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The Rip Curl Wave |
By Prof. Jeffrey Bierman, CMT
I grew up on the beaches of Los Angeles. |
Friends would drive us to the shore. We'd hit the water at 6 AM for the morning glass. Boogie boards. Surfboards. Wetsuits. I lived in Hawaii and surfed there too. |
I'm not a great surfer. But I was a damn good boogie boarder. |
Now I live in Chicago. Gray hair. Old. My wife married me anyway knowing there was still some surfer in me. |
But I remember the water. I remember the waves. And I remember the ones that would kill you if you didn't respect them. |
This week I kept thinking about one wave in particular. |
The rip curl. |
What the Rip Curl Wave Does |
A rip curl builds from behind. It gathers inertia as it moves toward shore. |
You can see it coming. It looks manageable. The shore break seems fine. You paddle out thinking you've got this handled. |
Then the wave catches you. |
It doesn't ask permission. It doesn't give warnings. It just grabs you and takes you under. Holds you down for what feels like minutes. You can't breathe. You can't surface. You just tumble in the darkness hoping you don't drown. |
I've surfed Huntington Beach where the shore break runs five to six feet. Manageable. Fun even. I've been to Rincon in San Diego where it hits seven to ten feet. That's where things get real. |
But then there's Mavericks. |
Northern California. Cold water. Bad breaks. They drop you off on a helicopter because it's half a mile from shore. Waves hit 50 to 60 feet. Pro surfers drown there. Hawaiians. Australians. The best in the world. |
Laird Hamilton holds the world record. 72 feet. That's a 12 to 14 story building. If you go down in that, you're not coming back up. You better have strong lungs and know how to dog paddle your way out of that mess. |
That wave will rip you in half. |
This market is the same wave. And most traders are about to drown. |
The Wave Is Building Right Now |
Look at the four-hour chart on the S&P. |
The MACD is flat. Curled right at the top. Still green. The algorithms are defending the slope. Everything looks fine above the waterline. |
But underneath? The wave is gathering. |
I call it a creeper. Slow undulation of momentum that comes upon you. Then over the falls you go. It takes you with it and you can't fight your way out. |
The rip curl happens when the wave rips higher, then curls underneath and down it goes. Once that MACD rolls over and pulls beneath the 50 on the RSI, the correction begins. That's where the shore break hits. |
And when it does, you're not getting out for three to four months minimum. |
People think they understand this market because they've been buying dips for six months straight. Every dip got bought. Every single one. Tech or financials or commodities doing their thing. Same video game every morning. |
They don't understand what happens when the curl takes hold. |
The algorithms operate in waves of selling once the rip curl grabs. They defend slopes on the way up. That's the safe bet. But taking the wave on the way down is what drowns you. |
If you're in that tube when the wave speed catches up, it grabs you and takes you under. You can't paddle out. You can't surface. You just sink. |
Look at the weekly indicator. That's what determines your fate. |
It's not saying we can't go higher. It's saying if we dip below that signal line and get more bearish divergence, it will be the Titanic going through. You will sink and drown. The air underneath is unbelievable. |
You're right on the fringe. Above the waterline. But get below it and it becomes real to everyone. |
Why Experienced Surfers Survive |
I surfed under the Golden Gate Bridge. Freezing water. Never made it out to Mavericks because that's only for people on helicopter drops who are insane and want to die. |
But I learned something from watching pros work big waves. |
They position themselves carefully. They don't fight the ocean. They read the water and respect what it can do. |
When a big curl is forming, they don't paddle harder into it hoping to break through. They move. They reposition. They protect themselves before the wave hits. |
Amateur surfers? They see the wave coming and think they can power through it. They paddle harder. They fight the water. They convince themselves it won't be that bad. |
That's when they drown. |
Right now the market is full of amateur surfers who think they can fight this wave when it comes. They'll buy the dip when we're down 200 points. Then we'll drop 300 more and they'll panic. Then 400 more and they'll be destroyed. |
That compression in the channel has to explode like a bomb. And when it does, the selling will be so fast that buying any dip will be suicide. |
My Position Right Now |
I loaded the boat on oil last week. Energy's coming to life while everyone ignored it. I'm long General Mills when everybody hated it. These stocks are dirt cheap. |
When this market corrects, these rotation vehicles go vertical. Not because they're amazing companies. Because they're the only things algorithms can buy when everything else is drowning. |
I'm making money on the short side. I'm making money on the long side. I position myself carefully not to get drowned when the wave hits. |
That's portfolio management. That's trade management. That's knowing when risk is elevated and you need to dial it back. |
I have more cash now than I've had all year. Not because I'm bearish. Because I'm not stupid. When the Bollinger Bands are this compressed and the market sits in this tight box, the expansion will be violent. |
The Genesis Cog Scanner tracks these exact pressure points in real time. The system watches for the algorithmic signatures that appear before the rip curl takes hold. Standard deviation channels. Linear regression. MACD momentum shifts across multiple time frames. |
These patterns don't lie. The machines leave footprints. And right now those footprints are showing compression that has to release. |
This Weekend, Make a Decision |
Turn off the screens for two days. Step back from the water. |
Ask yourself one question: When the rip curl hits, where will you be positioned? |
Will you be the amateur surfer paddling into the wave thinking you can fight through it? Or will you be the pro who repositioned before it breaks? |
The wave doesn't care about your confidence. It doesn't care about your winning streak. It doesn't care if you're right 80% of the time. |
When it grabs you, it takes you under. And the only thing that matters is whether you prepared for it or not. |
Monday the market opens again. The video game continues. Tech or financials or energy. One of those three. |
But underneath the surface, the wave is building. The MACD is curling. The compression is tightening. And when it releases, most traders won't be prepared. |
I spent decades building algorithmic systems at ThinkorSwim. I taught these machines how to think. And I'm telling you right now they're positioning for what comes next while retail traders are still celebrating new highs. |
If you want to see how Genesis COG positions ahead of these market breaks instead of getting caught in them, take a look at what we're tracking. The system shows you the pressure building beneath the surface. The exact signals that appear before the curl takes hold. The levels where algorithmic defense breaks down and systematic selling begins. |
You don't need to predict the exact day. You need to be positioned correctly when it happens. |
Have a good weekend. We'll see what Monday brings. |
Professor Jeffrey Bierman
Creator of the Genesis COG System |
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