Hey trader,
Tuesday morning, I fired off a burn signal position.
Friday, I blew out for the quickest 10%-12% I ever made with very little risk (over 250% if you played the options).
Then I nailed another burn signal at 186 on the same broadcast. The stock was already trading at 183 by the time I walked members through the setup.
The burn signal is on fire right now. But the bigger lesson landed somewhere else entirely.
I sold some of my Etsy yesterday. They report next week and I refuse to care what the numbers say.
This weekend, I want to show you why the whole point of this business is selling.
Buying is the easy part that every retail trader already figured out.
The Burn Signal identifies the precise moment when institutions stop accumulating and retail starts chasing. That is when smart money exits and the signal fires.
See how the Burn Signal caught this week’s 12% move in three days →
If you understand this one concept, everything else about trading gets easier.
The Purpose of the Business
Most traders spend their lives hunting for entries. They build elaborate watchlists and wait endlessly for setups.
They have it backwards. My actual goal is to sell, lock in the gain, wait for the next crash, and buy the same name again.
The Burn Signal automates that exit discipline for you. The trade ran Tuesday through Friday and produced a clean 10%-12% gain.
I had 14 longs heading into Friday and I liquidated two of them during the broadcast. Their RSIs had climbed to 100 and the risk-reward flipped against me.
Why I Sold Etsy Yesterday
The stock sits at an 80 RSI and earnings drop next week. The math on this exact setup is simple and brutal.
When a stock runs parabolic into earnings, every possible outcome turns into a loser:
- A beat gets absorbed instantly because the good news already priced in.
- A meet reveals weakness and the stock gives back most of the run.
- A miss gaps the stock down 20 points overnight and destroys accounts.
It is a lose, lose, lose situation. Every one of those scenarios ends with the holder getting clocked by Monday morning.
Netflix ran from 75 to 110 on the same type of setup. The stock was up 30 percent heading into earnings and traders were trying to squeeze blood from a turnip.
Alcoa Proves the Rule
Alcoa reported Friday morning and missed by a country mile. The stock got clocked into the close.
Anyone holding into the number lost significant money overnight. The opportunity to sell was right there Thursday with a parabolic chart and an overbought RSI.
The short trade is not even finished yet. Twelve dollars of downside still sits between Friday’s close and the neckline at 54 dollars.
State Street Shows the Bubble
State Street Boston missed estimates Friday morning and the stock went up five dollars anyway. The contradiction between a miss and a rally is the tell.
In a melt-up, fundamentals stop mattering because algos and retail panic-chase financials and tech. When companies can miss estimates and still rally 24 percent in a quarter, you are standing inside a bubble.
The move is to sell into the strength and raise cash. I liquidated three of my 20 positions Friday and booked the profits.
The market will not get materially better from here. My weekend is peaceful because my risk is off the table.
The Discipline That Pays You
The purpose of the market is to sell, and the Burn Signal makes that discipline automatic. It fires when the exit window opens instead of when you hope the top is in.
This week it booked 10 to 12 percent in three days with very little risk. Then it fired again Friday morning and was already working within minutes.
Etsy will print earnings this week and somebody will hold it into the number. The rest of you still have the weekend to decide.
See how the Burn Signal pulls quick gains while everyone else holds and hopes →
Have a good weekend. Monday comes fast. Be ready.
Professor Jeffrey Bierman
Creator of the Genesis COG System
