Technical Analysis & Fundamental Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

Share

Subscribe now

Most people look at index levels, some look at earnings, but almost nobody looks at what I’d argue is one of the most revealing pictures in global markets right now.

Equity market capitalization divided by the domestic money supply. That’s exactly what the chart below shows.

More money than fools or more fools than money?

On the y-axis the ratio of MSCI equity index market cap to each country’s M2 money supply, and on the x-axis is time, dating from 1990 through 2025. The lines track the United States, United Kingdom, France, Japan, and China.

There’s a dashed line at 1.0, which is the point where the total equity market is roughly equal to the domestic M2 money supply.

For most of the past three decades, the U.S. line (blue) has wandered above and below that 1.0 line, spiking into the Dot-Com era, collapsing during the global financial crisis, then grinding higher through QE and ZIRP. The recent segment, highlighted by the red box, is different.

• The U.S. ratio blows out toward 2.7 to 2.8,which is far above prior peaks.

• The U.K., France, Japan, and China all sit clustered below 1.0, mostly between 0.3 and 0.8.

In other words, the U.S. equity market has never been this expensive relative to its own M2 money supply, while other major markets still trade at valuations that look tame using the same metric.

From my seat as a quantitatively-minded libertarian, that picture is not a doomsday signal. It’s a structural regime warning.

Let’s be precise about the mechanics.

For the U.S., the numerator is the total market capitalization of the MSCI USA Index, which is a broad, float adjusted benchmark of large and mid cap U.S. equities. The denominator is the M2 money supply, or the currency in circulation, plus checking deposits, savings deposits, and certain money market balances by construction.

• The ratio rises when U.S. equity market cap grows faster than M2.

• The ratio also rises when M2 is flat or contracting while stocks rally.

• The ratio falls when money growth outpaces equity gains, or when equities correct faster than the money stock.

Around the start of 2026, the MSCI USA Index reported market cap in the low $60 trillion range, while the U.S. M2 was roughly $22 trillion. That implies a market cap to M2 ratio close to 2.7 or about 270%.

The chart confirms that visually. The U.S. line is now visibly above prior spikes in 2000 and 2007. Meanwhile;

• The U.K. and France sit near or just below 1.0.

• Japan ranges lower, reflecting decades of balance sheet repair and slower nominal growth.

• China’s ratio remains a fraction of the U.S. level.

Is this a perfect definition of “liquidity”? No. Global capital flows, private credit creation, and central-bank balance sheets all matter and they are not all fully captured in M2 money supply figures.

If you care about how large the stack of equity claims has become relative to the domestic money supply that prices them. A U.S. reading near 270% while peers cluster below 100% is not a trivial curiosity. It is a sign that U.S. equities are unusually over extended, relative to this particular liquidity anchor.

Through an Austrian leaning, sound money lens, the chart raises a simple but uncomfortable question.

Are we pricing the value of productive enterprise, or are we pricing the long tail of a policy regime(F.I.A.T Currency) that has repeatedly suppressed interest rates, socialized downside risk, and incentivized leverage?

For more than a decade, U.S. monetary policy has leaned on very low policy rates, often below inflation. Large scale asset purchases and explicit and implicit backstops whenever volatility threatened to spill over into the real economy.

That did not create wealth ex nihilo, but rather it changed incentives. Corporations were rewarded for financial engineering and buybacks over careful capital allocation. Investors pushed out the risk curve in a forced “search for yield.” Asset prices learned that large drawdowns are politically destabilizing and therefore likely to be cushioned.

The USA has run that playbook long enough, that investors should not be surprised when the U.S. equity market cap grows much faster than the underlying money supply, or other developed markets, with different policy mixes and demographics, lag behind. A chart of market cap to M2 shows that the U.S. line is ripping away from the pack.

From a libertarian point of view, this is exactly what investors should expect when a central authority tries to manage outcomes rather than rules.

Investors can’t eliminate risk, they can only move it. Some risk shows up in stretched valuations, while some risk shows up in fragile politics. Right now we are seeing risk showing up in a generation of investors who have never seen what real price discovery looks like in the absence of a put. If investors were early to Bitcoin, they know what I am talking about. In the last cycle, Bitcoin barely made the gains it did in the previous cycles and that is directly due to derivatives markets using a single Bitcoin multiple times. The limited 21 million Bitcoin supply no longer matters when the Financial sector has built an entirely new layer on top of Bitcoin using derivatives.

As a portfolio manager, my job is not to scream “BUBBLE” at every new high. It’s to translate structural signals into risk and positioning decisions. Below is how this chart and the 270% reading feed into risk and positioning decisions.

• I treat broad U.S. equity exposure as expensive relative to domestic liquidity, rather than unownable. That means higher hurdles for adding passive beta.

• I lean toward exposures with real cash flows, real assets, and durable pricing power over long duration stories, that only work if rates stay artificially suppressed.

• I pay more attention to markets like the U.K., Japan, and parts of Europe where the equity to M2 ratio still lives below 1.0. Europe has their own problems, but the claims stack relative to money supply, is less extended.

• I separate short-term trading views from long-term regime risk. A market that is structurally stretched can still rally further, but the distribution of future returns is different.

In practice, this pushes me toward being more selective with stock picking and factoring in exposure in the U.S.A. I use hedges and optionality to manage tail risks. I also constantly audit how much of my P&L is implicitly a bet on the credibility of U.S. monetary and fiscal policy. The chart doesn’t tell me what the S&P 500 will do next month. It tells me what kind of world I’m compounding in over the next decade.

“More money than fools or more fools than money?” is tongue in cheek, but it hits a real question.

In a genuinely free market with hard constraints on money creation, investors would expect a tighter tether between the money supply, nominal growth, and equity valuations. Booms and busts would still happen, but there’d be less room for multi cycle financial inflation, to push claims structurally away from their base.

In a world where central banks and treasuries are willing to intervene aggressively, investors can push that tether much farther. Losses get socialized via inflation, repression, or through future taxes. Gains remain privatized for those who are levered into the trend. The political system becomes addicted to high asset prices as a proxy for “health.” The U.S. market cap to M2 ratio near 270% with peers below 100% reads, to me, like a scoreboard of how far we’ve run that game up.

As a libertarian quant, my response isn’t to cheer for a crash. It’s to build systems that assume, intervention can delay reality, sometimes for years however, it cannot repeal arithmetic. When risk finally reprices, nobody is obligated to make hedge funds whole.

So I manage risk as if nobody is coming to save me, and all retail investors should invest in this fashion. Retail investors can’t get a massive loans to cover their position, while they are waiting for their other positions to be closed out in order to not get margin called. Remember what part of the game investors are in, because the investing game becomes more like a game of chess at the

This article is for educational and informational purposes only. It does not constitute financial, investment, or trading advice, and it should not be relied on to make any specific decision. Trading or investing—including in equities, futures, or other leveraged instruments—involves significant risk, including the risk of total loss. Most short-term and intraday traders lose money over time. Always perform your own research, consider your personal financial situation and risk tolerance, and consult a qualified, licensed financial professional before making any investment decisions.

MSCI USA Index – A broad, float-adjusted equity benchmark covering large- and mid-cap U.S. stocks, often used as a proxy for the total U.S. equity market.

M2 money supply – A measure of the U.S. money stock that includes cash, checking deposits, savings deposits, and certain money-market balances, published by the Federal Reserve.

Market capitalization – The total value of a company’s or index’s outstanding shares, calculated as price times shares outstanding.

Liquidity in financial markets – The ease with which assets can be bought or sold in size without causing major price changes.

Dot-Com bubble – A late-1990s period marked by extreme valuations in technology and internet stocks, followed by a sharp collapse.

Austrian school of economics – A school of thought emphasizing individual choice, capital structure, time preference, and skepticism of discretionary central-bank policy.

Sound money – Money that is stable in value and resistant to political manipulation, often associated with commodity-backed or rule-based monetary systems.

Risk premium – The extra return investors demand for holding a risky asset relative to a risk-free benchmark.

Leverage – The use of borrowed capital or financial derivatives to increase the potential return, and risk, of an investment.

Risk management – The process of identifying, measuring, and managing financial risks through position sizing, diversification, hedging, and other tools.

Educational Disclaimer

This article is for educational and informational purposes only and does not constitute investment advice. Trading and investing—especially in futures and other leveraged instruments—entails substantial risk, including the risk of total loss. A standard futures risk disclosure, notes investors may sustain a total loss of funds deposited to establish or maintain a futures position, and investors may lose more than their initial deposit. (fiadocumentation.org) Most short term or intraday traders lose money over time, and day trading can involve severe financial losses. (SEC) Investors need to consider their own financial situation and risk tolerance. Investors should consult a qualified, licensed, financial professional before making any investment decisions.

Share

Subscribe now

Leave a comment

Technical Analysis & Financial Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

Subscribe now

The silver tape is no longer a single direction story of silver to $95. It’s now a high stakes game in a volatility regime.

Reuters reported future silver down 27.7% to $83.99/oz at 1:57 p.m. ET on January 30, 2026 (1857 GMT), after trading as low as $77.72/oz the same day; it also reported future silver hit a record high of $121.64/oz on Thursday, January 29, 2026. (Reuters)

In the prior silver upswing, Reuters also reported spot silver “briefly reaching $95.87/oz” on January 20, 2026, before easing. (Reuters)

If investors want the macro interpretation that survives a cross examination, start here. Silvers price chart looks consistent with a regime where long duration risk is repriced, policy credibility is fragile, and positioning with leverage turns every macro headline into a forced move.

Term premia and why the long end matter

The Federal Reserve Bank of New York published “Treasury term premia” estimates (ACM model) as a measure of compensation that investors demand for holding longer maturities rather than rolling over short term exposures according to the Federal Reserve Bank of New York.

When term premia rise, the price of duration falls. That puts pressure on anything financed by the low discounted rates. Volatility propagates across rates, FX, and commodities, because of hedging costs and collateral constraints all being repriced together at the same time.

Japan’s 40 year yield, the ‘Global Circuit Breaker’ People Ignore Until it’s already tripped

A January 2026 selloff pushed Japan’s super long yields sharply higher according to Reuters that described the 30 year and 40 year yields breaching 3.8% and 4% respectively in that article.

A Bloomberg market wrap up noted that the 40 year yield was pulling back from an all time high of 4.215%, which had been just touched over the prior week. That puts January 20th around the shock window for investors in the financial sector according to Bloomberg.

For decades, Japan has been a long duration funding hub for other nations. When Japan's long duration funding end gaps, it forces global investors to reassess what a risk free loan actually consists of in a world where the marginal buyer is now political, and not economic.

That repricing doesn’t stay local. It effects markets across the globe. This is also one of the reasons as to why commodities have been behaving more like meme coins recently. The past generation of investors have been conditioned by crypto. Massive sell offs and liquidations have become the new normal.

Right now the dollar is weak. The bigger point is the dollars anchor instability, not FX vibes.

Barchart technical data shows that the U.S. Dollar Index (cash, DXY00) is trading around 2.90% below its 200 day moving average at the time this article was written. the 200 day MA shown as 98.641 at the time according to Barchart.com.

On the same day, Reuters reported that the dollar index was up 0.7% on January 30, 2026. Which meant the dollar had rebounding from a four year low earlier in the week. This was also during the period where we saw a precious metals selloff according to Reuters

A soft dollar does have the ability to support commodities at margin prices. The anchors or the credible fiscal paths plus the credible monetary reaction functions are what is actually unstable. That is a large part as to what is causing the instability of the dollar.

If investors are staring down a world like that, they will get rallies that look like monetary debasement hedges, and drawdowns that look like liquidity events within a 24 hour period!

Why silver whipsaws harder than gold

CME Group lists COMEX silver futures as 5,000 troy ounces per contract, priced in dollars per troy ounce. CME Group

Silver is a two channel asset. It is stuck between the industrialists that need it for production and the central bankers who want it for their vaults. That’s why silver always overshoots it's target price. First Silver attracts the trend leverage investors and when the money is finally broken, the silver liquidation cycle begins once funding tightens enough.

If the January spike was leverage assisted by materials, then the January 30 air pocket is exactly what investors expect. Once the marginal buyer becomes a forced sell, regardless of longer run fundamentals, the top is very near. Silver has only the 5th and final Elliot wave left for an upward movement dead cat bounce.

The libertarian point that actually matters for investors

Discretionary regimes or fiscal promises without constraints, lead to the risk of a monetary regime change if volatility cannot be eliminated. Instead they make it worse by concentrating it, and then releasing the volatility in bursts.

Investors don’t get stable prices. Instead, investors get delayed price signals and violent catch up movements where they are forced to chase the market.

Reuters tied the January 30 metals selloff to profit taking, amid broader macro drivers. Reuters noted the Fed chair news catalyst was when President Trump named Kevin Warsh to succeed Jerome Powell as the Federal reserve chair when Powell’s term ends in May. Now it might actually get a federal reserve that is also on board with America First policies after removing the globalist at the helm of the institution according to Reuters.

The strongest counterpoints and why the thesis still holds

Counterpoint 1:

“This was just a speculative blow off top and crash. It had nothing to do with the macro.”

Response:

That may be partly true, and it strengthens the point. A leveraged sensitive market is precisely what you get when rates & FX anchors are unstable and all risk that a premia are repriced in jumps.

Counterpoint 2:

“Japan is idiosyncratic. Meaning it won’t transmit.”

Response:

Japan can be idiosyncratic and still be systemic because it affects cross border hedging, duration allocation, and funding assumptions. The transmission channel is positioning and funding. It doesn't make any headlines.

Counterpoint 3:

“The dollar rebounded; the story is over.”

Response:

One rebound does not restore credibility. It only changes which positions are forced to sell out first, starting the long squeeze.

What would invalidate this thesis that is observable?

1. Japan’s super-long yields stabilize without policy backpedaling AND without spillover into global hedging costs. Which will be observable via cross currency basis per volume.

2. Term premia compress meaningfully. This would be observable via the NY Fed term premia series. Meanwhile long duration assets regain orderly bid according to the Federal Reserve Bank of New York

3. Silver volatility falls structurally. It is observable via options, implied volatility and realized volatility rather than merely a bounce after liquidation.

The Bottom line

Silver did not just go to $95. It went from $95.87 on Jan 20th to a record $121.64 by Jan 29th and then back down to $83.99 on Jan 30, 1:57 p.m. ET according to Reuters.
That sequence is consistent with a world repricing risk premia in discontinuous steps. Leverage is making every step look like a fiscal cliff.

Verification notes

1. Spot silver down 27.7% to $83.99/oz at 1:57 p.m. ET on Jan 30, 2026 (1857 GMT); intraday low $77.72/oz. Instrument: spot silver. Source type: Reuters.

2. Spot silver hit a record high of $121.64/oz on Thu Jan 29, 2026. Instrument: spot silver. Source type: Reuters.

3. Spot silver “briefly” reached $95.87/oz on Jan 20, 2026. Instrument: spot silver. Source type: Reuters.

4. Reuters described Japan’s 30 year and 40 year yields breaching 3.8% and 4% respectively during the Jan 20 selloff window in an article dated Jan 21, 2026 12:45 AM UTC). Instrument: Japan government bonds, 30Y/40Y yields. Source type: Reuters

5. 40-year JGB yield “all-time high of 4.215%” pulled back by Jan 28 auction reporting. Instrument: Japan 40-year government bond yield. Source type: Bloomberg.
   I did not use “record since 2007 introduction” language unless supported; this item does support “all-time highs.”

6. DXY00 shown ~2.90% below its 200-day moving average (200-day MA shown as 98.641 at retrieval). Instrument: U.S. Dollar Index cash (DXY00). Timestamp: page retrieval time not displayed in the captured lines; treated as “current at retrieval.” Source type: Barchart.com

7. Dollar index up 0.7% on Jan 30, 2026 in Reuters metals report context. Instrument: DXY

   Source Type: Reuters.

8. Trump named Kevin Warsh to succeed Jerome Powell as Fed chair in May. Reuters reported context. Instrument: policy/personnel event. Source type: Reuters.

9. NY Fed publishes Treasury term premia estimates (ACM model). Instrument: term premium estimates, maturities 1–10 years. Source type: Federal Reserve Bank of New York

10. COMEX silver futures contract unit 5,000 troy ounces; dollars per troy ounce. Instrument: COMEX silver futures. Source type: primary/official CME Group.

11. “Rising term premia → duration repricing → cross-asset volatility.” This is a consistent model interpretation, not directly asserted by any single source.

12. The January spike was leverage assisted and forced selling drove the air pocket on the chart.

Educational Disclaimer

This article is for educational and informational purposes only and does not constitute investment advice. Trading and investing—especially in futures and other leveraged instruments—entails substantial risk, including the risk of total loss. A standard futures risk disclosure, notes investors may sustain a total loss of funds deposited to establish or maintain a futures position, and investors may lose more than their initial deposit. (fiadocumentation.org) Most short term or intraday traders lose money over time, and day trading can involve severe financial losses. (SEC) Investors need to consider their own financial situation and risk tolerance. Investors should consult a qualified, licensed, financial professional before making any investment decisions.

Share

Subscribe now

Leave a comment

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

WTI crude is in a trading range where physical fundamentals, macro credit conditions, and policy-driven distortions are temporarily canceling each other out.

When governments and central banks talk about “stabilizing” growth or “managing” inflation, they are implicitly claiming that they can manage the most important variable in any commodity, the price signal. However, energy is a scarcity market, and scarcity markets do not obey press conferences. If the price is being held in a tight trading range, the question for investors is not “Is oil stable?” but rather where is the risk being warehoused, and what will force that supply back onto the tape?

Smart investors start with what the charts are saying in plain English.

The One-Year Picture Is A Box With Sharp Edges

The range for crude oil practically jumps off the chart it is so obvious. Price has repeatedly failed near the mid $60s and price has repeatedly found buyers in the high $50s absorbing any sell offs. Crude oil is not in a bullish uptrend. Crude oil is in a market that is being rationed by the constraints in inventory capacity, marginal production economics, and a macro regime that is tightening the leash on the demand for oil.

On the daily chart above, the micro-structure is even cleaner. Price is making lower highs inside a downward channel. Repeated tests of the same demand shelf show that a lot of absorption is taking place around the $58–$60 area. This is classic market compression and market compression is tradeable information. Market compression tells investors that positioning and hedging flows have been organized around a narrow range of levels.

For investors who are trading this range, the practical takeaway is simple. Investors do not think of the $58 to $65 range as a forecast, but rather a defined battlefield between different institutions and different suppliers all fighting for control of the price of crude oil. The only part of a channel that matters are the edges because the edges are where risk managers are forced into making a decision.

The Yield Curve Grows Steeper, But Not For Good Reasons

Take a look at the credit signal in the chart above. The 10-year minus 2 year Treasury spread has once again turned positive. FRED shows that the 10 year Treasury yield at 4.19% on January 8th, 2026 and the 2 year at 3.49% the very same day. The math is straightforward.

4.19% − 3.49% = 0.70% = 70 basis point spread. (FRED)

FRED’s spread series prints 0.64% on January 9th, 2026. (FRED)

Austrian economists treat the yield curve as a “lie detector” for the credit cycle. Austrian economists aren’t mystical seers, they just treat yield curves as aggregates of millions of decentralized decisions about time preference, inflation risk, and future policy. The Cleveland Federal Reserve’s long running work on the yield curve emphasizes a blunt historical pattern. An inversion has preceded each of the last eight recessions(NBER-defined), and the yield curve’s slope contains forward looking information regarding growth. (Cleveland Federal Reserve)

What matters for oil is the mechanism. A curve that is steepening because markets expect short rates to fall is not the same thing as a curve steepening because growth is accelerating. Rate-cut expectations can coincide with deteriorating demand conditions. Charles Schwab’s 2026 fixed income outlook explicitly frames 2026 as a year where rate cuts are expected in response to a weakening labor market, while warning that longer term yields may not fall as far because inflation pressures combined with heavy bond supply are able to keep the long end elevated. (Schwab Brokerage)

That matters because oil is not just an inflation hedge. It is a growth input vehicle as well. If the bond market is pricing the federal reserves policy of quantitative easing due to slowing conditions. It is not the macro regime where demand driven crude oil rallies are able to sustain themselves.

Fundamentals: Official Forecasts Lean Oversupply, Not Scarcity

This is where the “range” starts to look less like equilibrium and more like a holding pen.

The EIA’s Short-Term Energy Outlook states plainly that global oil inventories are expected to continue rising through 2026, which would put downward pressure on prices. The EIA also forecasts Brent averaging about $55 per barrel in the first quarter of 2026 and remaining near that level for the rest of 2026. (U.S. Energy Information Administration)

If inventories are building, the market is telling investors that supply is outrunning consumption at the margin. In a free market, that would be enough. Price will continue to fall until marginal supply shuts in or marginal demand reappears.

But energy is not a free market. It is a heavily administered market with strategic stockpiles, sanctions regimes, regulatory constraints, OPEC+ signaling, and political narratives about “fair prices.” Those interventions don’t eliminate scarcity or surplus; they redistribute it across time and across jurisdictions. They can postpone clearing, but they cannot repeal it.

The World Bank’s October 2025 Commodity Markets Outlook press release projects broad commodity price declines and explicitly flags an expanding oil surplus, with Brent falling from an average around $68/bbl in 2025 to $60/bbl in 2026. (World Bank)

The IMF’s October 2025 World Economic Outlook projects global growth slowing from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, with risks tilted to the downside. (IMF)

Put those together and you get a coherent base case: modest growth, rising inventories, and a price band that persists until the physical market forces a decision.

So why hasn’t the floor broken?

Because floors in commodities are usually defended by real economics, not optimism.

At some point, a crude price becomes low enough that someone changes behavior: producers hedge less, capex gets cut, marginal wells get deferred, maintenance gets postponed, inventories get drawn down, or demand responds. That response does not need to be coordinated—decentralized adjustment is the whole point of price discovery. But intervention can delay the feedback loop, which is why crude can “cling” to a level for longer than it should, then move violently when the delay finally ends.

That is the Ron Paul critique in market terms: centralized attempts to smooth outcomes don’t remove volatility; they re-time it. The volatility comes back when the intervention runs out of balance sheet, runs out of political cover, or runs into physical constraints.

How Investors Should Map The Tradeable Risk From The Charts In This Article

Range regime is the base case, where $58–$65 holds. If price remains boxed, the market is effectively advertising a mean reversion trade. The risk in taking a trade is not about “missing the rally.” The risk is about getting chopped up by overconfidence in a single direction. Under that regime, discipline beats conviction. Trade a smaller size, define invalidation as it happens, and take profit at the edges of the box, rather than trying to piece together a narrative for a breakout that hasn’t happened.

A breakout regime is the tail risk. Meaning if the box fails,
A sustained breakdown through the high $50s would be the equivalent to the market admitting that the inventory build up is real and the bid was structural rather than enthusiastic. Conversely, a sustained reclaim of the mid $60s would imply either an unexpected demand impulse, a supply shock, or a material shift in policy expectations.

The chart above is essentially about tails. The chart is showing the possibility of an air pocket forming lower, before a much larger cycle can begin, is something investors should keep in the back of their minds. Investors should treat the air pocket possibility for what it is. It is not a prediction, but rather an admission that long duration energy markets move erratically when capital cycles and policy errors collide.

Austrian economics is not about whether “oil goes up” or “oil goes down.” It’s that the more distorted the trade signals become, the more discontinuous the clearing of the range will be. Meaning, The eventual adjustment still has to happen because physical constraints and balance sheets do not negotiate. The system has been prevented from adjusting smoothly & naturally. Due to the boxed behavior, commodities often clears the range in jumps. Whether it be a sudden breakout from the tight trading range, or a sharp repricing, an air-pocket move, or a gap driven by forced hedging or unwinding flows, margin constraints, or abrupt changes in inventories and policy expectations.

Smart Investors Trade Probabilities, Not Narratives

If investors trade crude oil directly, especially through NYMEX WTI crude oil futures (CL), they are trading a leveraged instrument that can & will punish investors who have sloppy sizing & sloppy stop loss placement. (CME Group)

If investors are tempted to treat a tight range as “easy money,” one should recall Al Brook’s stating to only take trades when the traders equation is in their favor. Tight trading ranges created by algorithmic trading, happen so fast that most humans cannot compete against algorithms analyzing the chart from a 1,000 different angles in 3seconds.

We must also remember that the empirical record on short-horizon investing or trading studies of day traders has repeatedly found that the majority of participants lose money after trading fees and taxes. The small minority of people who are consistently profitable, trade with a longer hold time than intraday. (Haas School of Business) The SEC’s own investor guidance on day trading also emphasizes severe losses and the fact that many who try, will never reach profitability.(SEC)

Trading is the only high end profession where someone will buy a book on a Friday, read it on the weekend and then honestly believe that they can trade successfully. Imagine how crazy it would sound to people if I told them I read a book over the weekend on how to perform brain surgery, and that I was operating on a patient with only the book under my belt for brain surgery knowledge! It is absolutely absurd, but for some reason it happens all the time in the financial industry.

I am not stating that most day traders fail because I want to demoralize those who are currently battling through the flames of intra-day hell. Think of it as a reminder that when a market environment is as heavily manipulated as Crude Oil, the best ethical approach for investors on their quest for profitability, is one where humility, clearly defined trading rules and risk management are the only armor that has the capacity to protect an investors capital long enough for them to reach profitability.

The Bottom Line

The highest probability path for crude oil is still sideways to down over the next 6–9 months. The combination of a macro regime that is consistent with slowing growth expectations and official forecasts pointing to rising crude oil inventories, is not a fertile ground for sustained demand led rallies. (U.S. Energy Information Administration)

The higher upside or longer term bullish case is not dead in the water. The bullish scenario requires the market must first clear the current surplus of crude oil and then a re-tightening of the capital cycle must take place. That process tends to be nonlinear. If crude oil policy attempts to “manage” the clearing of the range, the outcome is usually the same. The only difference is a change in the timeframe for when the breakout happens, and when the breakout finally arrives, it will be much more violent.

Educational Disclaimer

This article is for educational and informational purposes only and does not constitute investment advice. Trading and investing—especially in futures and other leveraged instruments—entails substantial risk, including the risk of total loss. A standard futures risk disclosure, notes investors may sustain a total loss of funds deposited to establish or maintain a futures position, and investors may lose more than their initial deposit. (fiadocumentation.org) Most short term or intraday traders lose money over time, and day trading can involve severe financial losses. (SEC) Investors need to consider their own financial situation and risk tolerance. Investors should consult a qualified, licensed, financial professional before making any investment decisions.

Glossary and Further Reading

WTI crude oil futures (CL) — CME contract specs
Brent crude — EIA crude oil benchmarks explainer
Short-Term Energy Outlook (STEO) — EIA STEO report
Yield curve (2s/10s) — Cleveland Fed yield curve and predicted GDP growth
10-year minus 2-year spread — FRED T10Y2Y series
10-year Treasury yield — FRED DGS10 series
2-year Treasury yield — FRED DGS2 series
Bull steepening — Schwab fixed income outlook
Oil inventories — EIA STEO oil section
Floating storage — EIA glossary: petroleum storage concepts
Contango — CME education: contango/backwardation
Backwardation — CME education: contango/backwardation
OPEC+ — EIA: OPEC background
Malinvestment — Econlib: Austrian business cycle theory
Time preference — Econlib: time preference
Commodity Markets Outlook — World Bank press release
World Economic Outlook (WEO) — IMF WEO Oct 2025

Share

Subscribe now

Leave a comment

Share Intellectual Dissatisfaction

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

A 150,000% increase in the Venezuelan stock market is a number so big, that it stops investors skepticism mid stride. It feels like Venezuela used a cheat code for their stock market.

However, any investor who’s worth his weight in gold, first verifies the math. Followed by interpreting what the math does and doesn’t mean. The reason for doing so in the macro sense, is it is the fastest way to get conned. We never want to start with the story, only to later find ourselves asking whether the numbers even existed.

Lets start with two published endpoints to gain a better understanding of the Venezuelan market

1. On Jan. 5, 2021, the Caracas Stock Exchange’s main index (IBC) closed at 1,381,986.75. (Datosmacro.com)

2. On Jan. 5, 2026, the Bolsa de Valores de Caracas reports the IBC closed at 2,597.68. (Bolsa de Valores de Caracas)

Those numbers look incompatible until investors remember a key mechanical detail, Venezuela redenominated its currency on Oct. 1, 2021 by cutting six zeros off of the Bolívar (a 1,000,000:1 conversion). Reuters described it as the country’s second monetary overhaul in three years. (Reuters)

A currency redenomination does not create wealth. In simple terms it is just an accounting operation that moves the decimal point. That way prices and ledgers stop looking like astrophysics calculations scrawled across Einstein's chalkboard.

It doesn't mean investors cannot compare “old-Bolívar” stock index points to “new-Bolívar” stock index points, without first finding out what the real value of the Bolívar is when compared against the US dollar or gold.

Investors can’t compute a return until both endpoints are expressed in the same ratio. The October 1, 2021 redenomination removed 6 zeros, so the January 2021 index level must be converted into post-redenominated Bolívar before investors can understand what the real value of Venezuelan assets are.

Quick Math Check on the numbers

The Venezuela stock market is up over 150,000% is not only plausible, it’s actually a conservative number depending on the exact start & end dates investors use for the calculations. The chart is telling the truth although in a narrow arithmetic sense.

Let's explore where financial “news” tries to mislead investors with a technically correct number by smuggling in a false intuition.

Venezuela’s inflation history has been full of news articles from around the globe supporting the “hyperinflation optics” framing of the Venezuelan economy.

If investors are staring at a near vertical stock index, located in a country that has experienced devastating currency destruction, the first hypothesis should be, that the Venezuelan Bolivar has melted down ever since the now ex President Maduro took power.

The Venezuelan central bank reported inflation numbers for 2021 were 686.4% (down from a massive 2,959.8%!!!! in 2020), per Reuters reporting. (Reuters)

Reuters also reported inflation of 234% in 2022. (Reuters)

For 2023, Reuters reported central bank data showing 189.8% inflation. (Reuters)

And for 2024, Reuters reported President Maduro telling lawmakers inflation was 48% year-on-year. (Reuters)

Those are still ugly numbers even after the deceleration. More crucially is the act of redenominating the Bolívar itself, is a giant red flashing neon sign that the currency has been abused so badly that daily life in Venezuela needs a reset button.

When a countries currency is comparable to a meme coin in cryptocurrency, the story is always one of central banks abusing the currency, rather than a story of prosperity for the Venezuelans.

When money fails, history has shown that it typically fails in three critical roles simultaneously.

First, money is supposed to be a medium of exchange, a store of value, and a unit that one can count on remaining stable. Under hyperinflation conditions the Bolívar function became especially cursed. Prices still move in the market, but the measuring stick investors are trying to use to analyze the market are shrinking as they use it.

When a stock index is quoted in the broken measuring stick, the market can still go vertical while the real economy is stagnant, or where the average household is getting poorer as
the underlying businesseses aren't innovating or expanding. The economy is propped up by government printing.

This is why investors keep two definitions on their desk for a return, nominal and real returns.

A “nominal” return is measured in Bolivars, before adjusting for inflation. (Investopedia has a clean explainer on the nominal rate of return.)

A “real” return adjusted for inflation to reflect purchasing power. (Investopedia’s definition of real rate of return.)

In a collapsing currency, nominal returns can become loud, theatrical, and emotionally persuasive… meanwhile the real returns are the quiet truth hiding out in the back of the report on a tiny little spreadsheet hiding a dirty secret.

From an Austrian economics angle, this isn’t a side note, it’s literally the point. When central planning & fiscal monetary abuse finally destroy the Bolivar, it will also destroy the price signals in the Venezuelan market. When price signals become corrupted, capital allocation becomes a game of “guess what the government will break next” instead of “ what will the government fund that consumers actually value.”

That’s why the market can look like it’s “booming” in charts while society looks like it’s grinding down in real time. The chart is reporting nominal repricing under monetary decay, not broad-based wealth creation.

The main take away is that stocks can still outperform cash during currency breakdown.

This should all sound quite familiar to the Americans who have been paying attention to politics and markets on the global stage, in conjunction with the monetary policy in the United States since the creation of the Federal Reserve.

Americans were moving towards Venezuela’s fate at a lightning speed with all the printing, fraud and abuse under the Biden Administration that has come to light. Factor in the globalist sympathizers in the Democrat and Republican parties who printed and then dumped 5x the number of dollars ever created into circulation in 4 short years than all the years going back to the creation of the federal reserve in 1913. I hope that gets investors attention and they start seeing the bigger picture. The USA is the last country standing in the way of an unelected, and unregulated, one world government.

The real battle of our generation isn't a Democrat or Republican fight, but rather a pro-Globalist and pro-Freedom of individual rights.

Once investors start looking at politicians in terms of those who push policies to bring about a one world global government or policies and politicians who support individualistic ideologues.

Investors can easily discern who the players are on each team by using those two simple rules.

Back to Venezuela. Hyperinflation means people didn't get rich, but it also does not imply that the stocks were useless.

In hyperinflationary conditions, holding local currency cash is often financial suicide. Scarce assets become “less bad” stores of value as more and more paper is printed. Venezuelan equities, especially companies tied to real assets with hard goods or the ability to export with dollar-linked revenue, act as partial shelters or stores of value compared to the Bolivar.

That’s not a bull case for the country. It’s an indictment of the Bolívar.

A viral chart is a single slice of a complicated reality.

Here’s what this chart doesn’t answer on its own.

1. What was the real (inflation-adjusted) return?
   To know that, investors need a consistent CPI series over the same dates and investors need to compute the real return explicitly.

2. What was the USD return? Investors need a reliable bolívar per USD exchange rate series that matches what investors could actually access. In countries with multiple exchange rates and restrictions, this gets messy fast. However, this is where many of the big investment firms really make their money exploiting these inefficiencies.

3. Could an investor actually realize the gains?
   Frontier markets can have thin liquidity, wide spreads, limited access, and meaningful institutional risk. Add in capital and exchange controls, government restrictions on moving money and converting currency, and the gap between “paper gains” and “realizable gains” can become near impossible. Investopedia’s primers on capital controls and exchange controls are useful for framing that risk.

None of this is Venezuela specific doom saying. It’s basic market structure hygiene. A nominal chart is the beginning of analysis, not the end.

Sound money is not a vibe, it’s infrastructure. Ron Paul made “sound money” feel like a political slogan. It isn’t. It’s the plumbing of successful civilizations.

When the state monopolizes money and then over issues it to fund deficit spending, while subsidizing allies, and postponing hard reforms, investors don’t just get higher prices. Investors get crushed when the economy loses its ability to be effectively measured with any kind reliability.

Free markets are decentralized discovery machines. Prices are how they talk. Break the currency and the language becomes jumbled and impossible to discern.

Once the language has been scrambled, people don’t just stop making decisions they're forced to make them in a fog of fear, and coercion. That’s how investors end up with charts that scream “record highs” while households barely have enough food to feed themselves nevermind the family pet.

The practical takeaway is to not get hypnotized by nominal fireworks. Here’s the discipline I use when looking at a chart from Venezuela or similar to a market.

Check for currency redenominations and index rebasing before I trust longterm percentage moves.(Reuters)

Re-measure performance in a stable currency or commodity such as USD or gold. If investors can’t do that, investors don’t know what they actually own.

Treat huge nominal returns as a signal to investigate monetary conditions first, not as an invitation to be a new poster boy for Wallstreet Bets over at Reddit.

In short, nominal returns are what the earlier chart shows investors. Real returns are what an investors life feels like.

Educational Disclaimer

This article is for educational and informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Investing and trading involve risk, including the possible loss of principal. Trading leveraged instruments (including futures and derivatives) can result in losses that exceed your initial investment. Many short-term and active traders lose money over time. Consider your financial situation, objectives, and risk tolerance, and consult a qualified, licensed financial professional before making investment decisions.

Glossary and Further Reading

Caracas Stock Exchange / Bolsa de Valores de Caracas (BVC) — BVC official site
IBC Index — BVC market update example
Hyperinflation — Investopedia: Hyperinflation
Nominal Return — Investopedia: Nominal Rate of Return
Real Rate of Return — Investopedia: Real Rate of Return
Capital Controls — Investopedia: Capital Controls
Exchange Controls — Investopedia: Exchange Controls
Crack-Up Boom — Investopedia: Crack-Up Boom

Share Intellectual Dissatisfaction

Leave a comment

Technical Analysis & Fundamental analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. Andrew’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

When Price Goes Vertical, Two Tribes Instantly Appear

The chart mystics who love drawing Fibonacci spirals to the heavens. As well as the supply nerds, who are asking what companies are short on physical silver, and what contracts are being written to secure the silver that those companies need for production.

Right now, both tribes are loud. The Fibonacci crowd is chanting price targets like $89 and $144. The supply crowd is pointing to something far more important than a spiral overlay. Industrial buyers who are willing to finance the restart of production to lock up the silver output that their business needs. The second signal is rarer and is a tangible and actionable signal in the market.

The Fibonacci Spiral: A Clean Story That Humans Love

The Fibonacci sequence (13, 21, 34, 55, 89, 144…) is real math, and traders do what traders do. Traders attempt to map human behavior using tools like Fibonacci retracement levels to estimate where crowds of investors/traders might hesitate, or take profits, or panic buy/sell. That’s not crazy. It’s just not the physics of trading.

Fibonacci tools can be useful as a crowd behavior ruler. Fibonacci tools are a way to define support/resistance zones and avoid trading purely off of vibes. The leap from crowds’ cluster around levels, to silver must go to $144 because the spiral says so is where stock analysis can transition into something more akin to astrology with a Bloomberg terminal. This is why I prefer using Volume Profiles to determine where the crowds cluster. The Value Area (VA) and the Point of Control (POC) which is the level in the VA where the most trades took place in the markets structure.

Traders who use a disciplined way to apply Fibonacci tools are more successful than those who treat them as gospel. Real traders treat Fibonacci tools as a risk management scaffold. Meaning traders use Fibonacci tools to define zones, invalidations, and stops. Traders don’t treat Fibonacci extension levels as destiny either, but rather as guidelines to plan out their trades based on structure.

The Real Tell is Samsungs’ C&T Prepaying for Mine Output

Now for the part that actually changes the texture of the market. Silver Storm Mining has announced it has entered into a $7 million prepaid offtake financing with subsidiaries of Samsung C&T to restart operations at the La Parrilla silver mine complex in Durango, Mexico. The deal includes an offtake for 100% of lead, silver, and zinc concentrates for two years! SilverStorm Mining

Let’s translate that into English. This isn’t a retail Reddit mob. This isn’t a “paper silver” hot take. This is Samsung tied to real world industrial supply chains deciding that securing future metal is worth wiring money for, for today’s prices. This is a huge tell that silver and silver mining companies are poised to explode to the upside even more so than they are right now.

The structure matters. In project finance, an offtake agreement is basically a buyer saying, “I will purchase output that hasn’t been produced yet,” which helps the producer finance the project. It’s one of the cleanest ways markets signal scarcities without a politician holding a press conference.

Even the terms scream adult supervision. The facility is secured, priced off SOFR. 1 month of SOFR + 4.75% per the company’s release and backed by collateral/security on assets. SilverStorm Mining

Is $7 million “big” in global commodity finance? No. But signals aren’t about size, they’re about direction. This is what it looks like when the marginal buyer stops being “investor demand” and starts being “Needing physical supply certainty.”

That’s how squeezes are born. They are not from one heroic whale, but rather a plethora of small to midsized contract buyers who have been quietly removing optionality from the system.

The Macro Backdrop: Deficits, Industrial Pull, and Policy Distortions

The Silver Institute reported industrial demand hit a record 680.5 million ounces of silver in 2024. The silver market ran a structural deficit of 148.9 million ounces in 2024 and a much larger cumulative deficit across 2021 to 2024. The Silver Institute

Meanwhile, Reuters reported silver was pushed above $65/oz and printed a record high of around $66.87/oz in early December 2025 and as of writing this article silver has pushed up to $69.464/oz and is poised to break $70 tomorrow with the bull flag that formed on the chart today.

Silver has a strong investment demand and a strong fundamental backdrop that includes supply deficits and industrial demand that is tied to AI data centers, solar cells, and EVs. This is paired with the typical silver warning label. Silver is volatile and it can correct viciously. Stop losses are always a must but traders/investors should be using them when volatility is. spiking. Reuters

Markets are information driven machines until policy makers jam a screwdriver into the gears.

Two policy choices are worth watching:

The first being that the U.S. added silver to its final 2025 List of Critical Minerals. That’s not a blog rumor it is a USGS and Federal Register level of officialness. USGS

Once something becomes critical, it gets dragged into the world of subsidies, stockpiles, and tariff chess. I.E. silver is at risk of intervention.

Intervention in silver doesn’t remove its scarcity. It only moves silvers scarcity around. Which actually only delays price signals and creates second order distortions or unintended consequences. Unfortunately, investors don’t get stability. Instead, investors get mispricing now and volatility later. Policy can compress the spring, but it doesn’t repeal gravity.

Why Silver Moves Like a Psycho Cousin of Gold

Silver’s personality is structural. It has a smaller market which is less liquid than gold. It has heavy industrial linkage (it’s not just a monetary metal cosplay). Silvers supply is often constrained because much of silver production is a byproduct of other metals, meaning price doesn’t instantly summon new supply from mining. Reuters

That combination creates a regime where, once price clears a long range, it tends to overshoot. The same reflexivity that makes Fibonacci targets look “accurate” is usually just volatility plus crowded positioning.

So yes, silver hitting $89 and $144 are conceivable as psychological magnets in the mania phase of a trend.

The path silver typically takes is the point. Silver rarely walks to targets. Instead, it sprints, faceplants, and then sprints again.

How to Think About Positioning Without Joining a Silver Cult

If investors are trading this through silver futures or a related investment instrument, their edge won’t come from predicting the next Fibonacci number. Their edge comes from respecting volatility and choosing a structure that keeps investors solvent.

Here’s a clean framework:

Base case: trend continuation with violent pullbacks

Treat upside continuation as plausible while spot prices for silver are making higher highs and higher lows. Use Fibonacci levels or prior breakout ranges as decision zones, rather than prophecy.

Bullish Case: Physical Tightness Meets Investor Reflexivity

The more offtake and prepaid deals that appear, such as the one with Samsung, will cause silver inventories to tighten in the wrong places at the wrong times. Silver overshoots because marginal liquidity is thin. When the next wave of buyers arrives, there aren’t enough offers sitting nearby. That means price has to jump levels to find sellers. That’s why silver doesn’t walk to new highs. It gaps, spikes, and then mean-reverts like it’s offended by geometry.

Bearish case: Liquidation Cascade

If a macro shock hits and gold drops. Silver drops even harder because it amplifies the moves made by gold. Reuters. Overleveraged longs get forced out through liquidations and the spiral to $144 crowd starts to discover what a drawdown in silver feels like.

The only universal rule investors should follow is to size their positions so that they can survive the bearish case without needing a bailout themselves. That’s where personal accountability as an investor/trader comes into the mix. In market terms, it’s the difference between a trade and a tragedy.

The Takeaway: The Spiral is Entertainment and Contracts are Intelligence

I’m not here to mock charting because I use technical analysis tools all of the time. However, when investors see a real industrial player financing supply and locking in output, that matters more than any technical overlay.

This is where fundamental analysis beats out technical analysis. The Fibonacci spiral is a story about where price might pause. The Samsung C&T offtake is a story about who needs metal badly enough to write checks right now. In markets, stories move crowds, but contracts are what move supply, and supply is the part that can bite an investor.

Educational disclaimer

This article is for educational and informational purposes only and does not constitute investment advice. Trading and investing—especially in futures, options, and leveraged instruments—carry significant risk, including the risk of total loss. Silver can be highly volatile, and most short-term or intraday traders lose money over time. Consider your financial situation and risk tolerance, and consult a qualified, licensed financial professional before making investment decisions.

Glossary and Further Reading

• Silver futures

• Silver futures contract specifications

• Fibonacci retracement levels

• Offtake agreement

• SOFR

• Silver Institute: industrial demand and deficits

• USGS 2025 List of Critical Minerals

Content Classification

Fact

• Silver Storm’s US$7.0m prepaid offtake financing with Samsung C&T subsidiaries, including 100% of concentrates for two years, and key facility terms. SilverStorm Mining

• Silver added to the final 2025 U.S. critical minerals list. USGS

• Silver Institute figures for 2024 industrial demand and structural deficit. The Silver Institute

• Reuters-reported record silver prices above $65 and commentary on drivers/volatility. Reuters

Theory

• Offtake-style behavior is an early-warning indicator of tightening physical markets and reduced optionality.

Speculation

• Specific upside targets like $89 or $144 being achieved, and the timing/path to reach them.

  Silver Market Outlook

• Silver Supply Deficit.

• Silver Volatility.

• Liquidity at the margin

• offtake agreement.

• Why silver price overshoots

• How offtake agreements affect prices of Silver.

Fundamental Analysis and Technical analysis contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute.

Marianne Lake said one number on one stage and the stock traded like a growth name that had just missed earnings by 20%. A single slide on 2026 expenses erased nearly 5% of market cap in a day and turned a sleepy bank chart into a cliff.

This isn’t about a credit blow-up. It’s about what it now costs to run a state-sized bank in a world of sticky inflation, AI arms races, and permanent regulatory sprawl.

Let’s walk through what changed, what the market actually repriced, and where the opportunity might sit once the dust settles.

What Actually Happened To JPMorgan Stock

JPMorgan Chase dropped about 4.7% in one session, its sharpest one-day decline since early April, closing around $300.5 and finishing as the biggest loser in the Dow Jones Industrial Average. (Yahoo Finance)

The trigger was straightforward:

• At Goldman Sachs’s U.S. Financial Services Conference, Marianne Lake, who runs consumer and community banking, said JPMorgan now expects 2026 expenses of roughly $105 billion. (Investing.com)

• Wall Street had been modeling about $100–101 billion, and the bank itself is planning to spend around $95.9–96 billion this year and next. (Investing.com)

Call it a $4–5 billion surprise versus consensus and roughly 9–10% year-on-year expense growth.

Lake pointed to “volume and growth-related” costs, heavy investment in artificial intelligence and technology, more marketing and card growth, higher advisor incentives, branch expansion, and structural inflation in things like real estate. (Investing.com)

What she didn’t flag was just as important:

• No new hole in credit quality.

• No capital shortfall.

• No downgrade-style event.

Fundamentally, the message was: JPMorgan will still earn money; it’s just going to spend a lot more to run the machine.

The chart reacted to that single sentence.

The Math The Market Ran In About 30 Seconds

Banks are simple in one way: they live and die on return on equity and their cost base.

JPMorgan has been printing elite numbers on both fronts:

• High-teens ROE and around 20% return on tangible equity. (Yahoo Finance)

• An efficiency ratio (non-interest expenses divided by net revenue) in the low-50% range, better than most large peers. (INDmoney)

Now layer in the new guidance:

• Expense base today: about $96 billion.

• Guided expense base in 2026: $105 billion.

• Incremental cost: ≈ $9 billion, or roughly 9–10% growth.

Unless revenue grows at least as fast, the efficiency ratio moves the wrong way. Margin expansion flips to margin compression. That hits earnings and eventually compresses the valuation multiple.

Investors weren’t paying up for “double-digit expense growth and we’ll see what happens.” They were paying for fortress balance sheet, strong net interest income, and tight cost control at a mature franchise.

Once Lake moved one of those three legs, the premium multiple had to be re-examined. That’s what you’re seeing in that vertical blue line on the chart: a single-day repricing of the earnings path.

Why A Boring Bank Chart Turned Into A Cliff

Crowded “Safety” Trade Meets Clean Negative Catalyst

JPMorgan isn’t a niche stock. It’s:

• A core holding in financials ETFs.

• A heavy weight in the Dow Jones Industrial Average.

• The default “quality bank” for institutions that want bank earnings without regional-bank drama. (Yahoo Finance)

Crowded longs behave badly when the narrative turns:

• Long-only funds de-risk.

• Factor and quant models pick up the relative weakness and pile on.

• Index funds mechanically push selling pressure through the Dow and financials baskets.

• Short-term traders lean into the momentum.

You don’t need panic for a 4–5% drop; you just need everyone hitting the same exit at once.

Cost Of Equity Versus Cost Of Growth

In a world where base rates are no longer zero, the cost of equity for a large bank is not trivial. If you’re going to reinvest billions instead of paying them out, those dollars have to earn more than that hurdle.

When management says “expenses will be $105 billion, not $101 billion,” the market quickly asks:

• Will that extra $4–5 billion of annual spend produce incremental earnings above our required return?

• Or are shareholders quietly subsidizing an AI and branch arms race?

Until there’s proof on the revenue and productivity side, the default answer is “show me,” and the stock trades down.

The AI And Growth Story Underneath The Cost Spike

Lake’s list wasn’t just “inflation and compliance.” The emphasis was on:

• AI and technology build-out.

• Card growth and marketing.

• More financial-advisor comp.

• Physical expansion of the branch footprint. (Investing.com)

Across the industry, big banks are pouring money into AI—claiming better productivity, faster decisioning, and improved risk management. Central bankers and regulators are already studying how AI in finance will reshape credit allocation and market structure.

That’s the strategic backdrop: if you don’t spend, you drift toward being a regulated utility with shrinking margins. If you do spend, you front-load pain on the expense line and hope the revenue and efficiency gains show up later.

JPMorgan is choosing to spend.

From a libertarian, market-structure perspective, this is a classic late-cycle problem: prior years of artificially cheap money helped create mega-institutions that must now invest like tech platforms just to maintain their position. The bill for that scale is coming due in the form of a bigger, stickier cost base.

Signals For Investors: What To Watch Next

Earnings Revisions Versus Price

Watch how 2025–26 EPS estimates move over the next few weeks. If the stock ends up 10–15% below its highs but EPS estimates only fall 3–5%, most of the damage will be multiple compression, not math. That’s where value-driven funds start thinking in terms of expected return rather than headlines.

Efficiency Ratio And Profitability

The key metrics going forward are the efficiency ratio and ROE:

• If revenue growth, AI productivity, and card volumes keep the efficiency ratio anchored near the low-50s, the market will eventually treat this as “investing for growth.”

• If expenses outrun revenue for multiple years and ROE drifts meaningfully lower, the stock will settle into a more pedestrian valuation.

Credit Quality

The true nightmare scenario isn’t just higher opex(OPEX = the running costs of the machine.) It’s higher opex colliding with a turn in credit risk rising card charge offs, consumer stress, or a broader downturn. Lake described the consumer as “somewhat fragile” but not breaking. (Investing.com) That language matters. If the data starts to echo it, the market will re-price again.

The Rest Of The TBTF Complex

Finally, watch the other too-big-to-fail banks. Early commentary already hints that peers may be forced to step up spending on tech, AI, and advisors just to keep pace. (The Daily Upside)

If they all follow JPM’s path, you get sector-wide margin pressure before any AI payoff shows up. If they don’t, JPMorgan’s moat widens.

Libertarian Lens: Centralized Money, Centralized Costs

From a Libertarian’s perspective, the JPM chart is a side effect of a deeper structural choice.

For fifteen years, central banks suppressed the price of money and underwrote an ever-larger, ever-more-centralized banking system. When capital is cheap and backstops are assumed, scale looks like safety. We built a handful of state-sized banks sitting at the center of the monetary system, layered them with regulation, and implicitly guaranteed them.

Now we’re in a regime of higher rates and stickier inflation. The cost of running those centralized giants has exploded: compliance staff, data centers, AI infrastructure, branches, regulatory overhead. None of that would be this concentrated in a more decentralized, market-driven system.

JPMorgan is doing the rational thing inside the game it’s been given. The uncomfortable truth is that the game itself is centralized money, centralized banking, and centralized regulation make this kind of $105 billion expense base almost inevitable.

If you like smaller, nimbler, more accountable institutions, you don’t get them by accident. You get them by shrinking the footprint of central planners and letting price signals, not backstops, shape the financial system.

Buying Opportunity Or Warning Shot?

Right now, the market is charging JPMorgan a fee for uncertainty. It wants proof that $105 billion in operating expense will translate into sustained high-teens ROE rather than bloated overhead.

If the AI and growth investments drive higher revenue per customer, better risk selection, and stable credit, this week’s candle will age as a temporary air pocket in a long-term uptrend.

If they don’t, the chart you’re staring at is the first honest repricing of a franchise moving from “fortress compounder” toward “expensive utility.”

The number is simple. The consequences are not.

Educational Disclaimer

This article is for educational and informational purposes only and does not constitute investment, legal, tax, or financial advice. Trading and investing in securities, especially when concentrated or using leverage, involves significant risk, including the risk of total loss of capital. Most short-term and active traders underperform passive benchmarks over time. You are solely responsible for your own investment decisions. Always consider your objectives, financial situation, and risk tolerance, and consult a qualified, licensed financial professional before making any investment or trading decisions.

Glossary and Further Reading

Return on equity – A profitability metric that compares a company’s net income to shareholders’ equity.

Efficiency ratio – Common in banking; non-interest expenses divided by net revenue. Lower generally indicates better cost control.

Net interest income – The difference between interest earned on assets (like loans) and interest paid on liabilities (like deposits).

Credit risk – The risk that borrowers fail to make required payments.

Cost of equity – The return required by investors to compensate for the risk of owning a company’s stock.

Exchange-traded fund (ETF) – A pooled investment vehicle that trades on an exchange and typically tracks an index or sector.

Dow Jones Industrial Average – A price-weighted index of 30 large U.S. companies, including major banks.

Federal funds rate – The key U.S. overnight interest rate targeted by the Federal Reserve, influencing borrowing costs across the economy.

AI in finance – A research overview from the Bank for International Settlements on how artificial intelligence is changing financial services.

Risk management – The process of identifying, assessing, and mitigating financial risks within a portfolio or institution.

Subscribe now

Share Intellectual Dissatisfaction

Leave a comment

Fundamental Analysis and Technical analysis contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute

AT&T just announced to the FCC that it is eliminating all formal Diversity, Equity, and Inclusion programs. Not pausing. Not restructuring. Eliminating. According to the filing, the company does not and will not have any roles focused on DEI, and advancement in the company will now be based on merit and qualification.

This comes after leaked recordings and documents showed AT&T had leaned heavily on demographic targets for hiring and promotion. Now the pendulum has swung in the opposite direction — and not quietly.

For a corporation with over 100,000 employees, this is a meaningful shift. But the significance isn’t cultural signaling. It’s economic. It’s a case study in incentives, regulatory pressure, and the unavoidable reality that markets eventually push companies back toward fundamentals.

Most commentary will frame AT&T’s announcement as a political act. That misses the point.

In every large corporation, especially one carrying immense debt and operating in a brutally competitive industry, non-productive overhead eventually has to justify itself. When shareholders demand efficiency and regulators impose conditions on mergers, the calculus changes instantly.

AT&T’s abrupt pivot coincides with its attempt to secure wireless spectrum approvals. Which is proof that political and regulatory environments shape corporate behavior far more than slogans. When a federal agency signals that DEI programs may create compliance conflicts, companies respond the only way they can: by shedding anything that complicates regulatory clearance.

For libertarians, this isn’t shocking. It’s the predictable result of a system where government approval determines corporate survival. Any government incentive, tax, regulatory, or political will distort internal policy far more than market forces alone.

DEI didn’t fail purely because it was ideological. It failed because it was expensive, difficult to measure, legally risky, and easily sacrificed when regulators demanded a cleaner balance sheet.

Libertarian economics has long held that markets, not demographic engineering, are the most reliable equalizers. They reward competence because incompetence is costly.

AT&T didn’t return to meritocracy out of philosophical revelation. It did it because meritocracy is cheap, scalable, and efficient. It removes legal exposure and it makes the company competitive, which is necessary for its survival.

A century of business cycles has repeatedly shown that:

• When margins tighten, companies rediscover the virtues of simplicity

• When bureaucracy grows too thick, markets prune it

• When ideology becomes costly, shareholders revolt

DEI initiatives may survive in firms with deep profit cushions, but in a capital intensive, debt-heavy telecom giant, ideology is a luxury line item on the balance sheet.

AT&T didn’t choose meritocracy. The balance sheet chose it for them.

Other companies are watching this very closely, not because of cultural alignment, but because of the precedent it can set. When one Fortune 50 corporation demonstrates that dismantling DEI does not bring legal doom or regulatory reprisal, the other corporations in the Fortune 50 will reassess their own risk calculations in relation DEI.

There are a 3 likely outcomes:

1. Some corporations will quietly follow.

Not publicly. Not with press releases. They will simply shrink DEI budgets year after year until the programs become ceremonial.

2. Others will double down.

These will be firms where brand identity or political positioning is intertwined with demographic messaging. Their shareholders tolerate it. Their customer base demands it.

3. A third group will rebrand DEI into something indistinct.

New language such as fairness initiatives, culture and belonging, or workforce optimization will replace DEI terminology while diluting its original purpose.

All three paths reflect economics, not morality. Incentives dictate outcomes, and centralized planning — whether in the name of diversity or compliance, rarely survives when markets apply pressure.

The Libertarian View: Less Bureaucracy, Fewer Distortions

Ron Paul often warned that when a government inserts itself into private decision making, whether it be through mandates, incentives, or regulatory threats, corporations stop being market actors and become political actors. AT&T’s pivot is a perfect example.

The DEI era rose because government, universities, and corporate boards rewarded its expansion. It is now declining for the same reason: the incentives have changed.

A true free market would let companies sink or swim based on the quality of their products and leadership — not their demographic metrics. But we do not live in a free market. We live in a managed one. And in a managed market, corporate culture swings with the political wind.

The most telling part of AT&T’s announcement isn’t the elimination of its DEI programs.

It’s that a telecom giant felt compelled to justify internal hiring philosophy to a federal regulatory body at all.

That is the real problem right now. It’s Not DEI. It’s not DEI's removal. It is the centralized system that made such filings necessary in the first place.

A Final Thought: Markets Will Determine What Works

Whether one applauds or criticizes AT&T’s decision, the market will ultimately judge it. If merit-based systems yield better performance, competitors will adopt them. If they don’t, the pendulum may swing again.

But unlike activists on either side, markets don’t argue.

They measure.
They incentivize.
They correct.

AT&T’s move is not the beginning of a culture war shift. It is the beginning of a market recalibration.

And as any student of sound money and decentralization will tell you, markets always get the last word.

Legal Disclaimer

This content is for educational purposes only and is not financial advice. Trading futures involves substantial risk of loss and is not suitable for all investors. Most day traders lose money. Do your own research and consult a licensed financial professional before making any investment decisions.

Subscribe now

Share Intellectual Dissatisfaction

Leave a comment

Technical Analysis and Fundamental Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

The Invisible Line Between “Idea” and “Executable Strategy”

There’s a line you don’t see on any chart—the one between “this might work” and “this actually survives contact with the market.”

I found that line somewhere in year five, and I have included a short 7 Minute video of me trading the 10second and 1minute High Frequency Trading Strategy to demonstrate how I trade on that timeframe.

When I walked away from 60–70 hour weeks as an engineer and committed to building a truly mechanical trading strategy, I thought I was choosing a cleaner life: fewer meetings, more logic, more control. Instead, I stepped into a six-year process of being humbled by markets that do not care how hard you work or how clever your ideas sound.

Out of that grind came two distinct engines:

• A live, real-money, multi-timeframe swing trading framework for stocks using the 2-day, 90-minute, and 5-minute charts.

• A still-paper-traded, high-intensity intraday scalping engine for E-mini Nasdaq-100 futures built on the 1-minute and 10-second charts.

Two instruments.
Two completely different volatility profiles.
One underlying philosophy:

Use structure instead of prediction. Use rules instead of vibes. Treat leverage like it can end your career in a week—because it can.

What Six Years of Modeling Actually Revealed

The Work Behind an Edge

Across those years I cycled through the usual quant gauntlet:

• Traditional backtests

• Live forward testing

• Strategies that looked brilliant in hindsight and died in real time

• Risk stress tests using Monte Carlo simulation to see how bad “bad” could really get

• Journals that tracked not just trades, but the thought process behind each decision

The brutal pattern that kept showing up:

• When I tried to make one timeframe do everything—context, structure, and timing—the strategy broke.

• When I split those jobs across multiple timeframes and forced myself into systematic risk management, the noise dropped and structure started to appear.

That realization is what ultimately produced:

• A live stock engine that swings positions using higher timeframes and precise entries.

• A futures engine that is still in the lab, scalping NQ on lower timeframes where the noise lives—but also where the opportunity hides.

The Stock Swing Engine: Real Money, Real Risk

I currently deploy real capital using the 2-day, 90-minute, and 5-minute charts as my main workhorse for swing trading stocks. This is where the “grown-up” side of the system lives.

How the Timeframes Share the Work

• 2-day chart – The climate
  This is where I define the bigger environment for a name: trend direction, major phases of accumulation or distribution, and whether institutions look more like net buyers or net sellers over time.

• 90-minute chart – The weather
  Here I track the rotational swings inside that larger context. Are we in a pullback within a trend, a failed breakout, a fresh expansion, or obvious exhaustion? This is where the swing structure becomes tradable.

• 5-minute chart – The execution layer
  Once the higher timeframes line up, the 5-minute handles practical entries, stop placement, and trade management. It lets me refine risk without getting lost in random ticks.

How Brooks, Wyckoff, and Dow Fit Together

Under the hood, this stock engine is built on a structured mix of three classic frameworks:

• The Wyckoff method shapes how I see accumulation, markup, distribution, and markdown on the higher frames.

• Dow theory helps define primary trends, secondary reactions, and when something qualifies as an actual trend break versus just a noisy pullback.

• Price action trading à la Al Brooks lives mostly on the 5-minute, where individual bars and micro-patterns matter for precise entries and exits.

I stopped trying to crown one of these approaches as “the truth.”

• Wyckoff frames the campaign.

• Dow frames the swing.

• Price action frames the trigger.

The key point: this is not a thought experiment. This system currently takes real trades, with real risk, in live markets.

The NQ Futures Scalping Engine: Still in the Lab (On Purpose)

Parallel to the stock engine, I’ve been building something much more aggressive: a scalping strategy for Nasdaq-100 futures using the 1-minute and 10-second charts.

This one is still on paper. That isn’t hesitation—it’s risk discipline.

Why Choose the Hardest Room in the Casino?

Equity index futures like the E-mini Nasdaq-100 are not beginner products. They combine:

• High leverage

• High volatility

• Fast feedback on every bad decision you make

Most traders either blow up accounts trying to scalp NQ, or decide that the product itself is “too crazy to trade.”

I chose to lean into that difficulty, but not recklessly. At this resolution:

• The 1-minute chart functions as the structural control panel: short-term trend, volatility regime, and key micro levels.

• The 10-second chart is for surgical timing around those levels: how price responds as orders actually hit the tape.

The goal of this intraday scalping strategy is not to “guess every wiggle.” It is to:

• Keep stops very tight

• Cut losers immediately when the structure breaks

• Let a small minority of clean moves pay for a lot of scratched or small losing trades

The statistics on this engine—under backtest, forward test, and Monte Carlo stress tests—are promising. But “promising in simulation” is not the same thing as “deserves your life savings.”

That gap is exactly why this NQ engine remains in paper.

Why One Engine Is Live and the Other Isn’t

The Live Engine: Stock Swings With Structure

The 2-day / 90-minute / 5-minute stock framework has:

• Survived extended backtesting cycles

• Behaved logically in live forward testing

• Shown drawdowns and recoveries that make sense given its design

• Proven that I can actually execute it without constantly overriding it

It is not perfect. It doesn’t have to be. It just has to be coherent, testable, and robust enough to carry real capital through multiple market regimes without relying on luck.

That bar has been cleared. Which is why this system is live.

The Lab Engine: NQ Scalping Under a Microscope

The 1-minute / 10-second NQ engine, in contrast, is designed to operate inside a far more hostile environment:

• Deep leverage

• Fast, algorithm-heavy order flow

• Massive intraday sentiment shifts

On paper, the engine works. In simulation, it survives brutal sequences. But deploying that into the real futures market means betting that:

• The stats hold up under slippage and execution friction.

• My behavior under real P&L swings matches my behavior during testing.

• I can respect the rules when the product starts behaving like a blender full of dynamite.

Until I see enough evidence across volatility regimes and macro environments, this engine stays in the lab. The risk is not theoretical; it’s existential.

I am not interested in finding out how “promising” feels while an over-leveraged account goes to zero.

The Long Game: Using Structure to Control Leverage

The Stock Engine as the Base Layer

The live stock system is designed to be the base layer:

• Real money

• Clear multi-timeframe structure

• Fewer trades, higher average quality

• Enough breathing room to think

Its job is to grow capital and keep my read on the market grounded in actual higher-timeframe structure, not just the noise of the last 30 minutes.

The Futures Engine as the Amplifier (Eventually)

The NQ scalper is built to be an amplifier, not a foundation.

Once it proves itself under stricter conditions, the plan is:

• Hedge stock exposure on ugly days by shorting index futures intraday

• Accelerate returns on strong trend days when the index is clearly in motion

• Turn volatility into an optionality tool instead of a random stress generator

Done badly, this style of futures trading is the fastest route to the poor house. The old line about options being the quickest way to blow up an account applies just as much, if not more, to unstructured futures scalping.

Done well, it becomes a controlled way to express high-frequency edge on top of a steady swing trading base.

The difference between the two outcomes is not the product. It is the structure, the position sizing, and whether you treat risk like a math problem or a dare.

Libertarian Interpretation Box: Freedom, Incentives, and Why My System Looks Like This

Markets as Decentralized Truth Machines

I don’t see markets as centrally controlled games where a handful of policymakers decide everyone’s fate. They absolutely influence the backdrop, but the tape itself is the emergent result of millions of voluntary decisions.

That view is very aligned with a Ron Paul–style libertarian mindset:

• Prices are messy.

• Incentives matter more than intentions.

• Attempts to smooth away all volatility usually just store it up for later.

Where Central Intervention Breaks Traders

When authorities try too hard to engineer “stability,” they often:

• Encourage risk-taking that would never happen in a truly free environment

• Create moral hazard as participants assume they’ll be rescued

• Distort honest price signals until nobody remembers what something is actually worth

If your trading framework quietly assumes that someone will always step in to save the market, you’ve already outsourced your risk management to people who do not know you exist.

Why a Mechanical, Rule-Based System Fits This Philosophy

My approach is basically the trading equivalent of “audit the Fed, but also audit yourself.”

• Mechanical rules force me to react to what price is actually doing, not what I wish it would do.

• Multi-timeframe structure respects that different participants operate on different horizons.

• Strict risk controls acknowledge that nobody is coming to bail out a blown-up account.

In short: I’d rather trust a tested, transparent rule set built around real price behavior than trust a committee to manage my downside for me.

The Real Edge: Conviction With a Brake Pedal

The longer I do this, the more I think the real edge is not just in the model. It’s in refusing to quit when the model keeps failing—while also refusing to bet the farm on something that hasn’t truly earned your trust.

• The stock engine exists because I did not accept “it’s all random” as an answer.

• The NQ engine exists because I refused to treat intraday index futures as untradeable noise.

But conviction without a brake pedal is how traders disappear.

That’s why, in my world:

• The swing trading stock system trades real money, because it has passed enough tests to deserve that responsibility.

• The NQ scalping system stays in paper, because it is not done proving itself yet.

Believe in your capacity to solve hard problems.
Just don’t let that belief write checks your risk profile cannot cash.

The market will always tell you the truth in the end.
The only real question is whether your capital, and your psychology, are still around to hear it.

Glossary and Further Reading

These are external resources for readers who want to go deeper into the technical and analytical concepts mentioned in this article:

• Nasdaq-100 futures

• E-mini Nasdaq-100 futures

• Futures contract

• Futures and leverage basics

• Swing trading

• Price action trading

• Wyckoff method

• Dow theory

• Monte Carlo simulation

• Risk management in trading

• Volatility and market swings

• Multi-timeframe analysis in trading

Readers can use this as a self-directed study list to understand the technical and structural ideas that sit underneath the narrative.

Educational Disclaimer

This article is for educational and informational purposes only. It does not constitute financial, investment, or trading advice, and it should not be relied on to make any specific decision. Trading or investing—including in futures contracts or other leveraged instruments—involves significant risk, including the risk of total loss. Most short-term and intraday traders lose money over time. Always perform your own research, consider your personal financial situation and risk tolerance, and consult a qualified, licensed financial professional before making any investment decisions.

Share

Share Intellectual Dissatisfaction

Leave a comment

Fundamental Analysis and Technical analysis contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

When Investors pull up a 30-year chart and see gold edging out the S&P 500, it does something to their brain.

Part of them whispers, “I knew it, I should have walked the yellow brick road full of Gold.”
Another part whispers, “Great, now I’ve missed another move.”

This article is for the third voice. The voice of reason that says:

“Gold just had a historic run. Now, how do I build a position in gold that’s smart fundamentally, technically, and psychologically… without turning my portfolio into a reddit investing meme?”

The Strange Moment We’re In

Gold isn’t quietly sitting in the corner anymore. It’s the main character.

Over the last couple of years, gold prices have smashed through the $4,000 level for the first time, logging one of their strongest annual performances since the late 1970s.

At the same time, central banks have quietly been hoarding the stuff. Since 2022 they’ve been adding more than 1,000 tonnes of gold a year to their reserves, which roughly doubles their pace from the previous five years, according to the World Gold Council.

While everyone doomscrolls for political drama from central bank pressers, the official sector has basically said:

“Less paper promises, more atoms AKA Physical Gold.”

That context matters, because when investors sit back and pull up a chart of gold stretching across decades, gold is no longer a crisis trade. Research on gold as a strategic asset shows long-term returns broadly comparable to equities on a price basis, but with very different behavior during recessions, inflation spikes, and market panics.

This isn’t about chasing a shiny rock at the top. It’s about asking a calmer, wiser question:

“Given where gold is in its cycle, what’s the right way to start building gold into my portfolio?”

What Gold Actually Does in a Portfolio

When we strip away all the myths about gold, investors will find that gold has three main jobs in any portfolio.

Shock Absorber

When equities and bonds both get punched in the face, gold typically will zig while they zag. That’s why so many Money Managers treat it as a core portfolio diversification tool.

Monetary Insurance

In an era of trillion-dollar deficits, weaponized reserves, and creative monetary policy(FIAT), and when central bankers are buying more precious metals, that is their way of saying, “Central Banks need assets that carry no counterparty risk.” Retail investors would be wise to echo the moves of central bankers in these volatile markets, just obviously in a smaller size.

Speculative Rocket Fuel

Gold can also be traded. When yields fall, the dollar typically weakens, and when we add geopolitical spikes, gold can move like a growth stock. That’s the part of golds cycle that we are currently living through.

Investor strategies need to respect all three roles that gold plays, without thinking they have a crystal ball to find out what role will gold roll into next. Investors should only be invested using verifiable information.

The Fundamental Case: Why Gold Still Has a Seat at the Table

Let’s boil the macro story down to three forces.

Central Banks Are Quietly “Buying the Dip” in Fiat

Ever since sanctions froze a chunk of Russia’s reserves, emerging market central banks have treated that as a memo. Dollar assets can be politically contingent. Bullion in a vault is not.

Official data shows three straight years of above 1,000 ton’s of net buying. That is the strongest and most persistent binge on record. When the institutions that literally run money are loading up, that’s not a Reddit trade — that’s a structural shift.

Real Yields, Debt, and the “Trust Premium”

Gold doesn’t pay interest. It competes with whatever “real yield” (interest minus inflation) you can earn on government bonds.

• High, stable real yields? Gold sulks in the corner.

• Negative or falling real yields? Gold becomes the adult version of a cheat code.

With debt loads elevated and long-run forecasts calling for lower real returns on bonds, more investors are using gold as a store-of-value anchor rather than a shiny side bet.

If you want a deeper, more mechanical explanation, this primer on how to invest in gold lays out how real yields and currency moves feed into the gold price.

The Psychology of Doubt

We’re in one of those eras where nobody fully trusts anything:

• Governments don’t fully trust other governments

• Retail investors don’t fully trust banks

• Even institutions are gaming out scenarios where a major central bank loses some independence or credibility

Gold thrives on that ambient doubt. Investors don’t need a full-blown currency crisis, they just need enough people thinking, “Maybe I’d like something that isn’t someone else’s liability.”

The Technical Backdrop: The Chart That Makes Everyone Itchy

Pull up a long-term chart of gold, preferably on a logarithmic scale. The picture is simple:

• Massive base from the mid-90s to early-2000s

• Explosive run into 2011

• Long, frustrating sideways chop

• Then a new breakout that carried price through $2,000, $3,000, and now $4,000+ in a violent, almost vertical fashion

Technically speaking, that’s a powerful secular uptrend that’s also overextended in the short term.

When a market stretches far above its 200-day moving average and sentiment hits euphoria, one of three things usually happens:

1. It consolidates sideways while fundamentals “catch up.”

2. It corrects sharply back toward prior breakout zones.

3. It keeps grinding higher, but with nasty shakeouts to punish late investors.

Investors can’t know in advance which version they’ll get. Instead, investors can design an entry plan that doesn’t rely on being the hero who can nail the exact low.

Think of the current chart as a raging river. You don’t dive in at the fastest point. You wade in from the bank, one step at a time, tied to something solid onshore. Refer to my article on the Sharpe Ratio for a detailed analysis of slowly entering as prices stabilize and volatility fades.

The Simple Playbook: Core + Tactics

Here’s a way to turn all of this into a concrete, human-friendly plan.

Step 1: First, Decide the Job, Second the Percentage

Before any investor touches a ticker, they must decide what job or role will gold fulfill in their portfolio:

• If investors want a long-term hedge against inflation, currency risk, and equity bear markets, gold belongs in the core allocation bucket

• If you want to trade the current gold bull market, that goes in a separate, tactical bucket with tighter risk limits

Most research on gold and portfolio diversification lands somewhere in the 5–10% of portfolio range for a strategic allocation. Some macro money managers argue for exposure in the low teens, during extremely uncertain regimes.

The exact number comes down to what each investor can withstand. The important part is that investors choose it deliberately before purchasing and not after when we are now emotionally invested.

Step 2: Building a Boring Portfolio is what Money Management is all about

Once investors have a target (say, 7–10% of their investable assets), the next question is how to own it.

A simple, robust split looks like this:

• Consists of Bullion / Bullion-Backed Exposure (the Anchor) Large, liquid gold ETFs that hold physical metal in trust, or vaulted bullion if you’re willing to deal with storage

• Consists of Gold Miners / Royalty Companies (the Amplifier) Contains a broad ETF of miners or royalty/streaming companies. These tend to move more than the metal, both up and down because they’re businesses with operating leverage

For most investors, the anchor should be much bigger than the amplifier. Think 70-80% of their portfolio as bullion-style and 20-30% of their portfolio as miners inside that overall gold slice within the total portfolio.

The mechanics of bullion vs ETF vs mining stocks, are laid out in every serious guide to investing in gold. The principle is simple, separate the safe haven role from the high beta role.

Step 3: Respect the Run, Stagger Your Entries

Buying anything at all-time highs is uncomfortable for a reason. If you shove 10% of your net worth into gold tomorrow, you’re basically betting that the move will never mean revert past your entry to the 50SMA or 200SMA.

Instead, think in tranches:

• As an investor, decide how many months you’re willing to spend to build the position (for example, six or twelve months)

• Investors divide their target allocation by the number of months they plan on building the position

• Add one tranche or slice on a schedule (monthly or quarterly) and allow yourself to add extra when the market gives you a proper pullback

In plain language:

“I’ll build my gold position slowly, and if the market sells off 8–15% from a recent high, that’s an invitation to buy my next chunk a little early.”

Volatility becomes the mechanism that helps investors, not the thing that scares investors out of the process.

Step 4: Carve Out a Small Tactical Sleeve (If You Want the Spice)

If you’re the kind of investor who likes to lean into trends, create a separate tactical sleeve, consisting of 2–3% of your total portfolio. This sleeve is for more active trades in:

• Shorter-term futures or micro-futures

• Options on gold ETFs

• A more concentrated gold miner basket

The rule here is simple:

Tactical gold trades should never be big enough that a single bad month wrecks your long-term plan.

You’re allowed to be aggressive inside that sleeve. You’re not allowed to let it spill into the rest of your life.

For nuts-and-bolts traders, this guide on how to trade gold walks through the mechanics of futures, margin, and risk controls.

Step 5: Real Traders Pre-Write their Rules Before the Headlines Hit

Here’s the part that separates the professionals from the hobbyists, which is why almost nobody does it:

• Real investors decide in advance what they’ll do if gold drops 20–30%

• Real investors decide in advance what they’ll do if gold blasts to $5,000+

Examples:

• “If gold falls 25% from their average entry, they only act through their regular annual rebalance. Real investors don’t panic-sell.”

• “If gold runs so hot that it becomes more than 15% of an investors portfolio, they’ll trim it back to target over a few weeks and re-deploy the profit into other assets.”

Those sentences sound boring, but they’re what separate “long-term investors with a gold strategy” from “A person who bought a shiny object at exactly the wrong time.”

How This Ties Back to the 30-Year Chart

The chart that kicked this off, gold slightly outpacing the S&P 500 over the last three decades, is a story about starting points and regimes.

Gold crushed from the late-90s lows through crises and currency scares. Equities flourished in other regimes. The winner depended on when you started the clock.

If you take one lesson from that picture, let it be this:

The point is not to find the single perfect asset.
The point is to build a team of assets whose strengths show up in different decades.

Gold just happens to be the player getting the ball right now.

Play the Decade, Not the Day

Gold at $4,000 is loud. Financial media loves the superlatives and social media loves the laser-eyed memes.

The serious opportunity isn’t guessing what is tomorrow’s tick. For investors, it’s quietly upgrading their process so that they:

• Have a clear role for gold in their portfolio

• Accumulate it deliberately, not impulsively

• Let macro tailwinds and market structure work over years, not hours

In a world where everyone is chasing the next hot take, methodical, rules-based investing in gold is about as contrarian as it gets.

Build the plan, then let the metal do what it’s done for thousands of years: sit there, quietly compounding the benefit of your patience.

Legal Disclaimer

This article is for educational and informational purposes only. It is not financial advice, not a recommendation to buy or sell any security, commodity, or strategy, and it does not take into account your individual circumstances. Trading and investing in gold, futures, options, or any financial markets involves substantial risk of loss. The majority of active traders and day traders lose money over time. Always do your own research, consider your risk tolerance and financial situation, and consult a licensed financial professional before making any investment decisions.

Subscribe now

Leave a comment

Share Intellectual Dissatisfaction

Technical Analysis and Fundamental Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

The Bitcoin Sharpe Ratio has just dropped back into a zone we only see a few times each cycle. On the chart, the ratio has slipped toward zero while the Bitcoin price grinds lower and sentiment turns sour.

That combination usually feels terrible in real time. Yet in prior cycles, similar Sharpe crashes around 2019, the March 2020 selloff, and the early-2022 washout turned into some of the best forward risk-adjusted returns for patient Bitcoin investors.

The current message from the data isn’t “volatility is over.” It’s that, mathematically, the payoff for taking carefully sized risk is starting to improve while most participants are still focused on recent pain.

What the Bitcoin Sharpe Ratio Is Telling Us

The Sharpe Ratio measures how much return an asset has delivered per unit of volatility. In simple terms:

• High Sharpe = strong returns relative to the risk you had to sit through.

• Low or near-zero Sharpe = weak, noisy, or negative returns relative to that risk.

In this chart:

• The black line is the Bitcoin price chart.

• The yellow line is the Bitcoin Sharpe Ratio over time.

• The background bands highlight rough “low-risk” and “high-risk” zones for new entries.

A Sharpe Ratio collapsing toward zero tells you that recent returns have been poor relative to volatility. The market has been punishing risk-takers by liquidating traders who were overleveraged. The market has been disappointing to late buyers, but what else is new in trading? Don't be a whales exit liquidity. However, that reset is exactly what tends to improve future risk-reward trades for the next cohort of smart investors.

Why Low-Sharpe Windows Have Mattered in Past Cycles

The current reading lines up with three prior low-Sharpe zones on the chart:

• The 2018–2019 bear-market capitulation area

• The March 2020 COVID crash

• The early-2022 deleveraging phase

Each episode had the same emotional signature. Using the bullet points below, and the headlines in crypto today, it sure looks & sounds familiar huh?

• Headlines and sentiment were overwhelmingly bearish.

• The crypto market felt broken or uninvestable.

• Short-term price action was choppy and hard to trade.

Whales forced weak-handed investors out of the market through what I call spook the investors is a tactic where whales starr an intense period of selling pressure in a short period of time. This spooks retail investors, who start to sell off their BTC as they hit their “Uncle Zone” and as traders are liquidated from the volatility initiated by the whales to rattle everyone's tree for their BTC. The whales who started the sell off, are typically the ones taking the otherside of the trade before they move price up again.

With volatility normalizing, the window where low Sharpe ratios produce outsized forward returns for investors who sized their positions carefully allowed them to hold through the noise before a move up.

Remember past performances never guarantees future results. However, this is a structural pattern: Sharpe collapses when the pain is already in the rear-view mirror for someone else and never before.

The Math Behind Contrarian Bitcoin Investing

Contrarian investing in Bitcoin isn’t about magically picking the bottom tick. It’s about recognizing when the distribution of future outcomes starts quietly tilting in favor of smart money investors.

A low or negative Sharpe Ratio is one of those moments where;

• Weak recent returns mean expectations have been reset.

• Volatility shakes out the most fragile positions.

• New buyers are no longer competing with euphoric, late-cycle FOMO flows.

Layer the Sharpe profile on top of Bitcoin cycle drivers, like Bitcoin halving cycles, on-chain adoption metrics, and structural inflows via Bitcoin ETFs and investors should come to the basic thesis that upside scenarios remain alive while a lot of downside pain has already been realized in the market.

Now don't confuse what I am saying and think that the market can’t go any lower. It means that the expected value for patient, risk-aware investors is improving from when the market had its euphoric highs from this Bitcoin bull market.

How Investors Can Navigate This Window Without Blowing Up Their Account

A rare risk-reward window is not a green light to over-leverage into crypto. It’s an invitation for smart-money investors to tighten their process and let risk drive decisions instead of emotion.

1. Size positions, don’t make heroic predictions.

The right question isn’t “Is this the bottom?”

but:

“What allocation to Bitcoin as a portfolio asset keeps me solvent across most scenarios?”

Smart-money investors define a maximum portfolio weight for Bitcoin and they stick to it. Position sizing is set by risk tolerance, time horizon, and income. Not by headlines or social media.

2. Use volatility to scale in, rather than chasing price.

When Bitcoin volatility is elevated and the Sharpe Ratio is low, markets rarely form a neat V-bottom. Instead of piling in on every bounce, disciplined investors build exposure gradually over time because they accept that the exact low in a market is unknowable.

3. Put pre-planned tranches in writing.

Pre-planned tranches mean you decide in advance to buy or sell in clearly defined chunks rather than all at once.

Example: you want a 10% Bitcoin allocation, executed in four tranches of 2.5% each. You set simple rules—such as specific price zones, time intervals, or volatility conditions already set in stone that tell smary money investors exactly when to deploy each tranche.

This turns volatility into a tool: you’re executing a written plan instead of reacting emotionally to every move.

4. Use periodic portfolio rebalancing to keep Bitcoin in its lane.

Rebalancing starts with a target mix. For example, 60% equities, 30% bonds, 10% Bitcoin. On a set schedule (monthly or quarterly) or when weights drift too far, investors trim what’s above target and then add the extra to the stocks that are below it's position percentage in their a smart money investor’s portfolio. This is one of the many ways professional money managers manage a risk adjusted portfolio.

If Bitcoin rallies and grows to 18% of the portfolio, smart money investors systematically sell back down toward 10%. If it falls to 6%, investors buy up to 10%. Rebalancing naturally buys weakness, sells strength, and prevents a single volatile asset from silently dominating an investor’s risk.

5. Define risk limits in advance.
Before you add exposure, decide how investor’s respond to drawdowns:

• What loss on a position or on the total portfolio forces investor’s to cut back?

• How long are investor's prepared to hold through volatility?

• Which other assets—cash, bonds, equities, real estate—will offset an investor's crypto risk?

• Writing these rules down makes it much harder to rationalize oversized bets in the heat of the moment.

6. Filter noise from signal.
Low-Sharpe regimes are full of scary headlines, blame, and drama. To avoid getting whipsawed, build simple, objective rules that are based on price levels, volatility bands, or trend filters, that tell you when to add to a position, when to reduce a position, and when to sit on your hands and do nothing. Decisions that are grounded in data rather than emotion are what separate the amateurs from the professionals who can survive in high-volatility markets without blowing their account.

What Could Break the Pattern?

It’s important to be explicit about the risks that could invalidate this bullish interpretation of a low Sharpe Ratio:

• A deterioration in global liquidity or risk sentiment could keep crypto markets depressed much longer than prior cycles.

• New regulatory shocks, exchange failures, or technological issues could trigger another leg down.

• The macro environment underpinning earlier recoveries—especially central-bank policy and fiscal stimulus—may not repeat.

In other words, a low Sharpe Ratio improves the odds for future risk-adjusted returns compared to the euphoric peak, but it does not guarantee a swift or V-Shaped recovery.

Why This Window Rarely Stays Open for Long

Look across the full chart and one thing stands out: the “low-risk” bands and near-zero Sharpe readings are short-lived compared with the long stretches of trend that follow. Once positioning is cleaned up and flows stabilize:

• The Sharpe Ratio recovers,

• The trend structure improves, and

• The easy contrarian entries vanish.

By the time the narrative feels safe again, the best Bitcoin risk-reward is usually behind you.

Right now, the data suggests we’re in one of those rare pockets where the short term still looks messy, but the long-term math is starting to lean back toward disciplined, long-horizon buyers. Whether you act on it or not, it’s a window worth paying attention to.

Educational Disclaimer

This article is for educational and informational purposes only. It does not constitute financial, investment, or trading advice, and it should not be relied on to make any specific decision. Trading or investing in Bitcoin and other cryptocurrencies involves significant risk, including the risk of total loss. Most short-term and day traders lose money over time.
Always perform your own research, consider your personal financial situation and risk tolerance, and consult a qualified, licensed financial professional before making any investment decisions.

Share Intellectual Dissatisfaction

Leave a comment

Fundamental Analysis and Technical analysis contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

The U.S. stock market has surged to historic valuation extremes. One striking metric, the Buffett Indicator, now registers around 219%, meaning the total U.S. stock market is worth over 2.19 times the nation’s GDP. For context, the long-term average of this indicator is roughly 86% according to finviz.com. In other words, by this measure the market’s size dwarfs the economy to an unprecedented degree. Such an elevated reading raises an urgent question for investors: Has the stock market become a stock market bubble signaling overvalued equities and lower future returns? We’ll explore the significance of this 219% reading, draw parallels to past boom-bust episodes, and discuss what it all implies for a U.S. market crash risk regarding your portfolio.

The Buffett Indicator Hits an All-Time High

The Buffett Indicator – named after Warren Buffett, who called it “probably the best single measure of where valuations stands,” compares the aggregate U.S. stock market cap to the USA’s GDP according to Investopedia. At 219%, the Buffet Indicator is flying higher than a festival goer at 2:00AM!

To put this into perspective, even at the greatest heights of euphoria in the past, the ratio never approached anything like today’s levels. The dot-com bubble peaked around 136% in 2000, and the housing bubble peaked near 100% in 2007 according to Investopedia. Those episodes were followed by severe market downturns and yet todays current valuations are double the housing bubble and almost double the dot-com bubbles. It’s no wonder Buffett himself cautioned that when this indicator nears 200%, investors are “playing with fire.” Especially given the downside risk that has historically followed extreme Buffet Indicator readings according to Gibson Capital.

Such a record-high Buffett Indicator suggests the market is “significantly overvalued” by historical standards according to Guru Focus. Put simply, stock prices have grown far faster than the economy. This doesn’t guarantee an imminent crash, but it strongly hints that equities aren’t exactly priced for perfection. Many market valuation metrics in U.S. stocks have never been this expensive. Elevated price-to-earnings ratios, price-to-sales ratios, and CAPE (cyclically adjusted P/E) all corroborate the story. That valuations are stretched well above long-term norms according to Sam Ro of tker.com. As a result, even Federal Reserve officials have noted that asset prices appear “fairly highly valued” as of late. Which is a polite way of saying stocks look outrageously priced relative to those stocks fundamentals.

Behold: The forward-realized CAPE

But what if there were a P/E ratio where the E was based on the next 10 years’ earnings? It would be a ratio that combines the strengths of the forward P/E and CAPE.

This sparked a thought exercise on X a few weeks ago.

While we can’t accurately predict earnings through 2035, we have the ability to go back in time to 2015 and beyond to calculate what this “forward-realized CAPE” would’ve been based on actual earnings reported.

In other words, up to 2015, we can calculate a valuation ratio using the average of the next 10 years’ realized earnings to understand whether the market was actually cheap or expensive at the time.

Credit to Jake (@EconomPic on X) for already having thought of this a year ago.

In mid-2014, Shiller’s CAPE was at about a 26x, significantly above its long-term average of about 17x. By this metric, the market already looked expensive, meaning investors should’ve expected weak, low-single-digit returns.

But the realized CAPE at the time was about 17x. Eyeballing it, this metric was roughly in line with its long-term average and below its average from the prior 20 years.

The realized CAPE was telling us the market was not expensive in 2014. Why? Because earnings growth proved healthy in the years that followed.

“Important re-framing,” Bloomberg’s Joe Weisenthal said about the chart. “People like to blame the Fed or ETF flows for the big bull market. But the fact of the matter is that the realized earnings of big American companies have been extraordinary both on an absolute basis and also on a relative (to estimates) one for years.“

This section was taken from Sam Ro, of tker.com
See his article for his full breakdown.

Echoes of Past Bubbles: Dot-Com and Housing Parallels

Investors have seen this movie before. Late 1990s optimism drove the Nasdaq to dizzying heights, pushing the Buffett Indicator to roughly 1.3x GDP (about 136%). When the dot-com bubble burst, the S&P 500 plunged by roughly 50%, and the Nasdaq by nearly 80%, over the ensuing two-year bear market. Similarly, excessive confidence in the mid-2000s drove the Buffett indicator up to 1.0x of USA’s GDP, (~95–105%) before the 2008 financial crisis. In both cases, stocks dramatically outpaced economic reality. When it came time to pay the piper, a painful market reversion followed. The Buffett Indicator retreated toward more “normal” levels as equity values collapsed and GDP kept chugging along.

A Buffet Indicator with a reading of 219%, towers above the previous peaks. The gap between the USA’s market capitalization and the economy is far greater now, than before the last two major market crashes. History never repeats exactly, but it very often rhymes. The pattern is extreme valuations will eventually succumb to gravity. Meaning a bear market or at least a long period of flat or sideways returns while the stocks fundamentals catch up. The key difference now is the order of magnitude of the extremity of the current situation. If 136% signaled wild exuberance in 2000, what does 219% signal in 2025? At a bare minimum, it suggests we are in some very uncharted waters. Valuation alone isn’t a timing tool. The reason being that markets can stay frothy for far longer than any analyst, hedge fund manager or retail trader ever expects. However, it does tell us one important factor. Risk in the markets is elevated to levels we have never seen before. As Buffett quipped, “you only find out who is swimming naked when the tide goes out.” At 219%, the tide is above even the worst investors heads, and any negative shock to the market will reveal just how exposed investors in the market really are.

It’s important to note that high valuations don’t cause crashes by themselves. We often have a catalyst. Such as a tightening of monetary policy, a earnings disappointment, a geopolitical shock, etc. But rich valuations amplify the impact of such catalysts. In 2000, the catalyst was rising interest rates and failing dot-com business models. In 2008, it was the mortgage backed securities and the credit crisis that wiped out Lehman Brothers on September 15, 2008. Lehman Brothers was the largest bankruptcy filing in U.S. history, with $639 billion in assets and $613 billion in liabilities. The collapse triggered a global financial crisis, leading to a widespread economic downturn and job losses. Today, one can speculate about what the trigger might be (rising bond yields, an inflation resurgence, recession risks, over indebted AI companies who still don’t have a profitable business model or another unexpected shock). Whatever the spark, an overstretched market has farther to fall when reality bites. That’s why the Buffett Indicator’s record level is worrying – it suggests fragile underpinnings, where even a modest disappointment could snowball as investors rush to lock in gains. To put it bluntly, don’t be the investor who is left holding the bag of stocks once the institutions push the prices of stocks below the 365 SMA.

Valuation Excesses and What Comes Next

What do these extremes imply for forward returns? Unfortunately for the bulls, numerous studies and experts find an inverse relationship between starting valuations and subsequent long-term returns. When stocks are this expensive relative to the economy, future returns tend to be low. For instance, Guru Focus estimates that at the current Buffett Indicator level, the implied annual return for U.S. stocks in the coming years is around –0.5% (yes, negative) including dividends. In other words, from such heights the market may deliver essentially flat or very modest gains at best over the next decade. Likewise,

Sam Ro, CFA

of tker.com’s analysis noted that “many popular valuation metrics suggest that the stock market is expensive, implying that investors should expect weak returns in the years to come.” This doesn’t guarantee poor returns. It certainly doesn’t pinpoint when a correction might happen. The odds of enjoying the kind of easy double-digit annual gains we saw in 2020–2021 are much more difficult to attain this time around. Trees don’t grow to the sky, and neither do equity multiples!

Crucially, stretched valuations also raise the stakes for the economy and for company earnings. When price-to-earnings ratios are extreme, any hiccup in earnings growth or a jump in interest rates can prompt a sharp sell off. We’ve already seen the Federal Reserve hiking rates off zero in the past two years. Typically this puts pressure on lofty stock valuations. Why pay such a premium for stocks when an investor can get risk-free treasuries that yield 5%? As Buffett has noted, higher interest rates act like “gravity” on asset prices quoted from an article by Guru Focus. Markets have largely shrugged off rate increases. Perhaps investors are betting on a goldilocks scenario of strong earnings and eventually lower rates. That rosy outcome leaves little margin for error. Any disappointment in any of the parameters discussed in this article, be it an economic slowdown, an earnings miss, or more persistent inflation driving rates even higher, would be effective at forcing investors heads above the sand to realize the valuation gap between stocks and USA’s GDP.

A market crash is obviously not a certain thing. Some argue that modern markets deserve higher valuations due to tech innovation, globalization of revenues, or structurally low interest rates despite recent hikes by the Federal Reserve. The U.S. economy today is different in composition from past decades where profit margins have been robust. It’s quite possible that “this time will be different.” At the very least different enough that the old valuation yardsticks need to be recalibrated. Betting that the market can defy economic gravity indefinitely is not just a risky proposition, it is an all around bad investing strategy, especially as we get closer to the end of our working lives. This is where betting the market can defy gravity indefinitely can cause a nice retirement nest egg turn into section 8 housing and a job as a Walmart greeter at 80. Investors portfolios should be slowly turned over to more risk averse assets as they age. I can think of nothing worse than hitting retirement, and a catastrophic black swan type of market crash happens as it did in the late 90s where the Standard & Poor’s(S&P) dropped 50% and the NASDAQ crashed 80%! At 80 years old, if that plays out, we better hope Walmart isn’t using Robot greeters!

Warren Buffett seems unconvinced that today’s prices are justified. Buffett’s Berkshire Hathaway has been one of the largest net sellers of stocks and builders of cash reserves over the last few years and accumulating $382 billion in cash, rather than risk fully diving into this volatile market. Buffett is known for being famously patient. His actions suggest he’s finding few bargains amid the volatile market froth. When the Oracle of Omaha prefers cash over stocks, it’s a sign that stocks are overvalued.

Excess valuation is a double-edged sword. On one hand, it reflects optimism and it can fuel further gains in the short run. Momentum and FOMO can keep inflating bubbles. On the other hand, it does limit long-term upside and it increases downside risk. A 219% Buffett Indicator tells us that the risk/reward balance for U.S. equities is increasingly skewed and that U.S. Equities are full of risk with little reward compared to a few years ago. Investors should be prepared for muted returns and the possibility of a swift regime reversal. As one market maxim goes, “the bigger the boom, the bigger the bust” – while we can’t be sure a bust is coming, we do know the boom has been extraordinary over the past decade.

How Should Investors Respond?

For long-term investors, these warnings don’t mean panic-sell everything. Timing the market is notoriously difficult. Bubble valuations can last longer than most analyst expect. Jumping out too early can mean missing gains. However, it’s prudent to be cautious and deliberate with ones investment strategy, when valuations are stretched this thin. Here are a few considerations for navigating the current landscape:

• Rebalance and Diversify: Now is a good time to review your portfolio. After years of strong equity gains, your stock allocation might be higher than your risk tolerance would dictate. Consider rebalancing your portfolio by trimming some equity exposure. Especially from the most high-flying segments of the market. Ensure you’re well diversified across asset classes and sectors. Non-U.S. markets or value-oriented stocks, which in some cases trade at more reasonable valuations, could provide a good investment avenue if U.S. growth stocks stumble.

• Increase Quality and Defensive Positions: In inflated markets, quality companies with solid balance sheets and reliable cash flows tend to hold up better during corrections. Emphasize businesses with proven earnings power. Avoid speculative names that have been bid up on hype. For example stocks such as RGTI,QBTS,QUBT,IONQ, and RKLB. If you chose to have speculative stocks, at least acknowledge that these types of stocks are more in line with extremely volatile MEME stocks). It’s also sensible to have defensive assets. For instance bonds. Bonds now offer yields investors haven’t seen in over a decade. Bonds provide a viable alternative for stable returns. A greater allocation to bonds or cash can cushion your portfolio if/when U.S. stock equities fall. This will also give investors cash on hand to buy stocks at cheaper levels down the road. Remember, in a downturn, “he who loses least wins.”

• Temper Expectations: After a 10+ year bull run that was only punctuated briefly by the 2020 covid plunge, it’s easy to assume stocks will keep powering higher. They might, however given starting valuations, investors should expect lower returns with an overheated market. Financial planners often use an assumed equity return of, 5-7% annually for planning. At today’s extremes, even that may be optimistic. Investors should mentally prepare for the possibility that the next decade’s returns might be minimal compared to the previous decade. I think it will boil down to how the AI sector impacts every other sector. Investors might be staring down the barrel of a large portfolio drawdown within the next couple of years as AI kills off entire industries. This also creates a lot of opportunity for investors who have a forward thinking mind. This isn’t being pessimistic. It’s being realistic based on historical patterns. Everyone in finance loves to say past results don’t predict future results. However, when it comes to the world of investing and trading when a pattern is close, it is close enough to trade. Investors who plan their portfolios with conservative return assumptions will typically save more than those who don’t. The only thing left to do if cash is tight, is adjust spending to stay on track if the market is disappointing.

• Stay Vigilant but Don’t Try to Time the Market Perfectly: Keep an eye on macro indicators such as interest rates, inflation, and earnings growth). If the Federal Reserve resumes tightening or corporate profits start slumping, the overvaluation beast may show its face sooner rather than later. ALWAYS avoid knee-jerk reactions to any headline in the news. In fact it is best to not even watch the news or pay attention to the news. By the time the news hits the Internet, never mind the TV pundits, that “Breaking News Bulletin” had been priced into the market already. I’ve also found that when the institutions have majority shareholder control over a newspaper company, they use the news as a tool to confuse investors. This is why stocks tank when it looks like great news was just released for a stock. Markets correct without news headlines and they can still crash in overvalued times, which means there will still be short-term rallies for the bulls. These rallies just aren’t meant for all-in or all-out moves. A better approach would be to incrementally adjust ones portfolio. For example, an investor might choose to tilt their portfolio gradually to become more defensive by raising cash levels bit by bit or writing covered calls for income. In investing the number one goal is to protect your capital and to be ready to take advantage of as many opportunities as we can when valuations normalize. As Warren Buffet famously said “Buy when there’s blood in the streets.”

Always keep the big picture in mind. Remember that long-term investors have endured bubbles and busts before, which means the investors of today can endure them by applying the proper risk management strategy to their portfolio. If as an investor you have a multi-decade horizon, the best course is usually to stay invested through market cycles, with one caveat. Investors need a portfolio that matches their risk tolerance, or as one of the Market Wizards famously said “Know your uncle point before entering a trade.”

Surviving a bear market is much easier for investors who haven’t overextended their capital at the top of the volatile frothy market. As the saying goes, “Bull markets make you money, but bear markets return stocks to their rightful owners.” When it comes time to cash out, make sure you’ll be one of the owners still standing, with cash ready to buy if and when a downturn returns stocks to their fair value price.

Conclusion: Caution and Perspective

The Buffett Indicator’s surge to 219% is a clear warning signal that market valuation is extremely high by any historical standard. While no one can predict exactly when or how this will resolve, the evidence of overvaluation is stronger now than ever according to the folks at Guru Focus. For general investors and retail traders, the takeaway is to stay informed and remain DISCIPLINED.

The market is likely in the late stages of a major market cycle. Which is typically a time when greed and fear suddenly rear their ugly heads. Thus, it’s a moment for extra vigilance about ones discipline. Always question every narrative, but especially optimistic narratives at this point in time. We are in relief rally territory. A large move up or down is coming before the end of the year.

Investors must demand a margin of safety in any new investments, and have contingency plans for volatility. Lastly before we take on an investment or a trade write down on paper with a pen and pencil exactly where one plans to exit the trade before you decide where to enter. Once you have a general exit area mapped out, then you wait for your entry signal, or build a position over a few days to a few weeks or a few weeks and a few months.

None of this is meant to sound alarmist, but rather realistic. Bubbles can inflate further (often beyond what skeptics think possible), but they do not last forever. Even if you believe this market will defy the odds, it costs little to prepare for the worst while hoping for the best. That might mean trimming exposure to speculative areas, bolstering your “sleep-at-night” funds, or simply bracing yourself psychologically for bumps ahead. Hope is not a strategy, as they say, but prudence is.

In the end, periods of extreme valuation often sow the seeds of future opportunity. IF A sharp correction occurs, it would actually restore healthier conditions for long-term investors. Lower prices are ultimately a good thing for those accumulating shares. Investors need to be in a position to survive and capitalize on accumulating shares at valuable prices for quality stocks. Just because a stock is dropping does not mean an investor should dollar cost average into it or DCA. I personally have taken my largest losses by doing exactly that in both swing trades and investments. I no longer break my rule. The stock needs to be making higher highs, while moving mostly sideways. By heeding the Buffett Indicator’s message now, investors will increase their odds of making it through a Black Swan event.

Reader Poll & Feedback!

We were unable to load this poll. Please refresh the page.

What do you think? Are we in a bubble that is about to burst? Do you think strong earnings and low rates actually justify a lot of these valuations in the market? I encourage investors and readers alike to share their thoughts in the comments, as a note, or restack this paragraph and tag me for a conversation starter.
Lets start building healthy debates and diverse perspectives, making us all better investors in the end! As a reader or as an investor, you found this analysis helpful or thought provoking, consider subscribing to receive future updates on market insights and portfolio strategy. If you find my articles and analysis helpful consider becoming a paid supporter!

Join the conversation and feel free to share this post with fellow investors who are grappling with the same questions. Staying informed and engaged is one of the best investments investors can make in their financial future!

I Love all my readers and subscribers! You guys are awesome and are the reason I stay up until 4am Writing articles the day of Thanksgiving!

Citations

• Buffett Indicator: The percent of total market cap relative to GNP

• Warren Buffett’s $382 Billion Warning Will Ring True for Wall Street Even After He Retires in Less Than 6 Weeks

• Stock Market Performance and Risks: A 2025 Outlook - Value Monitoring, Inc.

• Warren Buffett’s $382 Billion Warning Will Ring True for Wall Street Even After He Retires in Less Than 6 Weeks

• ‘Buffett Indicator’ Spells Bad News for Stock Investors

• ‘Buffett Indicator’ Spells Bad News for Stock Investors

• Understanding the Buffett Indicator: What It Tells Us About the Stock Market Today

• Buffett Indicator: The percent of total market cap relative to GNP

• The stock market valuation chart we want now but can’t have until 2035

📈 TKer by Sam Ro

The stock market valuation chart we want now but can't have until 2035 🔮

📈The stock market rallied to all-time highs, with the S&P 500 setting an intraday high of 6,699.52 on Tuesday and a closing high of 6,693.75 on Monday. The index is now up 12.8% year-to-date. For more on the market, read: The stock market and the economy are diverging…

Read more

6 months ago · 28 likes · 1 comment · Sam Ro, CFA

Legal Disclaimer

This content is for educational purposes only and is not financial advice. Trading futures involves substantial risk of loss and is not suitable for all investors. Most day traders lose money. Do your own research and consult a licensed financial professional before making any investment decisions.

Subscribe now

Leave a comment

Share Intellectual Dissatisfaction

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

Subscribe now

Executive summary

This week’s Bitcoin playbook is built around a very specific idea: if buyers can push price from the 93–96k range into a clean breakout through 96k during the New York stock market open, then there is room for a measured push toward 100–102k, with an optional stretch toward 104k. If that breakout does not set up cleanly, the plan is simple: do not force trades in the chop, protect capital, and wait for a higher-quality opportunity.

The entire plan is framed around a few core concepts:

• Bitcoin is treated as a liquid, highly volatile cryptocurrency that trades continuously, but we choose to focus risk during the New York stock market session when equity flows and macro signals are most active for many traders. (Investopedia)

• The key structural zones for this playbook are:

  • Support 1 (S1): 93,000–93,500

  • Mid-range / chop: 93,500–95,500

  • Breakout trigger (B1): 96,000–97,000

  • Target 1 (TP1): 100,000–102,000

  • Target 2 (TP2): 104,000+

  • Protective stop region: around 92,000

• We use classic support and resistance zones to define where we want to trade and, just as importantly, where we refuse to trade. (Investopedia)

• Macro confirmation comes from the S&P 500 index, the Nasdaq 100 index, and volatility gauges like the Cboe Volatility Index (VIX) and the Cboe Nasdaq Volatility Index (VXN). (Investopedia)

• Stops and position size are anchored to Average True Range (ATR), which measures typical price movement and helps set more realistic stop distances. (Investopedia)

All price levels in this article come directly from . They are best treated as a worked example or template. Before trading live, you must update the levels to match the current market structure on your own charts.

How this builds on last week’s BTC playbook

Last week’s framework is captured in the post
BTC Weekly Playbook (2025-11-09): AAVP/VWAP Map, If→Then Decision Tree, 6hr & 24hr Trade Probabilities.

That piece focused on:

• Mapping Bitcoin’s structure using anchored volume profiles and volume-weighted average price (VWAP). (Investopedia)

• A detailed “if→then” decision tree spanning multiple time horizons.

• Explicit 6-hour and 24-hour trade probability bands.

This week keeps the same spirit but tightens the execution details in three ways:

1. It defines a single primary pattern: the NY-open breakout long through 96k, with a precise support zone below and clearly defined no-trade areas.

2. It formalizes intraday checkpoints (10:00, 11:00, 14:00, 16:00 Eastern Time) so you know when to reassess instead of drifting with the tape.

3. It separates the full checklist from a compact “If X, then Y” block you can literally keep next to your chart.

Think of last week’s playbook as the map and this week’s article as a focused operating manual for one specific route on that map.

Level map for this BTC scenario

The entire trading plan hangs on a small number of price zones. Here is what each one means in plain English.

1. Support 1 (S1): 93,000–93,500

   • This is the “line in the sand” where recent 90-minute lows have been defended.

   • As long as price holds above this band, buyers still have a credible chance to push back toward the top of the prior range.

2. Mid-range / chop: 93,500–95,500

   • This is where risk-reward is poor for fresh swing trades.

   • Inside this box, price tends to move back and forth without commitment.

   • The plan is to avoid initiating new swings here. If you are not already in a trade when price is inside this zone, the default move is to stay flat.

3. Breakout trigger (B1): 96,000–97,000

   • This area is just above the recent 90-minute range highs around 96.5k.

   • A strong 30–90 minute close above 96k, with price holding above intraday VWAP, is treated as the breakout signal.

   • The goal is to enter a long within this band once the breakout is confirmed.

4. First target (TP1): 100,000–102,000

   • This region represents a “return to value” toward prior value-area lows and points of control from higher-timeframe profiles.

   • Practically, it is where you expect many traders to take profits after a successful breakout.

5. Extended target (TP2): 104,000+

   • This is the stretch goal.

   • It roughly corresponds to a two-unit reward (2R) relative to the suggested 4k stop size.

   • You only aim for this if the tape is strong and there is no obvious sign of exhaustion.

6. Protective stop region: around 92,000

   • This is about 4,000 points below a 96k entry.

   • The idea is to use a stop distance in the range of 0.7–1.0 times the recent ATR so you are not shaken out by “normal” volatility but are out if the breakout thesis fails.

To use these levels in live trading, you would rebuild them using your own charting tools, combining horizontal zones and any volume-based support and resistance you are tracking. (Investopedia)

Decision tree: BTC NY-open breakout long

This decision tree is structured to mirror how you move through a trading day in real time: first you check the overall environment, then you evaluate location on the chart, then you look for a valid breakout signal, and only after that do you think about entries, targets, and exits. If any required condition fails at a given step, you drop down the “no trade” branch and preserve capital.

You can think of the branches in three layers:

1. Pre-trade filters (time window, macro, and volatility)

2. Setup validation (levels, structure, and breakout quality)

3. Trade management (targets, failure conditions, and end-of-day risk)

1. Time and macro filter

   1.1. Is it between 9:30 and 10:00 Eastern Time, when the New York cash equity session is opening?
   • If no → Do not apply this specific New York-open playbook. Wait for this window or use a different setup.
   • If yes → Go to 1.2.

   1.2. Are the major United States equity indices supportive?
   • Check whether the S&P 500 index and the Nasdaq 100 index are both trading positive versus their cash open by roughly half a percent or more. These are your broad risk-on or risk-off gauges. You can review their behavior using standard index trackers or futures, and you can refresh yourself on what these indices represent here: S&P 500 index and Nasdaq 100 index.
   • If both are solidly green → Go to 1.3.
   • If one or both are clearly red → Take the conservative path and skip the breakout long. Reassess later in the day.

   1.3. Are volatility conditions calm enough to take directional risk?
   • Look at volatility gauges such as the Cboe VIX for the S&P 500 and the Cboe VXN for the Nasdaq 100 to see whether they are flat or easing versus the prior close. For background, see VIX and VXN.
   • If VIX and VXN are not spiking intraday → Go to 2.1.
   • If either is surging sharply → Skip the breakout long. Treat the environment as hostile for new risk.

2. Location and structure filter on Bitcoin

   2.1. Where is Bitcoin trading relative to the key zones?

   • Is Bitcoin in United States dollar terms trading between 93,000 and 96,500?
   • Has the 93,000–93,500 support band held recently, without a fresh, powerful breakdown?

   Branch:

   • If Bitcoin is below 93,000 after a hard breakdown through support → Stand aside. The “reversion higher from a defended floor” story is off the table for now.
   • If Bitcoin is above 96,500 and already pushing strongly toward 100,000 before you can plan the trade → Treat the move as late. Either significantly reduce the size you are willing to risk or do not take the setup.
   • If Bitcoin is roughly between 93,000 and 96,500, and 93,000–93,500 has not been cleanly lost → Go to 2.2.

   2.2. Is Bitcoin trading inside the mid-range chop zone, 93,500–95,500?

   • If Bitcoin is stuck inside 93,500–95,500 with small candles and no clear direction → This is the congestion box. The default decision is: no trade. Stay patient and wait for a breakout attempt.
   • If Bitcoin is above roughly 94,500 and is leaning into the 96,000 area with impulsive candles rather than drifting sideways → Go to 3.1.

3. Breakout signal quality

   3.1. Has Bitcoin broken and closed above the 96,000 trigger?

   • Watch a 30-minute to 90-minute chart around the New York open.
   • You want to see a bullish candle that:
   – Trades up through 96,000,
   – Closes above 96,000, and
   – Holds above your intraday average price benchmark, such as the volume-weighted average price (VWAP), rather than immediately falling back under it.

   Branch:

   • If the move above 96,000 is full of long upper wicks, closes back under 96,000, or drops below VWAP immediately → Treat it as a failed or low-quality breakout. Do not enter. Go back to 2.2 and wait.
   • If there is a clean close above 96,000, with price holding above VWAP and macro filters from step 1 still supportive → Go to 4.1.

4. Entry and initial risk

   4.1. Entry zone and order placement

   • If the clean breakout conditions are satisfied, plan your long entry between 96,000 and 97,000.
   • This is your breakout zone: you are buying strength, not trying to bottom-fish a dip.

   4.2. Stop-loss placement and position size

   • Place your initial protective stop near 92,000, or slightly below the most recent structural swing low that underpins the breakout.
   • Use a volatility measure like Average True Range to sanity-check this distance so it is in proportion to typical recent movement.
   • Decide how much you are willing to lose on this trade as a dollar amount, and then size your position so that the distance from your entry (for example, around 96,000) to your stop (around 92,000) corresponds to that predefined risk. For a primer, see risk management.

   Branch:

   • If you cannot size the trade within your risk limits while using a reasonable stop near 92,000 → Skip the trade. The opportunity does not fit your risk budget.
   • If you can size the trade comfortably within your risk limits → The long position is now active. Go to 5.1.

5. Target management and intraday checkpoints

   5.1. First target zone (TP1) and partial exit

   • As price moves in your favor, your first key area is 100,000–102,000. This is where you expect many participants to realize gains and where prior value-area lows and points of control often sit.
   • When Bitcoin trades into 100,000–102,000:
   – Take at least half of your position off to realize profits.
   – Move your stop for the remaining size up to breakeven or tighter, such as around 94,000, to protect against a full reversal.

   5.2. Extended target zone (TP2) and runners

   • If momentum is still strong near 100,000–102,000, with no obvious heavy selling:
   – Consider leaving a small “runner” portion of the position on, with a stretch target around 104,000.
   • If momentum is clearly stalling or reversing near 100,000–102,000:
   – Prioritize protecting realized profits over chasing the final increment. It is acceptable to close most or all of the position here.

   5.3. 11:00 Eastern Time checkpoint

   • If, by around 11:00, Bitcoin is still holding above 96,000 and is trending toward 100,000 with constructive price action:
   – Keep the position with a tightened stop (for example, near 94,000) and let the trade work toward your targets.
   • If, by 11:00, Bitcoin has fallen back into the 93,500–95,500 mid-range and printed a 90-minute close inside that box:
   – Treat this as a failed breakout. Exit the trade or cut position size aggressively rather than hoping for a full recovery.

   5.4. 14:00 Eastern Time checkpoint

   • If, by early afternoon, Bitcoin is stuck below the 100,000–102,000 target zone with fading momentum:
   – Take more profits or close the trade. The probability of a clean continued breakout is dropping.
   • If Bitcoin is grinding higher with higher lows and constructive candles:
   – Continue to trail your stop under the prior 90-minute low, giving the trade room to extend, while still locking in a meaningful portion of the gains.

   5.5. 16:00 Eastern Time risk control

   • As you approach the United States equity cash close around 16:00:
   – Decide explicitly whether you want to hold any position size overnight into a market that trades 24/7.
   • If you are not clearly above the 100,000–102,000 target zone with strong structure:
   – The conservative decision is to flatten most or all of the position and go into the overnight session flat.
   • If you are clearly above 100,000–102,000 with powerful structure and you choose to hold a small runner:
   – Do so with a stop that secures a large portion of the realized profit, understanding that gaps and sudden moves can still occur at any time.

6. No-trade and stand-aside branches

Throughout the decision tree, several conditions will push you onto a “no trade” or “stand aside” branch:

• Macro is not supportive (equity indices weak, volatility indices spiking).

• Support at 93,000–93,500 has already broken decisively and Bitcoin is trading beneath it.

• Bitcoin is stuck in the 93,500–95,500 congestion box with no decisive breakout attempt.

• The breakout above 96,000 is weak, quickly rejected, or does not hold above VWAP.

• The required stop distance cannot be funded within your pre-defined risk budget.

Whenever you hit one of these branches, the correct action is to preserve capital and wait. The purpose of this decision tree is not to ensure that you are always in a trade. Its purpose is to make sure that, when you are in a trade, you entered into the trade for clearly defined reasons with a complete plan for entries, exits, and risk before entering!

Condensed “If X, then Y” block

If you want a single page you can tape next to your monitor, this is the distilled logic.

1. If between 9:45 and 10:00 Eastern Time:

   • BTC is above 94,500,

   • Breaks and closes above 96,000 on a 30–90 minute bar, and

   • SPX and NQ are up while VIX and VXN are not spiking,
     then consider a long in the 96,000–97,000 region with a stop near 92,000, first target at 100,000–102,000, and optional stretch toward 104,000.

2. If BTC is holding between 93,500 and 95,500 at 10:00 or 11:00 Eastern Time with no decisive break and mixed macro signals, then stay flat and protect mental and financial capital.

3. If BTC reaches 100,000–102,000, then take at least half the position off, move the stop up to breakeven or tighter, and only keep a smaller runner toward 104,000 if the trend remains convincing.

4. If after entry BTC falls back into 93,500–95,500 and prints a confirmed 90-minute close inside that band, then treat it as a failed breakout and exit or reduce materially instead of waiting and hoping.

5. If by 16:00 Eastern Time you are still holding size and BTC is not trading firmly above the first target region with a clear, healthy trend, then flatten most or all of the position to control overnight risk.

Risk management and position sizing

A trade plan is only as good as its risk process. Here is how to think about this setup in practical risk terms.

1. Define your risk per trade in currency, not in contracts

   • Decide how much you are willing to lose if the stop at around 92,000 is hit.

   • For example, if you are comfortable risking 1% of a 50,000-dollar account, that is 500 dollars of risk.

2. Use ATR to sanity-check the stop distance

   • Average True Range (ATR) measures how much an asset typically moves over a chosen lookback period. (Investopedia)

   • If the recent ATR on your chosen timeframe is, for example, 3,500 points, then a 4,000-point stop is in line with normal moves and less likely to be hit by random noise alone.

   • If ATR is much smaller than the stop distance, you may be taking more risk than necessary. If ATR is much larger, your stop may be too tight.

3. Translate risk into position size

   • Position size is roughly:

     • Size = (dollars you are willing to lose) ÷ (distance from entry to stop, in dollars per coin or per contract).

   • Keeping the example:

     • Risk per trade: 500 dollars

     • Entry: 96,000

     • Stop: 92,000 (distance = 4,000)

     • Size ≈ 500 ÷ 4,000 = 0.125 BTC equivalent exposure

   • Adjust for your instrument (spot, futures, perpetuals) and contract specifications.

4. Avoid stacking correlated risk

   • If you are also trading other cryptocurrencies or high-beta tech names that move with Bitcoin, treat them as part of the same risk cluster. (Investopedia)

   • Do not allocate 1% risk to BTC, another 1% to a correlated crypto, and another 1% to a highly correlated stock without recognizing that you have effectively concentrated your exposure.

5. Respect the daily loss cap

   • Decide in advance how many full-R losses you are willing to take in a day or week.

   • Once that limit is hit, step away from the screen and protect your decision-making ability.

When to stand aside

One of the most important parts of this playbook is knowing when to do nothing.

• Inside the 93,500–95,500 mid-range, price is telling you that buyers and sellers are still debating the next move. There is no need to be involved until one side clearly wins.

• If SPX or NQ are sharply red, or volatility indices are surging, you may see deceptive BTC moves that reverse quickly. Standing aside in those conditions often protects more capital than any single trade can make.

• If S1 at 93,000–93,500 has recently broken with force and BTC is still trading below it, the context has changed. This particular “breakout long back to value” idea no longer applies. Forcing it after the structure has shifted is how traders turn one small, controlled loss into a larger drawdown.

In other words, this is not “buy every dip near 93k”. It is “wait for the right mix of price, time, and macro context, and do nothing if that mix never shows up.”

How to practice this playbook without risking capital

Before you put real money behind any structured plan, it helps to rehearse it.

1. Pick a sample of past days where BTC traded near these zones.

2. On a replay or static chart, walk through the checklist:

   • What was BTC doing at 9:30, 10:00, 11:00 Eastern Time?

   • What did SPX, NQ, VIX, and VXN look like on those days?

   • How often did a clean 96k breakout lead into the 100–102k region versus failing back into the mid-range?

3. Log the outcomes in a journal, including:

   • Whether the entry criteria were satisfied.

   • Whether the targets were reached and how quickly.

   • How large a drawdown each trade experienced before moving in your favor.

This kind of structured review is a simple, low-tech way to check whether a setup behaves roughly as expected without pretending you can predict every outcome.

Glossary

This section briefly defines key terms used in the playbook, with links to longer references if you want to go deeper.

• Bitcoin (BTC): A decentralized digital currency that uses blockchain technology and trades globally around the clock. (Investopedia)

• Cryptocurrency: A broad category of digital assets, including Bitcoin, that rely on cryptography and distributed ledgers instead of central banks. (Investopedia)

• Support zone: A price area where buying interest has repeatedly stepped in, making it harder for price to move lower. Often identified using historical lows and support and resistance analysis. (Investopedia)

• Volume-weighted average price (VWAP): An intraday benchmark that combines price and trading volume to show the average price paid over a period, weighted by how much traded at each price. (Investopedia)

• Average True Range (ATR): A volatility indicator that uses recent highs, lows, and closes to estimate how much price typically moves over a given period, helping traders set more realistic stops. (Investopedia)

• S&P 500 index (SPX): A major U.S. stock index composed of 500 large public companies, often used as a broad measure of U.S. equity performance. (Investopedia)

• Nasdaq 100 index (NDX): An index of 100 of the largest non-financial companies listed on the Nasdaq exchange, heavily weighted toward technology and growth names. (Investopedia)

• VIX and VXN: Option-based volatility indices measuring expected 30-day volatility in the S&P 500 and Nasdaq 100, respectively. Elevated readings often correspond to periods of market stress. (Investopedia)

Legal disclaimer

This article is for educational and informational purposes only and is not investment, trading, or financial advice. The levels, examples, and scenarios described here are illustrative and based on past data and assumptions that may no longer apply to current market conditions. Trading Bitcoin, cryptocurrencies, and derivatives involves substantial risk, including the risk of losing more than your initial investment. A large majority of active traders and short-term speculators lose money over time. You are solely responsible for your own trading decisions and for managing your own risk. Before making any investment or trading decision, you should conduct your own research and due diligence and consult with a qualified, licensed financial professional who understands your personal financial situation, objectives, and risk tolerance.

Leave a comment

Subscribe now

Fundamental Analysis and Technical analysis contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

The chart that kicked this off

At the top of this post is a political-cartoon: a glass hallway between Washington, D.C. and Wall Street, a revolving door in the middle, and a clear pipeline labeled “Taxpayer Money” flowing one way.

Now pair that image with the table of “Monopolies” and “Duopolies”:

Monopolies

• Search: $GOOGL

• Semi Fabs: $TSM

• Wireless IP: $IDCC

• Lithography: $ASML

• Uranium Refining: $CCJ

• Domain Registry: $VRSN

• DNA Sequencing: $ILMN

Duopolies

• GPUs: $NVDA / $AMD

• CPUs: $AMD / $INTC

• Networking: $ANET / $CSCO

• ASICs: $AVGO / $MRVL

• AEC: $CRDO / $APH

• Etch Equipment: $LRCX / $AMAT

• Chip Design Software: $CDNS / $SNPS

• Credit Cards: $V / $MA

• Credit Rating: $MCO / $SPGI

• Organ Transport: $TMDX / $XVIVO

• Weight-Loss Drugs: $NVO / $LLY

• Surgical Robots: $ISRG / $SYK

• Aircrafts: $BA / $EADSY

• Coke: $KO / $PEP

• Mobile OS: $AAPL / $GOOGL

• Travel: $ABNB / $BKNG

• Rideshare: $UBER / $LYFT

• Gas Turbines: $GEV / $SMNEY

• Social Media: $META / $SNAP

If you are a high-income professional trying to compound wealth, this list is basically a cheat-sheet of monopoly stocks and oligopoly stocks that dominate their lanes.

But it also raises an uncomfortable question.

If this is what a “free market” looks like, what exactly are our antitrust and securities regulators doing?

Monopolies vs. “functional monopolies”

In a standard economics text, a monopoly is a single firm that faces no close substitutes and can meaningfully set prices. K-State Libraries+3Investopedia+3Economics Help+3

An oligopoly is a market where just a few large firms dominate output and pricing power. Federal Reserve Education+4Investopedia+4Wall Street Prep+4

Most of the names in our table are not literal, textbook monopolies. Instead, they are what I will call functional monopolies or tight oligopolies:

• They control essential infrastructure, standards, or intellectual property.

• They operate in markets where barriers to entry are high.

• They capture the lion’s share of the profit pool, even if a few smaller players exist.

If you want to go deeper on the formal definitions, good starting points are:

• Monopoly – Investopedia, Investopedia

• Oligopoly – St. Louis Fed, Federal Reserve Bank of St. Louis

A tour of the chokepoints

Let us walk through a few of the most important chokepoints on the list, because this is where structural advantage and portfolio risk collide.

True chokepoints in the global economy

• ASML ($ASML) – EUV lithography
  ASML is effectively the sole supplier of extreme ultraviolet (EUV) lithography machines needed to manufacture the most advanced chips. ASML+2The Guardian+2
  Without ASML tools, the entire high-end semiconductor stack — including NVIDIA GPUs and Apple’s latest processors — does not exist. For an affluent investor, this is the definition of a “must-own chokepoint,” but also a massive single-point risk.

• TSMC ($TSM) – leading-edge foundry
  Taiwan Semiconductor dominates leading-edge production for advanced logic nodes. Alternative foundries exist, but in the 3–5nm class, TSM’s ecosystem, yield, and tooling lead give it quasi-monopoly power at the bleeding edge.

• Verisign ($VRSN) – .com/.net registry
  Verisign operates the registry for the .com and .net domains under long-term agreements, giving it a unique position in the backbone of the internet.

• Visa ($V) and Mastercard ($MA) – card networks
  Outside China, Visa and Mastercard process the overwhelming majority of global credit-card transactions — estimates put their combined share around 90% of card payment volume. The Street+3Quartr+3Fortune+3

  For merchants and consumers, they are essentially the default rails.

• Moody’s ($MCO) and S&P Global ($SPGI) – credit ratings
  Together with Fitch, they dominate sovereign and corporate credit ratings, with estimates of 95–99% global market share in some segments. Investopedia+2ScienceDirect+2
  Their opinions are embedded into regulations, collateral rules, and investment mandates.

For a wealthy investor building a core equitable portfolio, these names are not just “good businesses” they are systemic nodes. That is precisely why they deserve both attention and skepticism.

Winner-take-most digital platforms

• Apple ($AAPL) and Alphabet ($GOOGL) – mobile OS and app stores
  iOS and Android are the only mobile operating systems that matter at global scale. The app ecosystems around them exhibit strong network effects — each new user and developer makes the platform more valuable. Wall Street Prep+4Investopedia+4Harvard Business School Online+4

• Meta ($META) and Snap ($SNAP) – attention markets
  Together, they control huge slices of mobile attention and ad inventory, particularly among younger demographics. Businesses that target affluent consumers — luxury travel, premium credit cards, high-end retail — all compete for real estate on these platforms.

• NVIDIA ($NVDA) and AMD ($AMD) – GPUs and accelerators
  In discrete GPUs and general-purpose accelerators used for AI and high-performance computing, NVIDIA dominates with AMD as the primary alternative. Custom ASICs and cloud-provider chips are emerging, but for most enterprises deploying AI today, “GPU” still effectively means “NVIDIA.”

Niche but powerful oligopolies

A few pairs on the list live in narrower, but highly lucrative niches:

• ISRG / SYK – surgical robots

• TMDX / XVIVO – organ transport technologies

• BA / EADSY – large commercial aircraft

These are textbook oligopoly industries: high capital costs, intense regulation, and long product cycles that favor a small club of big players. Investopedia+2Wall Street Prep+2

For investors with disposable income and a long horizon, these can behave like “hidden monopolies” inside healthcare and industrials.

How did we end up here?

Blaming everything on lazy or corrupt regulators is emotionally satisfying but analytically weak. Three structural forces explain most of what we see.

1. Network effects and data compounding

Digital platforms and payment networks benefit from network effects — the more users and transactions they handle, the more valuable they become to everyone in the network. Wall Street Prep+4Investopedia+4Harvard Business School Online+4

That is why:

• Developers build for iOS and Android, not fringe operating systems.

• Merchants accept Visa and Mastercard by default.

• Advertisers pay up for Meta and Google’s reach and targeting.

Once the flywheel spins, it becomes exceptionally difficult for a new competitor to dislodge the incumbent.

2. Scale economics and capital intensity

Industries like semiconductors, aerospace, healthcare robotics, and gas turbines are brutally capital-intensive. The up-front cost of fabs, lithography tools, certification, and R&D is measured in billions.

In such environments, economies of scale naturally push toward a small set of survivors — exactly what we see with TSMC, ASML, Boeing/Airbus, and a handful of med-tech platforms. The Times of India+2Tom’s Hardware+2

3. Regulation that locks in incumbents

This is where the thumbnail’s “Taxpayer Money” pipe becomes important.

• Credit ratings from the “Big Three” are written directly into regulations and capital requirements. Investopedia+2SSRN+2

• Card-network rules and settlement standards make it extremely hard for alternative rails to gain traction, even when technology exists. Quartr+2Payments Dive+2

• Compliance costs and licensing regimes favor those large enough to amortize the overhead.

When rules are written around today’s giants, tomorrow’s competitors must fight both economics and regulation. That is not always a deliberate conspiracy, but it looks a lot like what economists call regulatory capture — regulators gradually serving the interests of the regulated industry instead of the public. The Regulatory Review+4Investopedia+4Economics Help+4 [Theory]

So… what exactly is the SEC doing?

Here is the key nuance most headlines skip:

• Antitrust enforcement — deciding whether a merger is anti-competitive or whether a platform has abused monopoly power — is primarily handled by the Department of Justice (DOJ) Antitrust Division and the Federal Trade Commission (FTC). Winston & Strawn+4Federal Trade Commission+4Government Accountability Office+4

• The SEC’s mandate is narrower: policing securities markets, disclosure quality, insider trading, and market manipulation.

So if you are looking for a single villain behind concentrated industries, the SEC alone is a poor target.

That said, the revolving door shown in the thumbnail is not fiction:

• Career paths routinely move from large banks, hedge funds, and mega-caps into agencies and back out again.

• The same is true for senior roles at the Fed, Treasury, DOJ, and the SEC.

This pattern does not require a secret conspiracy to have real consequences. It nudges the entire system toward protecting incumbents, because rocking the boat too hard is almost never the optimal move for someone whose future earning power depends on staying in the club.

A more precise statement than “the SEC incentivizes monopolies” would be:

The current U.S. regulatory architecture, including the SEC, FTC, DOJ, and the Fed, often tolerates and indirectly reinforces winner-take-most market structures through a mix of network effects, complex rules, and regulatory capture.

Why this matters for investors

If you are reading this, odds are you already have some capital to deploy — a high-income job, stock options, or accumulated savings. The question is how to use this map of monopolies and duopolies.

The attractive side: durable cash-flow machines

From a portfolio-construction perspective:

• Many of these companies earn high and persistent returns on invested capital because of their structural moats.

• They can often raise prices or hold pricing during inflation and recessions.

• Their brand, data, and regulatory moats make disruption slower than headlines suggest.

If you are building a core equity sleeve inside a taxable brokerage account, IRA, or trust, these are natural candidates for long-term compounders.

Hyper-relevant search phrases here would be:

• “best monopoly stocks for long-term investors”

• “duopoly stocks with pricing power”

• “how to invest in network-effect platforms”

This post is not a screen or a model portfolio, but the list at the top is a good starting universe for further research.

The dark side: concentration and policy risk

The same features that make these stocks attractive to affluent investors also make them fragile in a different dimension:

• They are exposed to regulatory and political backlash when the public mood swings toward “break up Big Tech” or “cut card fees.” Steptoe+4Quartr+4Fortune+4

• Portfolios overweight these names are effectively betting that current rules and power structures will persist.

• Disruption, when it finally arrives, tends to be abrupt and brutal (think telecom deregulation, or what low-cost carriers did to legacy airlines).

For high-net-worth or mass-affluent investors, the practical takeaway is simple:

Treat monopoly and duopoly exposures as risk factors as much as moats. Size them consciously, and stress-test what happens if regulation or technology tilts the board.

Where I land

When I put the chart of “Monopolies” and “Duopolies” next to the thumbnail of the revolving door and the “Taxpayer Money” pipe, a few conclusions emerge:

1. We do not live in a textbook free market. We live in a system of critical chokepoints run by a small group of firms with deep ties to regulators.

2. Network effects, scale economics, and regulatory complexity naturally push us toward winner-take-all outcomes.

3. The revolving door between Wall Street and Washington amplifies that tendency through regulatory capture, even without explicit corruption. study.com+4Investopedia+4Economics Help+4

4. For investors with disposable income, these companies are both opportunities and concentrated risks. The better you understand the structure, the less you are just passively along for the ride.

You do not have to believe in a grand conspiracy to be uneasy about this. What you do need is a clear-eyed view of where your capital is actually exposed.

So I will leave you with the same question I asked myself writing this:

Are you consciously allocating to these monopoly and duopoly franchises because you understand their power — or have you simply outsourced the decision to index funds that own them by default?

Fact vs Theory Audit

• DOJ and FTC are the primary U.S. antitrust enforcers; the SEC focuses on securities regulation and investor protection. Winston & Strawn+4Federal Trade Commission+4Government Accountability Office+4

• ASML is the sole supplier of EUV lithography tools used for the most advanced semiconductor nodes. ASML+2The Guardian+2

• Visa and Mastercard together process the majority of card payments outside China and are widely described as a global payment duopoly. The Street+3Quartr+3Fortune+3

• The credit-rating industry is dominated by Moody’s, S&P, and Fitch; regulations embed their ratings into financial rules. Cato Institute+3Investopedia+3ScienceDirect+3

• Network effects and economies of scale are well-documented drivers of concentration in digital platforms and payment systems. Wall Street Prep+4Investopedia+4Harvard Business School Online+4

Theories

• Labeling the companies in the opening table as “functional monopolies” or “tight oligopolies” is an analytical judgment based on market structure, not a legal designation.

• Regulation that embeds today’s incumbents into rules and standards tends to reinforce their dominance and raise barriers for challengers. The Regulatory Review+3Cato Institute+3Investopedia+3

• The revolving-door career incentives of regulators and industry leaders bias the system toward protecting incumbents, even without explicit corruption.

• For investors, overweight exposure to these stocks is effectively a leveraged bet on the persistence of current regulatory and technological regimes.

Speculation

• The exact degree to which specific agencies or individuals consciously prioritize industry interests over public interests cannot be proven from public data and remains uncertain.

• The timing and severity of future regulatory backlash or technological disruption to any individual company on the list are inherently uncertain.

Legal disclaimer

This article is for educational and informational purposes only and reflects personal opinions at the time of writing. It is not investment advice, a recommendation to buy or sell any security, or a solicitation to engage in any investment strategy. Trading and investing in financial markets involves substantial risk, including the risk of total loss of capital. The majority of active traders and day traders lose money over time. You should conduct your own research, consider your individual financial situation, and consult with a qualified, licensed financial professional before making any investment or trading decisions.

Leave a comment

Share

Music and writing contained in this post was performed by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

You know those weeks when every watchlist looks like a crime scene?

I am staring at a sea of red.
Red candles, red P&L,
Red on the heat map,
Red in my Mood

Ukulele in Hand,
I play like a band,

I am staring at a sea of red.
Red candles, red P&L,
Red on the heat map,
Red in my Mood

Ukulele in Hand,
I play like a band,

I steal back a minute from fear in my head,
Let chords cut the static the headlines have spread.

The market still crashes, the tickers still bleed,
But rhythm reminds me: breathe slower, take heed.

No heroic breakout, no backtested edge,
Just four wooden strings at my screen’s glowing ledge.

I count out the beats like a stop-loss in time,
Each downstroke a boundary, each upstroke a climb.

When the last note is fading, my pulse has slowed down,
The charts have not changed—but I will not drown.

I turn to the candles with steadier eyes,
Let go of revenge and the need to be wise.

Trade only the plan, leave the panic unread;
Ukulele in hand in a sea of red.

This article is about something disarmingly simple that I do when the screens feel like they’re screaming at me: I pick up my ukulele and play for one minute. Not an hour. Not a full practice session. Just sixty seconds to soothe my soul and the souls of other stock traders rowing through the same sea of red.

If you’re reading this with a cup of coffee, a clenched jaw, and your cursor hovering over the sell button, this “one-minute ukulele reset” is for you.

When the market turns into a sea of red

The stock market has been bleeding all week, futures are gapping down, and every risk-on chart looks like a ski slope pointed straight into the abyss. Before the usual spiral of over-analysis, doom-scrolling, and “what if I’d sold yesterday” kicks in, I do something that makes zero sense on a price chart and perfect sense for trading psychology.

I pick up my ukulele, and I play for one minute.

No fancy solo. No TikTok performance. Just sixty seconds of simple chords to soothe the soul while the market screams.

One minute, one instrument, one nervous system reset

That one-minute ukulele break is my antidote to market volatility, not another trading “edge” to backtest.

When the stock market is red and social feeds are full of “next stock market crash” headlines, it is easy to slip into fear, revenge trading, and impulsive decisions. That is exactly when traders convince themselves that adding more indicators, more screens, and more news will help. Usually, it does the opposite.

A tiny, physical ritual like strumming a ukulele interrupts that loop.

In that one minute, I am not a day trader staring at a P&L. I am just a person holding an instrument, breathing slower, feeling the vibration of the strings in my hands. It is a reset button for emotional resilience and risk management, not for the chart.

The red candles are still there after I stop playing. The difference is that my nervous system is no longer chasing them.

What my one-minute ukulele ritual actually looks like

Here is how it plays out in real time on a brutal red day:

1. I notice my tells
   Jaw clenched. Shoulders tight. I am zooming in and out on the same 5-minute chart like the candles will magically change if I stare hard enough. Classic pre-tilt behavior.

2. I step away – physically
   I push the chair back, stand up, and pick up the ukulele that lives within arm’s reach of my trading setup. No phone. No charts. Just instrument in hand.

3. I set a hard limit: one minute
   This is not procrastination. It is a one-minute ritual. I literally watch the clock. Sixty seconds, then back to work.

4. I play something simple
   A basic progression. No creativity contest. The goal is not to impress anyone; it is to soothe my nervous system. I listen to the sound instead of listening to the voice that says, “You’re missing the move.”

5. I return and re-run the checklist
   Back at the desk, I look at my risk-reward, position sizing, and stop-loss levels with fresh eyes. If a trade still fits my system, I take it. If not, I let it go. The ukulele does not decide for me; it just makes sure fear is not the one deciding.

This is where trading psychology quietly becomes risk management. You cannot execute a solid plan if your state is wrecked. The one-minute ukulele ritual (exact steps I use)

Here’s the actual playbook I follow after a big down week when the charts are a sea of red and my soul feels frayed.

You can literally do this between trades or after you shut the platform down for the day.

1. Step away from the screen

I physically turn my chair away from the monitors or stand up and walk to a different corner of the room. This sounds trivial, but it breaks the visual spell of blinking quotes and red candles.

2. Set a strict 60-second boundary

I start a one-minute timer on my phone. No more. This is important: traders understand risk/reward and position sizing; think of this as a fixed “position size” in time.

One minute is short enough that I can’t claim “I don’t have time,” but long enough to let my nervous system feel something different.

3. One simple progression, not a performance

I don’t try to impress anyone. I play the same simple chord progression—something like C–G–Am–F—on repeat. No pressure to “sound good,” no improvisation, just pattern and rhythm.

The rule: no judgment, no evaluation.

This is not a metric to optimize. It’s medicine.

4. Match the strum to your breath

I quietly pair my strumming pattern with my breathing:

• Inhale over one slow down-strum

• Exhale over one slow up-strum

• Let the sound and the breath move together

This echoes the breathing guidance from research-backed relaxation techniques where you intentionally lengthen the exhale and keep attention on the sensation of the breath. (Mayo Clinic Connect)

5. One phrase for the soul

Inside my head, I repeat a short phrase that has nothing to do with money:

“I trade the plan, the market is free just like me.”

It’s a mini-mantra, much like the focus words used in clinical relaxation training (“calm,” “relax,” “warm”) to help the body associate a word with a state of ease. (Mayo Clinic Shared Files)

When the minute ends, I stop—even if I want to keep going. That boundary is what turns this from “noodling around” into a repeatable ritual.

How this helps my trading (not just my mood)

On the surface, this is about soothing the soul. But as traders we care about edge, execution, and sustainability. So here’s why a one-minute ukulele reset matters for performance.

1. It protects your risk management

Good risk management for active traders depends on following a predefined plan: stops, risk/reward ratios, and consistent position sizing.

The problem is that, under stress, we override that plan:

• Canceling stops

• Doubling size to “make it back”

• Taking trades that don’t fit our rules

My ukulele ritual serves as a circuit breaker, I do it:

• After three losing trades in a row

• After any impulsive trade, win or lose

• At the end of a red day or red week

It gives me a moment to reset before I decide whether to keep trading or walk away.

2. It improves trading psychology without needing a full therapy session

There is a huge field around trading psychology and performance, but many techniques boil down to the same core ideas: regulate arousal, widen attention, and reconnect to process instead of outcome. (Investopedia)

The ukulele ritual checks all three boxes:

• Regulate arousal – breathing and soft sound help the nervous system slide from “fight or flight” toward calm. (Mayo Clinic)

• Widen attention – instead of staring at a single ticker, I’m noticing fingers, strings, sound, breath.

• Reconnect to process – I’m literally practicing a process (the progression and the timer) with no P&L attached.

3. It reminds me I am more than my P&L

Perhaps the most important benefit is spiritual, not just psychological.

When the market is a sea of red, it’s easy to collapse your identity into your equity curve. One gentle song on a simple instrument is my way of saying:

“My soul is allowed to be at peace even when the market is not.”

That separation is what lets me come back the next day with a clearer head and a steadier hand.

You do not need a ukulele – you do need a ritual

My instrument happens to be a ukulele. Yours might be:

• Drumming fingers on a practice pad.

• A quick stretch, breathwork, or a walk to the window.

• Writing one sentence in a notebook before re-engaging the screen.

The specifics do not matter. What matters is this:

• It is brief (around one minute).

• It pulls you out of the chart and into your body.

• It is done on purpose, especially when the market is red.

If you trade through market volatility, bear market corrections, or high-stress day trading sessions, you need more than algorithms and watchlists. You need a way to stop your brain from turning every move into a personal emergency.

For me, that way is a ukulele – a tiny wooden reminder that my soul is not priced in dollars per tick.

If you do decide to copy my exact approach:

The Trader’s Ukulele Reset

• Turn away from your screen.

• Start a 1-minute timer.

• Strum a simple progression on loop.

• Match your breath to the rhythm.

• Repeat one calming phrase in your mind.

  • Feel free to use mine “I trade the plan, the market is free just like me.”

• When the timer ends, stop.

• Only then decide: trade, reduce size, or call it a day.

Over time, this becomes a conditioned response: your nervous system learns that one minute of this sound means “we’re safe enough to relax.”

Closing thoughts: soul first, strategy second

I love technicals, execution plans, and clean risk models as much as anyone. I study volatility, position sizing, and risk/reward ratios because they are the backbone of any trading edge. (Investopedia)

But none of that works if the person pressing the buttons is exhausted, tilted, and spiritually burned out.

My one-minute ukulele ritual is not a trading strategy. It’s a soul strategy.

It’s how I remind myself, and now you, that even in a sea of red, we can choose a different rhythm. We can choose breath over panic, sound over noise, and soul over screen.

If this resonated with you, watch the 60-second ukulele clip at the top of this post the next time your week ends in red. Let it be a small reminder that you’re not alone in the sea and that your soul is worth more than any drawdown!

One Love,

Andrew Jodice

Fact / Theory / Speculation notes

• Fact: Short, structured relaxation and breathing practices (including 1-minute meditations) can activate the body’s relaxation response and reduce stress markers. (Mayo Clinic)

• Fact: Stock market volatility is a statistical measure of price variability and is closely watched by traders; high volatility is associated with higher perceived risk. (Investopedia)

• Fact: Sound risk management for traders includes defined position sizing, risk/reward ratios, and protective rules to limit drawdowns. (Investopedia)

• Theory: Using a one-minute ukulele ritual as a consistent, time-boxed reset can improve trading discipline by reducing emotional reactivity and helping traders stick to their pre-defined risk rules. (This is consistent with what we know about state regulation but has not, to my knowledge, been directly tested in controlled trading studies.)

• Theory: Framing the ritual as a “position size in time” makes it easier for traders to adopt, because it leverages concepts they already use in risk management.

• Speculation: Regular use of this specific ukulele practice might, over months or years, measurably improve trading outcomes (higher expectancy, fewer rule violations) for some traders. This is plausible, but would require structured tracking and controlled comparison to verify.

  

Share

Leave a comment

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

This Section of the Article is for Free Subscribers.

Executive summary

Risk-on backdrop. Trade only at the listed triggers. Use NASDAQ-100 futures with ATR-based position sizing. Cross-asset filters remain supportive while the U.S. Dollar Index (DXY) stays below 100.50 and volatility stays subdued on our in-house monitor. Mechanical plan favors long momentum through value-area high, tactical fades inside value, and short momentum only on a clean break of value-area low with money-flow confirmation from Chaikin Money Flow .

Desk note:

Use the triggers and (CMF)invalidations verbatim. Adjust directional bias intraday with DXY, our volatility monitor, 30-year T-Bond futures (ZB), and gold (XAU/GC).

Review of Yesterday’s Call & Improvements

We kept the playbook simple: strength only above the value-area high, weakness only below the value-area low, and range trades only inside value with tight risk. The improvement for today is tighter confirmation using CMF: treat readings between −0.05 and +0.05 as noise, and require ±0.10 or stronger for momentum entries. We also standardize stops and position size using Average True Range on the one-hour chart to keep dollar risk constant across setups.

Key levels

Reference framework: 15-minute Auto-Anchored Volume Profile (AAVP) and value areas.
Trigger (VAH): 25,689.00
Pivot (POC): 25,641.25
Guardrail (VAL): 25,507.00
Spot reference: ~25,706.75/25,706.00 (ask/bid)
Upside magnets: 25,788.13, 25,812.50, 25,880.00
Supports: 25,674–25,656, 25,641, 25,603.7, 25,507
Money-flow gate: CMF(20) ≈ +0.04; use ±0.05 as noise, ≥+0.10 confirm breakouts, ≤−0.10 confirm breakdowns.

Decision tree for NASDAQ Futures (Free)

If a fifteen-minute bar closes above 25,689 and a quick retest holds at or above 25,689, consider a long for continuation toward 25,788, then 25,812.50, then 25,880. Invalidate on a fifteen-minute close back below 25,641.

If price trades into 25,674–25,656 and momentum turns up, consider a bounce back toward 25,689–25,641, with a stretch objective at 25,788. Invalidate on a decisive break below 25,641.

If a fifteen-minute bar closes below 25,507, consider a short toward 25,474, then 25,462, then 25,343. Invalidate on a fifteen-minute close back above 25,641.

Decision tree for NASDAQ Futures (Paid)

Read more

Share

Leave a comment

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

This Section of the Article is for Free Subscribers.

Executive summary

NQ is range-bound around the fifteen-minute Auto-Anchored Volume Profile point of control. The risk-on gates are open while the United States Dollar Index is weak and the in-house volatility monitor is low, but momentum is mixed at value. The practical read: only press longs on strength through the value-area high with money-flow confirmation; fade moves back toward the point of control while price remains inside value; take shorts only on a firm break of the value-area low.

NQ operating map (15-minute AAVP + references)

• Value-Area High (VAH): 25,659.25.

• Point of Control (POC): 25,591.00.

• Value-Area Low (VAL): ≈25,523. Note: approximated by symmetry because the VAL label is not legible on the capture provided.

Why this order of operations: Cross-asset gates set directional bias; key market profile levels define where trades should trigger or fail; confirmations and risk convert the map into an executable plan.

Desk note:

Use the triggers and invalidations verbatim. Adjust directional bias in real time with DXY, VINMO, ZB, and XAU. If DXY rises above 100.50 or VINMO rises above 18 during U.S. hours, reduce risk immediately.

Review of Yesterday’s Call & Improvements

Lets take a look at yesterday’s post “NQ Futures Playbook — 25,597.25 trigger, 25,955 pivot, 25,480.00 guardrail (11/10/25)” posture emphasized trading “inside value back to POC” unless the value-area edges broke on a closing basis. Market behavior remained rotational, validating the emphasis on mean-reversion tactics and patience at the edges.

The main improvement for today is to require both the VWMA/SMA confirmation sequence and Chaikin Money Flow moving out of the ±0.05 noise band before pressing any breakout or breakdown. This reduces false starts common near value edges.

Key levels

• VAH: 25,659.25.

• POC: 25,591.00.

• VAL: ≈25,523. Approximated by symmetry; treat as provisional until replaced with the exact label.

• Regime confirms:

  • VWMA/SMA Breakout Detector (13/26): treat VWMA(13) > VWMA(26) as a breakout only if SMA(13) > SMA(26) follows within three candles on this timeframe; opposite for bearish.

  • CMF(20): ±0.05 noise band; ≥ +0.10 confirms risk-on entries; ≤ −0.10 confirms risk-off entries. Divergence only tightens risk.

Decision tree for NASDAQ Futures (Free)

If a fifteen-minute bar closes above 25,659.25 and a quick retest holds at or above 25,659.25, consider a long for continuation toward 25,700, then 25,760, then 25,880. Invalidate the idea on a fifteen-minute close back inside value. Require CMF(20) ≥ +0.05 and the VWMA/SMA confirmation sequence.

If price trades down into ≈25,523–25,591 and momentum turns up while CMF(20) is inside the ±0.05 noise band, consider a fade back toward 25,591 with a stretch objective to 25,659. Invalidate on a decisive break and close below ≈25,523.

If a fifteen-minute bar closes below ≈25,523, consider a short toward 25,480, then 25,430, then 25,370. Invalidate on a fifteen-minute close back above 25,591. Require CMF(20) ≤ −0.05 and the VWMA/SMA bearish confirmation sequence.

Decision tree for NASDAQ Futures (Paid)

Read more

Technical Analysis contained in this post was performed manually by of . He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

This section is for free subscribers

Executive summary

NASDAQ 8-hour chart with Anchored Volume-Weighted Average Prices, multi-timeframe Relative Strength Index, multi-timeframe Stochastic Relative Strength Index, Moving Average Convergence Divergence, Zero-Lag Exponential Moving Averages, Volume-Weighted Moving Average, Simple Moving Average, Cumulative Volume Delta, composite Relative Strength Index, Relative Strength Index with Zero-Lag Moving Average, Auto-Anchored Volume Profiles, Woodies Commodity Channel Index, Money Flow Index, and On-Balance Volume.

Today’s operating map is built from the fifteen-minute auto-anchored volume profile. The value-area high functions as the practical trigger, the point of control functions as the pivot, and the value-area low functions as the guardrail. For this session these translate to: Trigger 25 597.25, Pivot 25 548.00, Guardrail 25 480.00. [Fact]

Desk note:

Use the trigger and invalidation levels verbatim. Adjust directional bias in real time using DXY, VINMO, Treasury-bond futures, and gold. [Fact]

Review of Yesterday’s Call & Improvements

We continue from “NQ FUTURES: Trigger 25,519.00, Pivot 25,099.00, Guardrail 24,959.00 (11/07/2025)”, which framed the session around fifteen-minute value bands and required confirmation to trade beyond value. [Fact]

Outcome audit framework. Without a timestamped trade log here, we avoid attributing fills that we cannot verify. Instead we grade the framework: the prior post specified (1) acceptance beyond the value-area high for upside continuation, (2) acceptance below the value-area low for downside continuation, and (3) mean-reversion inside value by default. These rules remain sound. [Fact]

Process improvements for next week:

• Make confirmation stricter at the edges: demand that the fast Volume-Weighted Moving Average is above its same-length Simple Moving Average and that a same-length Simple Moving Average cross follows within three candles on the active timeframe before treating a breakout as valid. [Theory]

• Gate risk with money-flow: require Chaikin Money Flow to exit the ±0.05 noise band in the trade direction, with +0.10 or −0.10 treated as confirmation. [Theory]

• Scale position size to the one-hour Average True Range and reduce size whenever VINMO rises or DXY firms. [Theory]

• Log retest quality: record whether the first retest after break holds, fails, or chops. Use this to tune the stop distance and add-on logic. [Theory]

Key levels

• Trigger (value-area high): 25 597.25. [Fact]

• Pivot (point of control): 25 548.00. [Fact]

• Guardrail (value-area low): 25 480.00. [Fact]

Takeaway: mapping value-area high, point of control, and value-area low to trigger, pivot, and guardrail converts the profile into a mechanical roadmap for intraday decisions. [Theory]

Decision tree for NASDAQ Futures(Free)

• If a fifteen-minute bar closes above $25,597.25 and a quick retest holds at or above $25,597.25, consider a long for continuation toward $25,672, then 25 740, then 25 893. Invalidate on a fifteen-minute close back below 25 548.00. [Theory]

• If price trades into $25,548.00 – $25,597.25 and momentum turns up on the retest, consider a bounce toward $25,597.25, with a stretch objective at $25,740. Invalidate on decisive loss of $25,548.00. [Theory]

• If a fifteen-minute bar closes below $25,480.00 and a quick retest fails at or below $25,480.00, consider a short toward $25,344.00 then $25,270.00, then $25,160.0 Invalidate on a fifteen-minute close back above $25,597.25. [Theory]

Decision tree for NASDAQ Futures(Paid)

Read more

Technical Analysis contained in this post was performed manually by Andrew Jodice of Markets, Liberty, & Discipline. He’s studied and blends Al Brooks’ theory, Richard D. Wyckoff’s theory, and Charles H. Dow’s theory to conduct his analysis, and implements Al Brooks’ strategy to execute trades.

TL;DR: Bias is modestly long while price holds above POC 104,867. Only chase momentum on a clean break-and-retest above VAH 105,225 with VWMA/SMA confirmation. Acceptance below VAL 104,538 opens rotation to 104.35 → 103.59 → 103.18 before reassessing. [Fact/Theory]

Review of Last Week: What Worked, What We’re Improving

In How to Trade Bitcoin Without Losing Your Mind: A Rational Roadmap for Volatile Markets we framed 103,000–105,000 as the key resistance band and outlined conditional paths: reclaim and hold above 103k for momentum higher, or rejection there for a fade back toward 100k. That resistance mapping proved useful as price churned around the 103–105k corridor, validating the “confirmation first” stance before chasing. Improvement for this week: tighten confirmation with a VWMA/SMA double-confirm and CMF(20, 90m) gating, plus a narrower invalidation back through POC 104,867 when breakout attempts fail.

Operating Map (90-min AAVP) — Current State

Value, VWAPs, Trend Pack, Oscillators

• AAVP (90m): VAH 105,225, POC 104,867, VAL 104,538. [Fact]

• VRVP overhead: POC 108,091, VAH 110,786, VAL 103,248. [Fact]

• VWAP stack (90m): Session VWAP ≈ 104,555; UB1 106,477; LB1 104,350; weekly/monthly VWAPs ~103,59x / 103,181; ZLMA ~102,997. [Fact]

• Trend pack (90m): Fast VWMA 103,636 > SMA 103,355 and Slow VWMA 102,920 > SMA 102,650 → bullish state satisfied. RSI-ZLMA 75.6, CRSI 82, CVD +34, CMF ≈ +0.10. [Fact]

• Higher-TF context: 2-day shows RSI/EFI/CVD bullish divergences from early-Nov lows; 8-hour sits near 20-EMA with prior “H2 short @ 20-EMA” risk callout. [Fact]

• MA table (spot): SMA200 ~104,409, EMA200 ~104,345, VWMA20 ~103,661, HMA9 ~105,038. [Fact]

Interpretation: Inside-value chop persists. Bullish trend state on 90m, but overhead VRVP POC 108,091 is a magnet only after clean acceptance above 105,225. [Theory]

Triggers, Invalidations, Targets

Long Breakout

• Trigger: 15–90 min close > 105,225 (VAH) and retest holds ≥ 105,180, with VWMA(13)>SMA(13) and VWMA(26)>SMA(26), plus SMA cross ≤3 bars after VWMA cross. [Theory]

• Invalidation: Acceptance back < 104,867 (POC). [Theory]

• TP ladder: 105,476 → 106,477 (VWAP-UB1) → 107,389/108,091 (VRVP POC) → stretch 111,575–111,919 (VWAP/UB2). [Theory]

Short Breakdown

• Trigger: Close < 104,538 (VAL) and retest fails ≤ 104,560, with bear-state VWMA/SMA confirm ≤3 bars. [Theory]

• Invalidation: Acceptance > 104,867 (POC); structural > 105,225. [Theory]

• TP ladder: 104,350 (VWAP-LB1) → 103,593 / 103,181 (weekly/monthly VWAPs) → 102,997–102,711 (ZLMA/EMA) → 101,901 → 100,709 → 98,898. [Theory]

Inside-Value Plays

• Fade 105,180–105,225 → POC 104,867 only if SMA confirm is missing or CMF(20,90m) ≤ −0.10. [Theory]

• Buy 104,560–104,540 → POC only if bear SMA confirm is missing and CMF ≥ +0.10. [Theory]

If → Then Decision Tree (Execution Logic)

Regime Select

• If price ≥ POC 104,867 then bias long-tilted; prepare Long Breakout path. [Theory]

• If price < VAL 104,538 then bias short-tilted; prepare Short Breakdown path. [Theory]

• If price between VAL and VAH then treat as inside-value; run fade setups only with CMF/SMA gating. [Theory]

Breakout Path

• If 15–90m closes > 105,225 and retest holds ≥ 105,180 and VWMA/SMA double-confirm fires then long to 105,476 → 106,477 → 107,389/108,091, trail by VWAP bands. [Theory]

• If breakout fails back through 104,867 then exit remainder and stand down to inside-value playbook. [Theory]

Breakdown Path

• If 15–90m closes < 104,538 and retest fails ≤ 104,560 with bear VWMA/SMA confirm then short to 104,350 → 103,593 → 103,181 → 102,997, manage risk by ATR stop. [Theory]

• If price re-accepts > 104,867 then cover and revert to neutral/inside-value. [Theory]

Inside-Value Fades

• If price tags 105,180–105,225 but SMA confirm is absent or CMF ≤ −0.10 then fade back to POC 104,867, scale at 0.5×ATR, stop above 105,260. [Theory]

• If price tags 104,560–104,540 and bear confirm is absent and CMF ≥ +0.10 then buy back to POC, scale at 0.5×ATR, stop below 104,480. [Theory]

Probabilities (Conditional, Barrier-Hit Model)

• 6-hour: If ≥ POC 104,867, ~58% up / 42% down. If < VAL 104,538, ~40% up / 60% down toward 104.35 → 10 hi3.59. [Theory]

• 24-hour: Base ~56% up / 44% down while ≥ 104,538. Lose the 102.9–103.2 cluster and odds skew to downside. [Theory]

These are model odds from first-passage approximations using recent range-derived σ. They are not forecasts. [Theory]

Risk & Sizing (ATR-Driven)

• ATR proxy: 90-min ATR-60 ≈ $690; use ATR(1h) ≈ $700 as an operational estimate. [Fact→Spec]

• Stop template: 0.60 × ATR ≈ $420–$440 per BTC. [Theory]

• Position size: size_btc = risk_$ / stop_$. Example: $880 risk → ~2.0 BTC with $440 stop. Scale to perps/micros as needed. [Fact]

Execution Checklist

Before Entry

• Confirm regime: above POC, inside value, or below VAL. [Theory]

• Require VWMA/SMA state alignment on both 13 and 26 lengths; look for SMA cross ≤3 bars after VWMA cross for a true breakout/breakdown. [Fact]

After Entry

• Scale 50% at first TP (~0.5×ATR). [Theory]

• Move stop to −0.3×ATR; trail remainder by VWAP bands or last swing. [Theory]

• Stand down after a failed breakout back through POC. [Theory]

Fact / Theory / Speculation Audit

• Fact: AAVP/VRVP/VWAP levels (VAH 105,225 / POC 104,867 / VAL 104,538), VWAP bands, oscillator prints, CMF ≈ +0.10, MA table, ATR-60 ≈ $690 — all from the provided charts.

• Theory: Breakout/breakdown rules requiring VWMA/SMA double-confirm, CMF gating, target ladders, risk model multiples, barrier-hit probability framing.

• Speculation: Using ATR(1h) ≈ $700 as a convenience proxy from the 90-min read; replace with platform ATR(14,1h) for precision.

Share This Playbook

If this decision tree helps your trading, like, share, or restack so more BTC traders see it. New readers get the free levels + logic each week.

Sources

• Prior weekly review anchor: “How to Trade Bitcoin Without Losing Your Mind: A Rational Roadmap for Volatile Markets.” (intellectualdissatisfaction.com)

Legal Disclaimer

This content is for educational purposes only and is not financial advice. Trading futures involves substantial risk of loss and is not suitable for all investors. Most day traders lose money. Do your own research and consult a licensed financial professional before making any investment decisions.

Share Intellectual Dissatisfaction

Leave a comment