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Retail traders will lose billions when the algos turn the market. |
Timing isn't just important…it's everything. |
But you can't beat the machines unless you know HOW they work. |
Genesis COG does exactly that because I know the insides of the algos that run Wall Street. |
CLICK HERE if you want to see how they work and to stay ahead of the pack. |
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The Day After |
By Prof. Jeffrey Bierman, CMT
The Fed cut rates Wednesday afternoon. The market popped. Then it dropped. Then it settled flat. |
I watched it happen from my office in Chicago while snow piled up outside. One degree Saturday night. Try living that. |
None of it mattered. Not the cut. Not the pop. Not Powell's press conference. |
The only thing that mattered was Thursday morning. The day after. |
That's when the real decisions get made. When the committees at hedge funds and asset managers sit down together, sober and clear-headed, and ask one simple question: Now what? |
I did this for eleven years. Every Fed decision, same routine. We'd all get together with the analysts the next morning. |
No knee-jerk reactions. No parsing every word from Powell's mouth. Just critical thinking about what actually changed and what it means for positioning. |
This weekend, I want to explain why that distinction matters more than anything else you'll hear about markets right now. |
CLICK HERE to see how the Genesis Cog Scanner identifies these setups before the crowd |
The Sobriety Principle |
Wednesday's session was noise. Goofing and spoofing. Traders trying to analyze every syllable from a man who will say whatever keeps markets from panicking. |
The reaction on day one is never the real reaction. It's emotional. It's programmed. It's algorithms executing based on keywords, not fundamentals. |
Day two is different. Day two is done on sobriety. |
I called my brother-in-law Wednesday morning. He trades options like crazy. I asked what he was doing. |
Nothing. He said nobody's trading. Just waiting. |
That's the right answer. You make more money doing nothing and being patient than trying to force a trade into chaos. |
What the Committees Decided |
Thursday morning those committees met. Here's what they concluded. |
The Fed has maybe one more rate cut left. Probably March or April. After that, the rate cut cycle is over. |
That means four months of vacuum. No catalyst. No liquidity injections. No easy excuse to buy every dip. |
The market will have to stand on its own two legs. And right now those legs look shaky. |
The 30-year yield is pushing toward a 5% handle. Inflation isn't coming down. The bond market is telling you something completely different than the stock market. |
When those two forces diverge this dramatically, one of them is wrong. I'm betting it isn't the bond market. |
How I Trade the Day After |
I put in exactly one trade Wednesday. Covered a short I was making money on. |
That's it. While everyone else chased the volatility, I sat on my hands. Because I know the real information comes later. |
Here's what matters about my approach. I don't trade by predicting. I trade by managing risk. |
Take Cheesecake Factory. I just got into this position a few days ago. Here's why. |
Double bottom formation on the weekly chart MACD and RSI cycles complete Lowest PE ratio the stock has seen in fifteen years Every Chicago location has a line out the door
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I bought at $46 and $48. The stock ran to $49 Thursday. If I'm wrong, I stop out at $42. I lose four dollars to potentially make eighteen. |
That's not prediction. That's risk management. Find the point where downside is limited and upside is substantial. Then wait for the day after to confirm you're right. |
Defensive Stocks Will Have Their Day |
When January comes and the window dressing ends, everything changes. |
The performance gamers stop jamming high-beta names into portfolios. The algorithms reset their programming. The artificial support disappears. |
That's when defensive stocks go vertical. Not up a little. Vertical. |
I'm long Budweiser. I bought it at $60 right around earnings. Sold half at $65. When it came back to $60, I told every Genesis COG member to add more. |
Now it's running again. Because seasonality matters. Sports matter. Hockey, football, basketball. Budweiser volumes are strong. |
None of you want to buy it. It's not sexy. It's not AppLovin. |
But when the market corrects in January, this is the stock people run to. The ultimate duck and cover. |
The 6,500 Line |
Right now you can buy this dip. The technicals support it. I'm adding long positions. |
But if we go through 6,500 on the S&P, you're going to rue the day you didn't listen. That level is a game changer. A widow maker. |
Last time we had this setup, we blew out in February. I expect no different this time. Sometime between January and February, this market gives way. |
Your reason for staying long won't matter. The news won't matter. When you know you're in danger, get out. Don't wait around to have your head lopped off. |
The Genesis COG System tracks exactly when these inflection points arrive. When the algorithms flip from defending every dip to attacking every bounce. When the day-after decisions shift from buying to selling. |
Most traders won't see this until their accounts drop 10% in three days. The machines detected it weeks earlier. They repositioned before the crowd knew there was a problem. |
That's why I trade the way I do. Not reacting to day one. Waiting for day two. Letting the committees make their decisions. Then positioning accordingly. |
Have a good weekend. Stay warm. The cold in Chicago will lift by Monday. |
But the cold in this market is just getting started. |
Professor Jeffrey Bierman
Creator of the Genesis COG System |
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