There’s a price on your chart where the machines wake up.
It’s not marked on a chart or anything drawn up.
But when we cross it, volume detonates and the whole thing gets faster than it was a second ago.
I’ll tell you what it is in a minute, but first understand why I’m bothering.
Hands and feet inside the vehicle, because I have no feel for this market. And if you think you’ve got one, I promise you don’t either, because nobody’s had a feel for months.
Which is exactly why the one thing I do know is worth your time.
It’s the overnight low.
Now I know what some might be thinking, because overnight trade is garbage. Where the futures sat at 3am tells you nothing about where we close and I’ll keep saying that until I’m six feet under.
That’s about direction, but this is something else.
What’s sitting down there
Somewhere below this market is a price where the professionals quit hedging.
They put protection on down to a level and then they stopped, because you hedge to where you think it can reasonably go and past that you’re buying insurance on a fire you don’t expect. Reasonable enough.
So the second we cross that line, every one of those desks is naked underneath at the exact same moment.
And nobody sits there thinking it over, because it’s machines.
They kick in, buy protection or dump futures or both, and every one of them does it inside the same two minutes because one condition tripped one rule in three hundred different places at once.
Turn those machines back on, as I like to say.
Now what do you do with it
Mark the overnight low, and you’re done. That’s your entire preparation.
If we’re grinding toward it during the session and it looks like we take it out, you know two things nobody around you knows.
Volume is coming, and price is going to extend further than it should, because that selling is mechanical and mechanical doesn’t stop to think about what anything is worth.
Three or four points in the S&Ps.
I know it doesn’t sound like much. Trade two contracts on three points, you’re up a couple hundred bucks, go have lunch.
Some traders only need five ticks and they’re out, which is fine by me. Trade them if you got them.
All I’m ever trying to do here is hand you the slightest edge.
Not a system and not a strategy, just one thing about this market that most people staring at the same screen have never bothered to notice.
And on a day where nobody has a feel, including me, knowing that three hundred desks are all about to do the identical thing at the identical price is worth having.
The name of the game is putting yourself in a postion where the odds are in your favor. That doesn’t mean it works everytime because nothing does.
Anyways, I put something together that talks about it an eBook.
→ Grab it here
To your success,
Don Kaufman
