
While traders obsessed over Fed-speak, I was laser-focused on two technical signals: the 6450 level in the SPX and an expected move that refused to die. |
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"You stay above 6450 today," I told my trading room Friday morning. "That is incredibly bullish coming in next week." |
The SPX didn't just hold 6450 - it closed at 6466.91, a solid 16 points above my critical level. |
But here's the wild part that told me something massive was coming: the expected move was sitting at 58 handles overnight and wouldn't collapse even after the initial pop. |
Normally, when big news hits, volatility drops like a rock. |
The uncertainty premium evaporates. Not Friday. After the market jumped 40+ handles, that expected move should have fallen to maybe 25 or 30. It stayed stubbornly high at 50+ handles. |
"The marketplace could explode," I said live. "You could have a hundred handles move up, easily." |
The SPX moved 96.7 points. I basically nailed it. |
Order Flow Is Predetermined (Even on Fed Days) |
Look, I know this sounds ridiculous, but I'm a big believer that institutional positioning around Fed speeches is largely predetermined. The market doesn't give a damn what Powell says because the algorithms already know. |
Friday morning proved my point perfectly. |
They literally "dropped the speech" - meaning they released Powell's entire prepared remarks to trading firms before he spoke. |
By the time he stepped up to the microphone, every algorithm on Wall Street had already digested "the shifting balance of risks may warrant adjusting our policy stance." |
The explosion happened instantly. Not because of Powell's words, but because the positioning was already locked and loaded. |
Why Tesla's 6% Jump Proves My Point |
Want to see how backwards market logic really is? |
Tesla jumped 6% Friday on hints of a 0.25% rate cut. Meanwhile, their $7,500 EV tax credit expires in September - one month away. That's real money for every car buyer. |
But nobody cared about the $7,500 real impact. They went nuts over a quarter-point rate cut that means absolutely nothing for Tesla buyers. |
This is why you stop listening to financial media narratives and start reading market structure. The market tells you what really matters through price action, not through CNBC explanations. |
The Real Lesson Here |
I didn't predict Friday's rally because I'm some market wizard. I predicted it because I ignored the noise and focused on structure. |
While traders waited for Powell's prepared remarks, I was watching critical technical levels and volatility behavior that screamed predetermined institutional flow. |
The Fed speech was theater. The real move was already baked into market positioning hours before Powell spoke. |
This is exactly why I tell traders: tune out the commentary, read the signals. The market will tell you everything you need to know if you know how to listen. |
Friday's 846-point Dow rally wasn't a surprise. It was inevitable once you learned to read what everyone else ignores. |
To your success, |
Don Kaufman |
P.S. I've been traveling today, so my weekend update video will be posted later this evening. You can catch it here on YouTube, probably around 7-8 pm ET. |
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