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Listen, I know everyone's celebrating the Dow's 900-point rally today, but something's making me genuinely uneasy about this market. |
And when I get uneasy, I start looking for ways to profit from what's coming next. |
Here's what I'm seeing that has me concerned — and how I'm actually trading it. |
The One Thing That Always Worries Me |
You want to know what scares me more than volatility? When markets start ripping themselves apart. |
Today's rally looks great on the surface: Dow up 900 points, S&P gaining 1.4%, everyone talking about the "tech rebound." But look closer and you'll see what's actually happening. |
The Dow's soaring because of Caterpillar and Goldman Sachs. Regional banks are catching bids. Home builders are rallying. |
Meanwhile, Amazon's still down 8% and the software sector just had its worst week since 2008. |
This isn't healthy rotation. This is what I call bifurcation — and when I see it, I know trouble's coming. |
When the Pros Get Crushed, I Pay Attention |
Here's something most people don't understand: statistical arbitrage firms — the guys who trade baskets of stocks expecting them to move together — just had some of their worst trading sessions ever yesterday. |
Why? Because the market's not behaving like a market anymore. It's splitting apart. Apple stays strong while everything else sells off. Regional banks rally during a tech selloff. These moves break the basic assumptions that keep professional trading strategies alive. |
When the pros are getting annihilated by market conditions, I know we're in unusual territory. And unusual territory creates unusual opportunities. |
How I'm Actually Making Money in This Chaos |
While everyone else is trying to figure out whether to buy this rally or fade it, I've been trading zero DTE butterflies — and hitting them. |
This week alone, I placed three butterfly trades. Two of them hit. In Tesla, I paid 39 cents for a butterfly this morning and closed it for $1.10 a few hours later. |
That's a 180% gain in one session. |
Why are these working? |
Because when markets bifurcate like this, individual stock volatility explodes while correlations break down. The expected moves get huge — today's SPX expected move was $77 — which makes defined-risk strategies incredibly profitable if you know how to set them up. |
The key is having specific criteria for these setups. Not every butterfly works. But when markets get this volatile and disconnected, the ones that hit really hit. |
Why This Pattern Doesn't End Well |
I've been doing this long enough to know: markets can't stay bifurcated forever. Eventually, the pieces either come back together or they all break in the same direction. |
Right now we're seeing desperation allocation — money flowing into stuff people don't really want to own (regional banks, materials) just because there's nowhere else to go. That's not strength. That's fear disguised as buying. |
The bifurcation we're seeing today, with correlation finally hitting the upside after days of chaos, creates reversal probabilities as high as 50-50. Normal market days give you maybe 20-30% chance of reversal. |
Those are the kind of odds that make zero DTE strategies extremely attractive — if you know how to trade them. |
What I'm Doing Next Week |
Next week, I'm trading these exact zero DTE setups live in the Don-DTE mastermind. |
We're talk about 3 hours of live trading action here. |
Not just explaining the mechanics — actually placing the trades, managing the risk, taking the profits when they hit. |
The criteria I use to spot which butterflies work in bifurcated markets. The timing that turns 39-cent positions into dollar-plus winners. The risk management that keeps you profitable even when you strike out. |
This market is giving us textbook conditions for these strategies. The volatility is there, the disconnections are there, the opportunities are there. |
The question is whether you want to keep guessing about market direction, or start profiting from the one thing we can count on: when markets get this weird, individual stocks get really volatile really fast. |
Join Don DTE Live Trading Session Here |
Because while everyone else argues about whether this rally is real, I'll be trading the volatility that everyone agrees is definitely here. |
To your success, |
Don Kaufman |
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