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Don Kaufman here. |
So here's what's actually happening while everyone's losing their minds over missiles and oil spikes. |
Iran and Israel are trading strikes. GPS is jammed across the Strait of Hormuz -- we're talking 900 ships that literally can't navigate right now. |
Energy facilities getting hit on both sides. |
And oil just dropped 5%. |
Not up. Down. |
If that doesn't tell you everything you need to know about trying to handicap geopolitical risk, I don't know what will. |
The Margin Squeeze Nobody Talks About |
Look, I've been trading oil futures for decades, okay? And right now, margin requirements just hit $15,000 per contract at Think or Swim. Some firms have pushed it even higher. |
You know what happens when they jack up margin requirements like this? They're not just asking for more money. They're forcing people out of positions. Period. |
Doesn't matter if you think World War III is starting. Doesn't matter if you're bullish oil because of supply disruptions. Can't post the margin? You're out. |
And when thousands of traders get forced out of long oil positions all at once... well, prices fall. Even when tanker ships are literally lost at sea. |
That's the irony here. Oil firms are changing margin requirements, forcing longs out of the marketplace. Meanwhile, everyone's trying to figure out geopolitical implications. |
Why I Don't Bet on War |
Here's something I learned early in my career, okay? When you start to think you can handicap geopolitical risk -- like war -- you're outta your mind. |
It's beyond unpredictable. You need like an entirely new name for it. |
Case in point: We've got heavy GPS jamming in the straits of Hormuz right now. Over 900 ships can't be tracked. That alone should've sent oil through the roof. Instead, it's getting clobbered because of margin mechanics. |
The best advice I ever got was whatever you think geopolitically, a lot of times the opposite will happen in markets. |
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The Contract Role Everyone's Missing |
By the way, this whole "massive gap up" everyone's talking about in the S&P? It's not a gap up. It's a contract role. |
When we rolled from June to September contracts, that added 53 points right there. So when you see the S&P up big today, about half of that is just the mechanical roll between contracts. |
If you don't contract adjust your charts, it looks very substantial. If you look at something like the SPY, you see what's really happening -- we're just recovering what we lost Friday. |
The Real Problem Nobody's Watching |
Here's what's got me concerned, okay? A study just came out showing that over the last couple years, tech has been 100% of the gains in the S&P 500. |
Without equivocation. One hundred percent. |
Right now, this whole rally is basically two stocks: Meta and Nvidia. Apple's doing absolutely nothing. Microsoft's only up 0.6% with the Nasdaq up 1.3%. Amazon's threatening to go red. |
When you have that kind of concentration, and things get top heavy like this... if we drop, it's gonna be fast. It's gonna be violent. And I want no part of it. |
What I'm Actually Trading |
Look, I'm not gonna sit here and try to handicap what Iran does next or whether Israel closes shipping lanes. That's impossible. |
What I will do is trade the mechanics. Right now, we're sitting right at the daily expected move -- 70 points. We hit that level and flattened out. |
I put on a bearish spread in the QQQ on Friday. Not because I think the world's ending, but because the risk-reward makes sense. We're at highs, concentration is extreme, and I've got 25 days for this thing to work. |
The marketplace right now? If it flips, it's gonna be unforgiving. I'd rather risk a dollar on a spread than get caught holding the bag when everyone realizes 100% of market gains coming from two stocks isn't sustainable. |
That's the trade. Not trying to guess what happens in the Middle East. |
To your success, |
Don Kaufman |
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PROFIT FROM SQUEEZE BAR ERUPTIONS |
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+222% on PLUG... +100% on SLV... +72% on IYR
(Plus 15 other explosive recent winners using this exact method) |
PRO TRADERS REVEAL: How to spot the pressure building BEFORE prices explode. |
LIVE TRAINING: Wednesday June 18th with Don Kaufman & Brandon Chapman, CMT |
→ SAVE YOUR SEAT BEFORE IT FILLS UP ← |
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