Welcome new and current subscribers,
Recap- Last week we gave a pivotal level that dictated which way the water would flow. That level was $4050.
Patience- I can feel myself becoming impatient. Where in the world is our mate?! Let’s dive into the book of John, Chapter 11. A man named Lazarus from Bethany was sick, and in this village resided Mary and her sister Martha. Mary was the one who anointed the Lord (Jesus) with perfume and wiped his feet with her hair. The sisters sent a message to the Lord saying: “Lazarus, the one whom you love is sick.” When Jesus heard that he was sick, “he stayed two more days in the place where he was.”
Is a virtue- In times of struggle, or in our situation, impatience and anxiousness to the unknown, we want a response… immediately. If it were up to us, we would have checkmated this market last week. But the reality is that sometimes we don’t understand His timing or His purposes because ultimately His ways are not our ways. We truly believe that if you’ve somehow stumbled upon our little Substack, it is definitely not by mistake. You were meant to read this: the paycheck that you need to pay your rent this month is on its way to you right now; that healing that your family needs is making its way to them right now. We pray that each and every one of us will receive a fresh encounter with God this season.
The importance of R- The market rewards those who are patient. Last week, early bears thought they had a great deal. Follow along with this hypothetical trade: all-in puts (to short) at $4000 with no risk management, thinking it would be an easy roll-over to $3600. Today we’re sitting at roughly $4140 with the highs at $4200. So if the market rolls over here, my “poorly-managed” risk to “Lamborghini-projected” reward ratio, which we call R, is 2. Now what happens if we squeeze further to $4400? Most bear market experts would surely say: it certainly won’t happen! Well, my trade just became 1R, factoring in all the premium decays, and maybe even health decays due to loss of sleep…
Soft Landing? ES/SPX- The market is stuck between an inflating and deflating manipulation process. We’re currently searching for excess value. What do I mean by this? Let’s say the market starts at $4000 and has a 50/50 value. Manipulators can decide to f*** the bulls or the bears here, doesn’t matter which side. As the market decides to move north from $4000 to $4100, the call value inflates and put value deflates, say 75/25. When the pullback happens from $4100 to $4050, the manipulators will magically deflate the calls and inflate the puts such that the value is back down to 50/50. And then the process repeats. $4050 to $4200, value 80/20. $4200 back to $4150, 50/50 value. This works the same way for the downside, and the equation becomes much more complicated as you factor in other variables like naked shorting. You can see how this can be a never-ending cycle.
Excuse my French- so when will this fuckery end? When time and price collide.
It’s so easy even a kid can do it, right?- Picture a kid inflating a red balloon, given enough time and pressure, the balloon will inevitably burst.
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