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Don Kaufman here. |
While everyone's celebrating Nasdaq near all-time highs, I'm telling you to drastically reduce your allocation. |
And this isn't some doom-and-gloom bearish rant - it's cold allocation math that could save your ass. |
Look at this Nasdaq chart. |
We've been trapped in the exact same box for 10 weeks. July, August, and half of September - same damn territory, day in and day out. |
We're trading at 579 today, and the midpoint of this entire range has been 570. |
That's not a bull market - that's a sideways grind that's about to explode in one direction or another. |
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The Correlation Trap Nobody Talks About |
Here's the thing most retail traders miss: when you're range-bound like this for months, you start accumulating too many positions on the same side. |
I'm well aware you can find some piece of crap stock that moves autonomously. |
But when you substantiate real positions in five or six different underlyings, there's one thing you cannot avoid: you belong to the index. |
Period. |
And when this box breaks, that $50k you spread across 'different' tech names? It all bleeds the same color. |
I grew up as an index trader, and I'm telling you - this is when you want to be grossly under-allocated. |
Not 90% invested, not 70% invested. Grossly under-allocated. |
Why? Because you can't control whether this thing bursts to the upside or cracks lower. What you can control is your allocation. |
This is the shit CNBC will never tell you because every money manager that comes on TV wants you 100% invested 100% of the time. |
They only get paid for assets under management and don't want your capital freed up. |
What Actually Works When Nothing Works |
So what do you do? I start trading products that don't have great correlation to the S&P. Christmas trees will continue to grind out profitability even if we don't move. |
Volatility calendars work beautifully because the longer you stagnate and volatility doesn't do much, the more money you're gonna make. |
The directional stuff most retail traders love - that's where people get eaten alive at a time like this. Don't get eaten alive. Don't press right now because you got a hunch. |
If you're bullish, cool, use spreads. If you're bearish, great, use spreads. |
But when you're in a very tight, level-driven marketplace like we are, this is as binary as it gets. |
The Bottom Line |
This is not a bullish or bearish conversation. This is curb allocation. Be very, very careful. The range defines us all. |
You still gotta trade. You still gotta earn a living. But there's times where you literally have to downshift allocation, knowing that a substantiated move could be days away. |
When this range finally explodes, you want to be the trader with cash, not the guy watching his entire portfolio move in perfect, painful harmony. |
Be grossly under-allocated. Not because I'm bearish - because I'm not stupid. |
There's a better way to play this market, and that's not with individual stocks… |
It's by playing volatility.
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Make sure to join me tomorrow live at 1 PM ET, where I break down how this strategy works. |
To your success, |
Don Kaufman |
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Don's going nuclear on Wednesday | He's dropping the timing system that won $230,000 in a courtroom. | Not some feel-good trading story. Real money. Real case. Real system. | The same signals he used to convince a judge and jury are the ones separating winners from the walking wounded in this market. | Here's what you'll see: | The exact timing intel that lawyers paid six figures to understand | When retail money turns into smart money (and how to ride the flip) | How to stop getting your face ripped off by terrible timing | Most traders think timing is luck. | It's not. | There are invisible clocks running this market. The pros see them. You don't. | That's about to change. | Shadow Clocks with Don Kaufman
Wednesday, September 10 | 1 PM ET | |
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Macro In 60 Seconds | Dollar, bonds, gold can matter in pre-market, but indices remain flow-driven post-open CPI Thursday is major tone-setter, but even CPI surprises frequently reversed by flows High skew (~150) indicates heavy institutional put buying financed with call selling; not crash signal, but hedging distortion Ignore CNBC pundits, focus on vol pricing → $60 expected weekly SPX move with CPI loaded
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