|
Wall Street's volatility isn't stopping. Don Kaufman just turned it into a 4,900% VIX winner. |
Most traders freeze when markets whip. Don sees setups most will never catch. He recently banked $1,970 per contract using a high-volatility structure built for chaos. |
On November 25th at 2pm EST, he's hosting a Black Friday Volatility Summit to show you exactly how he structures trades that ride wild swings without excessive risk. This is not theory. This is the playbook he's using right now. |
Seats are capped. Once they're gone, the replay won't be public. |
π REGISTER FOR THE BLACK FRIDAY VOLATILITY SUMMIT NOW |
|
What's Happens When the Ice Breaks |
By Prof. Jeffrey Bierman, CMT
The cold hit Chicago hard this week. |
Thirty-five degrees Monday morning…Twenty-nine Wednesday night. |
I walked out the door Monday in a turtleneck because I had to lecture downtown at Loyola. |
The wind chill made it feel like thirty. |
No snow yet, but the kind of cold that reminds you winter is coming whether you're ready or not. |
The buses got rerouted. Construction closing bridges into the loop. |
So I walked. Two and a half miles through that cold. Gave me time to think about what I've been watching unfold this week. |
The market's doing something I've never seen in 38 years. It's ignoring every warning signal. Every technical indicator. Every piece of economic data that says this can't sustain. |
Parabolic MACD signals pointing down. They're not working. |
Support levels breaking that should trigger selling. Nothing happens. The machines just keep buying every dip with programmed precision. |
I kept thinking about that walk in the cold. About how things hold together until they don't. How structures can take pressure for a long time. Until one day they can't anymore. |
That's what I want to talk about this weekend. |
Not the technical patterns or the trade setups. But what happens when the thing holding this market up finally gives way. |
What People Tell You When They Stop Pretending |
Every day this week, the same conversations. Different people. Same message. |
At the gym Tuesday morning. Guy I've known for years. Successful business owner. Not struggling. Not panicking. |
He's just tired. Tired of prices never coming down. Tired of every expense creeping higher. Tired of the mental gymnastics required to justify what things cost now versus what they used to cost. |
Wednesday after class at Loyola. Student hangs back to ask about portfolio theory. We start talking about the markets. She mentions her parents are worried about their retirement accounts. |
Not because the market's down. Because they don't trust that these gains are real. They feel like they're watching a magic trick they don't understand. And they're scared about what happens when the trick ends. |
Thursday at the grocery store. Woman in line ahead of me puts back three items before checking out. Not because her card declined. Because she's doing the math in her head about what she actually needs versus what she can afford this week. |
These aren't panic signals. These are adjustment signals. People aren't collapsing. They're recalibrating. Making trade-offs. Deciding what's essential and what's not. |
That's how breaking points actually work. Not with dramatic crashes. With quiet erosions that compound over time until the foundation gives way. |
The Levy That's Been Holding |
Friday morning I walked into my Genesis COG call and said "When the levee breaks" was the theme for the day. |
The market's been held up artificially for months now. Every dip gets bought. Every breakdown gets defended. Algorithms programmed to maintain the slope no matter what the underlying data shows. |
That's the levee. Algorithmic support. Institutional window dressing. Fed policy that refuses to acknowledge what's happening in the real economy. |
And it's working. Sort of. The S&P grinds sideways instead of breaking down. Nvidia crushes earnings and saves everything for another day. The advance-decline ratio hits 21 to 4 and suddenly everyone forgets we've been selling off for three weeks. |
But levees don't fail because they're weak. They fail because the pressure behind them becomes too great. |
I've been watching that pressure build all week. Not in the charts. In the conversations. In the adjustments people are making. In the disconnect between what Wall Street celebrates and what everyone else experiences. |
Consumer sentiment just hit decade lows if you exclude COVID. Not because people are pessimistic. Because they're realistic about what things cost and what they can afford. |
Home Depot missed earnings. Not because construction is slowing. Because people can't afford the projects anymore. |
Travelers and Progressive are getting destroyed. Not because of catastrophic claims. Because people are dropping insurance coverage they can't afford to maintain. |
Ross Stores is breaking out to new highs. That's not a bullish signal. That's a stress signal. Discount retailers thrive when regular consumers hurt. When people trade down from Target to Ross, that tells you exactly where the economy really is. |
What My Students Don't Understand Yet |
Friday mornings I teach corporate finance at Loyola. This semester they gave me 49 students. Normally I get ten. |
Ten is perfect. I know everyone's name. I challenge them individually. We dig deep into applied portfolio management. Real work. Not textbook theory. |
Forty-nine is chaos. I'm trying to scare ten of them out because the workload is brutal. |
But that's not what bothers me about teaching right now. |
What bothers me is these kids have never seen a real correction. They don't know what 2008 looked like. They weren't trading in 2000. They thought Friday's drop was significant. |
It wasn't. It was day one. |
I show them the data. Average annual drawdown hits 16.3%. Not the median. The average. Which means we're mathematically owed at least 15% more pain from current levels just to hit normal. |
And we're not in normal territory. We're in historic overvaluation territory with artificial algorithmic support. |
They stare at me like I'm speaking another language. |
That's the conditioning problem. Everyone's been trained to buy every dip. Anchor to recent highs. Think 6,500 is a bargain because we were at 6,700 last week. |
The algorithms don't anchor. They calculate probability every millisecond. While you're married to your cost basis, the machines are preparing for mean reversion. |
I look at these students and think about what they're walking into. A market held up entirely by programmed buying. Consumer spending concentrated among the wealthy. Discretionary sectors already bleeding. And nobody preparing them for what happens when the levee breaks. |
They're learning capital budgeting in a market where capital doesn't follow normal rules anymore. They're studying breakeven analysis while millions of Americans are breaking even every single month. They're memorizing formulas for evaluating investment decisions in an economy where the biggest investment decision is whether you can afford next month's rent. |
That's not hyperbole. That's what's showing up in the data this week. |
The Data Nobody Wants to Acknowledge |
401k hardship withdrawals hit record levels last week. People are raiding retirement savings not to retire. To pay for groceries. To cover insurance premiums. To keep the lights on. |
Think about what that means. You save for decades. Build up a retirement account. And then you're forced to withdraw early, pay penalties, just to cover monthly expenses. |
That's not a soft patch in consumer spending. That's structural damage at the household level. |
Nearly 900,000 new homeowners are already underwater on mortgages they closed less than a year ago. First-time buyers who survived the approval process and made it through closing are already asking for payment suspensions. |
Car loan delinquencies hit record highs this week for subprime borrowers. They're not paying for the cars. They're not paying for insurance. They're just defaulting and walking away. |
This is the exact pattern that preceded 2008. Consumer stress showing up in hard goods and housing before it cascades into everything else. |
And Wall Street's response? Raymond James put out a note saying they see no problems with the economy. The market rallied 80 points Thursday like none of this matters. |
The Fed Governor Who Sees What's Coming |
Lael Brainerd pushed hard this week for immediate Fed rate cuts. |
Not because inflation is contained. Car insurance premiums are rising. Health insurance premiums are rising. Inflation is nowhere near under control. |
Not because the economy needs stimulus. Corporate profits keep hitting records. |
She's pushing for cuts because she sees structural problems in the financial system. Something in the mechanics of how money flows isn't right. |
Blake Young and Garrett Baldwin have been saying this for weeks. Something's breaking under the surface. Nobody can identify exactly what. But it's there. |
The VIX is walking higher. Financials are walking lower. The pieces don't fit together. |
And a Fed governor is essentially confirming it. There's risk that needs immediate intervention. That should make you pause. |
Because when Fed members start pushing for emergency cuts while Wall Street celebrates, they're seeing something you're not. Something that doesn't show up in the market indexes yet. |
When Propping Becomes the Only Reality |
Here's what's keeping me up at night. |
The market isn't trading on fundamentals anymore. It's trading on faith in the machinery. Faith that algorithms will keep buying. Faith that the Fed will keep supporting. Faith that something, somewhere will save this before it breaks. |
That's not investment. That's religion. |
I spent Monday morning grading corporate finance exams. Forty-nine students. Questions about capital budgeting. Breakeven analysis. Degree of operating leverage. |
Most of them got the math right. The formulas. The technical mechanics. |
But sitting at my desk before sunrise, I kept thinking about what they don't understand yet. What nobody can teach from a textbook. |
They're learning capital budgeting in a market where the biggest capital decision is whether algorithms decide to keep supporting elevated valuations. They're studying breakeven in an economy where millions of people break even every month while the market pretends everything's fine. |
The disconnect isn't sustainable. One of these forces has to win. |
Either consumers are wrong and the economy really is fine. Or Wall Street is papering over structural damage that's about to cascade. |
I'm betting on the consumer. Because the consumer is telling me the truth in every conversation I have. At the gym. At the grocery store. After class. In passing. |
Wall Street is painting over the cracks. Making it look presentable for another quarter. Maintaining the illusion that elevated valuations are justified when the people buying products can barely afford them. |
My Dad's Advice About Building Things |
My dad used to help me hang pictures when I was younger. God rest his soul. |
He'd always say the same thing: Measure twice. Cut once. |
It means if you get it right the first time, you never have to fix it later. You don't waste time. You don't waste materials. You just do it correctly from the start. |
That principle applies to everything. Teaching. Trading. Preparing for what's coming. |
The Fed didn't measure twice. They cut once based on optimism instead of reality. They stimulated into a bubble instead of responding to actual economic weakness. |
Now we're watching what happens when the structure wasn't built correctly from the start. When the foundation is artificial support instead of organic demand. When the levee is algorithms instead of fundamentals. |
It holds. Until it doesn't. |
What I'm Watching This Weekend |
I'm not predicting the exact day this breaks. I can't tell you the hour. |
But I know what happens when 900,000 homeowners default within a year of buying. When 401k hardship withdrawals hit records. When consumers at every income level simultaneously cut discretionary spending. |
The slope is breaking. The integrity is failing. And once that happens, the algorithms flip from defending every dip to attacking every bounce. |
The Genesis COG System tracks these structural breakdowns before they cascade. It monitors the exact levels where algorithmic support weakens. When consumer debt metrics cross thresholds that historically preceded corrections. |
The machines detect this weeks before it shows up in market indexes. They calculate debt sustainability ratios in real time. They measure when the pressure behind the levee exceeds the strength of the structure holding it back. |
Most traders won't see this until systematic selling has already begun. Until their accounts drop 10% in three days and they're wondering what happened. |
The machines saw it weeks earlier. They repositioned before the crowd knew there was a problem. |
I'm 60% cash right now. Holding selective shorts in expensive names. Building defensive positions. Not because I'm predicting a crash. Because I'm responding to the same calculations the algorithms are processing. |
The cold that hit Chicago this week reminded me something important. Structures hold until they don't. Pressure builds until it breaks through. And the signs of breaking are always visible before the break confirms. |
Take your daughter to martial arts. Watch the Bears try not to blow another lead. Have the conversations people are trying to have with you about what they're really experiencing. |
Because when the levee breaks, you want to be positioned ahead of the flood. Not caught in it wondering why nobody warned you. |
The warnings are everywhere. The question is whether you're listening. |
Professor Jeffrey Bierman
Creator of the Genesis COG System |
0 Response to "What’s Happens When the Ice Breaks"
Post a Comment