Hey trader,
Let me take you back to a movie I love. It came out before I was born. It stars James Cagney, one of the greatest villain actors of all time.
The film is called “White Heat.”
In the final scene Cagney climbs on top of a giant gas turbine. The police surround him with rifles. He dares them to shoot.
He screams it out. “Top of the world, Ma. Top of the world.”
Then the bullets fly. The whole tank goes up in white heat.
I opened my session on Wednesday with that scene for a reason. This market reminds me of Cagney on top of that tank.
We are at an all-time high. This is the most overvalued tape I have ever seen on three different metrics. The Case Shiller P/E is at 42x. Tobin’s Q sits at 2.52. Both are the highest on record.
I call this feeling white heat.
The market glows like metal so hot it throws off its own light. One word out of Warsh could light the match.
I want to show you how I read this danger without guessing at the top.
Because there is ONE signal that tells me a top has actually started.
A Top Is A Process
Corey says a top is not an event. It is a process. I live by that.
You have to work all the way through the process before a market tops out. That changes everything about how I handle timing.
I cannot pick the top. I will not even try.
I put a heavy premium on the weekly chart over the daily. The daily will whipsaw you with false signals. The weekly tells me the slower truth.
Right now the weekly MACD on the e-mini still climbs. It has not turned down. For that reason I give the benefit of the doubt to the bulls.
What Zoom Taught Me
I have been reading these charts my whole life. Let me show you Zoom, because I want you to remember this one.
I bought Zoom at 71 right on the breakout. I sold in the mid-90s before earnings. It was a layup for me because the weekly MACD went parabolic.
Then look at the other side of that trade. The MACD broke and curled over at the highs. It curls like a giant wave breaking in Hawaii.
That curl is the whole lesson. That is where crashes get called. That is where companies get destroyed.
I see that curl in Zoom. I do not see it anywhere in the S&P 500. The slope still points up. So I stay patient.
What The Slope Tells Me Now
People look at a flat MACD and call it bearish. They do not understand the formula.
I trust the math over the mood. Two simple reads keep me bullish for now:
- The line sits above the zero line. That keeps the trend pointed up.
- The line sits above the signal line. That confirms the strength.
A flat reading by itself does not flip me bearish.
Fight that read and it will cost you. Warsh could say one dovish thing. You could get a 100-point gamma squeeze before you blink.
So I wait for real proof. The match could come from Warsh. It could come from Trump. It could come from Elon. The white heat is real. The curl has not shown up.
Wait For The Curl
I am a survivor first. I refuse to be the last guy out of the pool. I think this market is overdue for a 35% to 40% correction.
That kind of patience needs a trigger you can actually see. The curl in the weekly slope is my trigger.
You trade the process instead of guessing at the event.
Professor Jeffrey Bierman
Creator of the Genesis COG System
