Friday punished weak systems. Monday rewarded discipline.
Tony Rago and I revealed how one NQ level trades through both.
No guesswork. No emotion. Just mechanical execution.
The replay covers everything you need to pass prop tests during chaos.
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Don here...
Jeff opened today's session and said something I haven't heard him say in years.
He's been around long enough to feel it. The way the air changes before something breaks. The pattern recognition that comes from living through 2000 and 2008.
He can sense it now.
Then he referenced Star Wars. Obi-Wan Kenobi feeling a disturbance in the force. Sensing a cataclysmic event before anyone else sees it coming. Before the Death Star destroys an entire planet.
That's where we are right now.
Friday's 227-point drop wasn't a one-off event you can ignore and move on from. It was the first crack. The beginning of something much larger building beneath the surface.
Jeff spent two hours today walking through exactly why. And the statistics he showed are brutal.
In today's free session replay, you'll discover:
- Why multiple analysts are calling this "the dumbest market in history." The market's trading at 26 times trailing earnings. That's far above historical norms. It sells for 40 times inflation-adjusted earnings over the past 10 years. Jeff walks through three specific reasons why this market is 100% overpriced. Passive investing has dumbed down fundamental research. Bad economic data keeps getting bought. Valuations are completely detached from reality. This isn't sustainable. It never has been.
- The shocking statistics about how long recoveries actually take. During the 2008 housing crisis, it took 1,021 days to recover from the bottom back to the previous high. That's almost three years. The 2000 dot-com bubble took even longer. Jeff showed data going back to 1928. The average drawdown is 16.3%. The median annual drawdown over the last 40 years is 10%. We're barely down 1.5% from recent highs. The math says more pain is coming.
- Why Morgan Stanley just lit the fuse on a systemic bomb. This weekend Morgan Stanley announced they're opening crypto trading to all clients. Not just sophisticated investors. Everyone. And they're allowing crypto to be used as collateral for margin. Jeff explains why this creates a vacuum effect when crypto finally breaks. When it goes below 110, everything correlates. Margin calls cascade across asset classes. Crypto becomes the kryptonite that drags the entire market down.
- The one number Jeff's watching that determines everything. He won't declare the bull market over until the S&P breaks below 6,200. That's his line in the sand. Above that level, the market can still hold. Below it, and he's calling the correction. The technical indicators have to roll over first. The slopes have to flatten. Until those conditions change, fighting the market is dangerous. But once they flip, the downside will be lethal.
- Why Fastenal's earnings miss is the beginning of hundreds more. Jeff's been warning Genesis Cog members for weeks that Fastenal was ridiculously overpriced. The company missed earnings by a penny today. Trading at a 41 multiple while earnings are declining. The stock got destroyed. Jeff explains why this is the cockroach theory in action. You see one company miss, there are a hundred more coming. The debt problems, the liquidity issues, the overvaluations. They're all going to unravel one by one.
- The funicular railway that explains this entire market structure. Jeff showed an image of a cable car system. Two cars attached to opposite ends of a cable. As one goes up, the other comes down. That's this market right now. Algorithms are slowly walking up the hill. Steady. Relentless. Every dip gets bought. But when it finally turns around and starts heading down the hill, you're never getting out. The ride up is slow. The ride down is really fast.
Jeff's not predicting the exact day this turns. He can't. Nobody can.
But he can show you the pattern. The over-leverage. The one-sided positioning. The refusal to acknowledge reality. The algo-driven momentum with zero human judgment.
He lived through 2000 and 2008. He recognizes what's building.
The Fed is worried about tariffs while cutting rates. They're worried about an AI bubble while everyone piles in. They're worried about soaring debt while companies like Jefferies get burned on bad loans.
Friday was the first disturbance. The first crack in the force.
Jeff closed another short position this morning for 100% profit. His portfolio showed gains on Friday when the market was down 227 points. That's being positioned correctly.
Not lucky. Prepared.
This week Jeff's walking through his complete risk measurement framework. Multiple tools for calculating how far markets can fall. Peak to trough analysis. Recovery time projections. Historical patterns that repeat over and over.
Most people focus on returns. Jeff focuses on risk. Because if you don't measure the risk first, the drawdown destroys you.
The statistics he showed today are brutal. Drawdowns of 30-50% happen. Recovery times of 400 to 1,000+ days happen. Markets don't just bounce back in weeks.
And when you account for inflation and the time value of money, the real recovery takes even longer.
Jeff's message is simple. Stop lying to yourself. A correction is coming. It's going to be fierce, brutal, and protracted. Friday was day one.
The question isn't if. The question is whether you're prepared for it.
→ Watch Jeff's complete session to understand the warning signs, historical patterns, and risk measurement framework that separates survivors from casualties
To your success,
Don Kaufman
Chief Market Strategist, TheoTRADE
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