Yesterday we saw a LOT of volatility, which led to the close just narrowly matching the open. This created a long-legged Doji which shows a price action “war” between buyers and sellers. The price fluctuates dramatically, but closing price is the same (or nearly the same) as opening price. Long-legged Dojis often appear at the bottom or the top of the prevailing trend. Given that we have seen some significant buying pressure last week, lending to a potentially overly-bought strong uptrend, I suspect we may see a short term reversal down. What are your thoughts?
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https://preview.redd.it/369byrynsxo81.png?width=729&format=png&auto=webp&s=18759483b4b7f23aec3ad0e627b12060494f2bc3
https://preview.redd.it/12fjrnrksxo81.png?width=732&format=png&auto=webp&s=f290ff82f5d992dd9e190a8db5d7edba47507c4b

Whats up cucks.
Choppy markets, short term rallies and the likes of which we are seeing now can create good opportunities for traders. Recently, I've put a few posts up about things folks might find interesting or useful in this different market environment.
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- A crash course in Inverse funds. This one went up when the XJO closed at 7,111 points on march 4th, 2022. October 28th see's us closing at 6,785. Within that span, we have been as high as 7,593 and as low as 6,430. The yank markets have been more volatile, so if inversing is your brand of jeopardy there has been amply opportunity to cash in over that period.
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-Market volatility and swing trades. This one goes through the basic dynamics of a swing trade. As above, there have been many opportunities since this post went up to practice and (ideally) successfully execute the trade.
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So this is the next one, we are looking a bit more deeply at technical analysis with pretty pictures and all for the visual learners amongst us. Those last posts are fairly general, this one gets specific. (Not super specific, you can seriously go down the rabbit hole with the witchcraft.)
We are going to go for a little walk through one of my stonks and I'll point out what I was looking at regarding technical indicators.
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WHAT THIS POST IS NOT
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- As always, this is not financial advice. The stonk below has been an absolute fucking dog since March. I've used is as my example because I've traded it and I know it pretty well.
- This is not a debate on the merits of TA. Have your opinions, thats great. Also, the charts below are snips of a larger story. (For the TA savvy amongst us, try not to take them out of context. I've included a pretty pic of buy/sell signals because I'm aware that some of my charts below do not demonstrate them perfectly. (Its the vibe man, thats what I'm attempting to demonstrate.) I've added bits and pieces to make a point here and there, so don't get all pissy....)
- I have missed a KEY ELEMENT in the post below, that being VOLUME!! Volume is a post on its own, but the TLDR is volume is key.
- This post also doesn't take into account a trade that I have fucked up. I'll do that one later, an example of how I interpreted the indicators incorrectly and lost money.
- I'm attempting to walk a line between technical but also not too technical. Super technical can be like jibbersh, not technical enough can be useless. How well that translates remains to be seen.
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So, without further preamble lets dive into a little section of my trading journey through my fav bio speccie, IHL and focus in on 2 things:
1 - My first big buy in and why from a technical perspective.
2 - My first short term trade and why from a technical perspective.
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IN THE BEGINNING...
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I went back in time and found my original purchase of IHL. I got in pretty heavily at 5.7c on the 24/09/2020 (settlement date). Lets have a look at the chart:
https://preview.redd.it/5bp6p5g4awv91.png?width=1366&format=png&auto=webp&s=96251540828b997a7e400d61c4638c8c5a1e116f
At this point in time, I'm looking to load a big position at a good price. I've already done a shit-ton of fundamental analysis on the company which I'm not going to lay out here because the purpose of this post is not to shill IHL (very speculative biotech/very risky/very high probability of failure/dogshit market right now for speccies), so lets zoom in on that chart and look at the technical indicators that told me now was the time.
https://preview.redd.it/eoqawssocwv91.png?width=1366&format=png&auto=webp&s=57c841f36ab801555a91c2fde4bb45a43bdcecd1
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So what the fuck am I seeing here? I'm seeing a breakout of a price trend coupled with some timely hype and announcements. Like I said above, I'm looking to load up a big position at a good price and this was the time for me. Psychologically, its a much better feeling to see good short term return on a long term investment, even though that type of thinking can be counter-intuitive at times. But I wanted to buy a big position before what I thought would be a decent break out because for me personally, it makes it easier to lock that long term position away and then concentrate on building some fast wealth on the short term trades. Others have different methods.
I did say this was a life in pictures type deal, so here are a few more that explain what those weird words I scribbled on the chart are.
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WHAT IS A CANDLE?
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This is a candle. More or less.
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https://preview.redd.it/yoh4jce8ewv91.jpg?width=640&format=pjpg&auto=webp&s=976fead543af1e12afafe605748b251096566e0c
WHAT IS A DOJI?
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A doji is a different type of candle. Sort of. Doji signals can mean different things, here is a great link that explains them.
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https://preview.redd.it/zxzx66x9fwv91.png?width=1366&format=png&auto=webp&s=9f9c8cdb82fc9dcd1adf6ffc9c2612fc7032ed9c
If you notice on the chart, I've highlighted 3 dragonfly doji signals that happened before the leg up and buy time. So if you're only planning to skim read that link, maybe focus on the dragonfly doji explanation and what it can indicate.
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WHAT IS A BUY OR SELL SIGNAL?
This is the part that can go on and on. I'm not getting into this too heavily here, I do try and keep these posts sort of bare bones and relevant to generalized trading. Below is a pic that give you a look at some of the more common signals the voodoo folk use. Call it bullshit all you want, traders use these signals and those people create patterns of behavior that are expressed in the charts.
https://preview.redd.it/snntd6jw9aw91.png?width=1140&format=png&auto=webp&s=86de916f17fed1733dd6ce88d42a56e74c705f7a
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THE FIRST SHORT TERM TRADE
I executed my first short term trade on IHL between October 5th and November 29th in 2021. The main reason I took so long was because this tipped me over the 12 months CGT threshold on my main hodling. It's one of my quirks, I like to get my main hodlings squared away and past any barriers before I fuck around with a stonk again. Why? Mainly because over the years I've paid attention to my own habits and learnt what works and what doesn't. I'm in a clearer frame of mind trading an individual ticker I have a big position in once I've ticked those boxes, so I don't rush things.
Lets check out the graph and see what we see...
https://preview.redd.it/o14c51dipwv91.png?width=1366&format=png&auto=webp&s=900a520b6e83e1dab9472c8f1c671e9651761463
Looks sexy right? Well, look closer. From the last leg up, it was hovering above something called the 0.618 Fibbonacci level. Want to know what that means? Here is a great link to Fibbonacci numbers and their relevance. The salient point for this trade was that the stonk has experienced a good period of consolidation above the 0.618 level. It has re-traced on low volume a few times and each time the retracement had been rejected. Couple that with significant sector hype, a bullish market and a few others company specific landmarks this gives me a good indication that the next leg up might be explosive.
And I want to get me a little taste of that explosive pop.
On October 5th, there was a crossover coming on the EMA (Those are the funny squiggly lines that trend along the graph, you can turn them on yourself in commsex by searching ''upper indicators'' and ''EMA''), another rejection of the level and some good volume on the market buying. I can't remember exactly what the VWAP was, but I remember setting a price of 0.34c and it got hit about a week later. My price target for this trade was 50%, a goal of 51c as the sell price. (I didn't make that price up randomly either. I used a different set of technical shit to set a sell price, but they are not shown here.) My main hodling isn't being touched and I'm ok adding these shares to my main hodling if the breakout I think is coming doesn't happen. So on this trade, I have no stop loss for this reason.
As you can see, there was a little dip during this 8 week period, so I had to be fairly confident with my targets. The pull back was on low volume and finally it hit my 51c target on November 29th. I actually pulled my sell order initially because I was getting greedy and missed my price target on the 4th of November, but ended up pulling my head out of my ass and selling for 52.5c, a total gain of 54.4% for an 8 week trade. An important thing to note here is the gap up from 29/10 to 1/11. I thought that was the ''explosive'' element I was referring to above, I was wrong.
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WHAT DID I MISS?
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Well, I missed 3 things. Firstly, I missed my price target the first time it was hit, which is a no no for short term trading. So that was a lesson learnt. Lets pull up the chart period from the 4th of November to the 29th of November more closely to see the other 2 things I missed:
https://preview.redd.it/u5j2toomqwv91.png?width=1366&format=png&auto=webp&s=e962235af127574a70489d39fb3c039d64821139
Number 1 was a clear rejection of what looks like a good buy signal, but at the top of the Fibbo trending range. You can endlessly debate this stuff, but those 3 green soldiers (although quite weak) can be look like a buy signal, alternatively with the rejection it can look like a hanging man (Yes, I know the bottom wick is missing for the super technical). The point is I should have been out of this trade already, but foolishly held on further than my target. Once that signal was rejected with that fat red candle, I had to wait for that next unfilled green candle to sell at 52.5c, but by this stage that price range was becoming exhausted. So, I got lucky on my sell because I got greedy.
Number 2 thing I missed for a short term trade was the gap up. Again, we can see our stonk bouncing nicely off that 0.618 fibbonacci line right before the explosive gap up I thought had already happened back on the 29/10 to 1/11. Catching those signals would have given me 2 more options. Firstly, another trade from 0.49c to 0.71c (45%) or a chance to take my original trade from a 54% gain to a 108% gain. However, catching the 108% gain would have made my ignoring of my price target on the original trade seem like a good decision. That time it would have been, but ignoring your rules is a long odds bad game to play.
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WHATS THE UPSHOT?
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The 2 scenarios above demonstrate looking at the technical indicators for different reasons. One for a long term load up and one for a short term cash out. You may think TA is a load of bullshit voodoo tea leaf reading hippie crap and thats fine. It's generally the stance I hear from anyone who cant be bothered putting in the effort to learn a bit of it. Personally, I'd prefer to make money.
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I have mentioned this before, but I also have a large hodling in AFI. Yes, its a total boomer stonk but its not for me, I use the DSSP because I have a long term financial plan. I routinely buy AFI, but I think the ''just buy (insert boomer ETF here) at whatever price because in 6,000 years the buy price won't matter is a lazy and shit mentality.'' Before I make a purchase, even on a boomer ETF, I look at the technical shit because I want to increase the odds to get the maximum out of my investment.
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Having said that though, these are indicators only. They can be wrong and you can read them wrong. But learning some basic indicators, some basic Fib numbers and some basic support/resistance clues should help you increase the odds of being in the green. Don't believe me, ask the person who bought ZIP at $14.00 thinking it would go up and up.
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The other salient point before we close is that each individual ticker has its own nuances. Watching IHL for years and performing a number of successful swing trades while keeping my main hodling out of the loop has taught me that when the volume and sentiment was good, it tended to coil up and explode. That being the case, often the technical signals were neutral when taken as a singular buy/sell signal, but when read in context with the way this stonk behaved it told me something else entirely. So, when they say ''the trend is your friend'', they aren't fucking lying.
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You can take technical signals and arbitrarily apply them to any stonk if you like. (lots of good TA traders do apply them to any stonk, but its not arbitrary. They scan for OBV and then apply the technical's without having any idea what the ticker even is) but unless you are very disciplined then this can go bad fast too. Personally, I have found more success in concentrating on a few specific ones and attempting to understand them.
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FINAL WORD
This stuff, take it or leave it. It's not advice, a recommendation or a suggestion. You may find some benefit or you may not.
I'm going to link a conversation I had with u/yothuyindi a while ago because I still thinks its accurate. I made the point above about not explaining volume in this post, but its of absolute importance. The market is dogshit for volume right now and has been for a while, so take that into consideration before any trades.
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TLDR: Learn to read squiggles, make money maybe. Don't buy ZIP.

Hi all - After some feedback from my Cash Flow post, I decided to do a similar one on reading a Balance Sheet (B/S). Some other comments wanted me to review BBBY's, so I figured I'd do GME & BBBY side by side. The businesses are not directly related, but part of financial analysis is analyzing across different companies to find commonality. We're all different people, but in general there's a desired range for keeping your health stats in. A vital being outside of a range isn't necessarily bad, just something to investigate. Same deal here, I'm looking for outliers to cue up some questions to Ops to better understand why. If you haven't read my prior post, I'd start there. In that post I talk about my background and why I read things the way I do. When I read the financials, I read them in the order of (Cash Flow Statement / Balance Sheet / Income Statement). Since cash is king I want to see that first. Then I want to see how a company is managing it's B/S, and lastly the Income Statement. Given the nature of accounting, an Income Statement (P&L) can look okay, but problems can lurk on the balance sheet.
Also keep in mind that since we're dealing with publicly traded companies, an army of accountants prepare these statements, and they're reviewed/audited by a firm with their own army. Bigger companies can be complex, so that when you're doing your own analysis, your numbers might look weird. Don't get discouraged, odds are there's an offset somewhere or the information is in the footnotes. I'd suggest trying to create your own calculations for things, and then compare it to a finance site for that company. I do this for a living and I get turned around.
This is all meant to be a primer, so I do breeze by a couple things. If you want to nerd out more, feel free to PM me. Trying to hit a broad group, so if anything is vague or unclear, please comment and I'll clarify :)
Accounting background: If you don't care about debits and credits, skip down to the "BBBY & GME Balance Sheet Review" portion below. I noticed some comments seemed to have an interest in the actual accounting of all this, so I wanted to touch on that. If you want to pursue a career in Accounting, I'd suggest watching some intro videos on YT, and visit Accountingcoach.com. I go there to check myself sometimes, and their explanations are down to earth and easy to follow. From a career standpoint going the bookkeeper route is a good foot in the door. Then you can grow to an Associate's/BacheloMaster's/CPA/CMA/etc in the field. There's so much more to Accounting besides booking invoices or paying bills. Accounting touches all aspects of a business. I went a non-traditional accounting route, but I love this part of my career. Where I'm usually sitting with Ops helping to figure out their processes and work flows to improve the shop floor and hopefully profitability. Typically a field of dreams scenario where "if you fix it, income will follow". If not, well, we'll try something else :)
Basic Accounting Equation: Assets = Liabilities + Owner's Equity
It really all starts with the above equation, why Debits = Credits and why all this works. By ensuring debits = credits, with some other balance reviews, basically I can feel comfortable that the statements are correctly stated. To put this equation into real terms, I think home ownership is a good example. The value of your home is equal to your mortgage plus your equity in the house. Meaning if I buy a house and put 100k down:
500k house = 400k note + 100k Owner's Equity
If the value of my goes up 50k the next day, it now looks like
550k house = 400k note + 150k Owner's Equity.
As I pay my note down, it shifts like:
550k house = 350k note + 200k Owner's Equity
Which logically makes sense, debt when paid down on the house is turning that debt into equity, that you can one day turn into cash when the house is sold. But let's say we want to start a business, we'll need to expand upon this equation.
Expanded Accounting Equation: Assets = Liabilities + Contributed Capital + Beginning Retained Earnings + Revenue - Expenses - Dividends
If you've ever wondered why Revenue is sometimes represented as a credit (negative) number, this is why. Economic changes to the business are effectively changes to the Owner's stake in the business. Meaning everything that happens on the income statement is a change to the Owner's Equity (OE) section in the long run. If I sold $500 of stuff for cash, That sales entry is
Debit (DR) Cash $500 (Balance Sheet)
Credit (CR) Revenue $500 (Income Statement).
If we pause there, this again follows the accounting logic. An increase in revenue is an increase to the Owner's equity. Since Owner's Equity is on the right side of the equation, you increase that by increasing the credit (typically portrayed as a negative) number. Likewise when we receive $500 cash, and that's on the left side of the equations, it increases on a debit. Which is typically represented as an increase using a positive figure. So that at month end as part of my review I'll add up all debits and all credits (trial balance) and they should cancel each other and leave a $0 balance for the month. I'll stop here as this is a whole thing. When I was in school, most kids just try to memorize which action increases which way on which sign. In hindsight I think it's more important to understand the expanded Accounting Equation, and let that guide you in what the different signs and balances mean. Once you understand the expanded equation, it'll be second nature what increases on a credit and vice versa. For analysis purposes, this will already be given to you.
Balance Sheet: All that to say, the specific purpose of the balance sheet is to report assets and liabilities (and Owners Equity) at a specific time. Because Accounting is a dual entry (debits = credits) system, it's important to look at the B/S side to a business's P&L. Since you could have a situation where Operations is basically throwing sh*t over a fence. Meaning "We've crushed sales expectations, beer me bro". Meanwhile most of those sales were on questionable credit accounts, vendors can't deliver the goods, and I have monster warranty expenses coming back. And now one of our products smacked a lady in the face so we have some legal provisions building. So our great looking P&L now punched some holes on the B/S that you can drive a car through.
Analysis: There's two main types of analysis I typically do, over time and comparative. Over time is for obvious reasons, are balances moving in a healthy way as we march through time? So here I typically look at raw numbers and their directional change to that account.
Second I like to use ratios to measure the business over time, and then compare that other businesses. That gives me confidence that we're not in left field as compared to our competitors. I'll give ratio examples below as we go through the two companies. Honestly the ratios CPA's use will look pretty basic to what someone like DFV was doing in his streams. But that's what I love about this area of work. Where my work ends (getting financials produced and checking for reasonableness/completeness/planning/budget), his work begins in doing detailed CFA type work. I have no interest in doing CFA work, and a CFA would probably be bored to tears doing what I love. But there's space for everybody in Finance.
Structure: On a B/S, the main parts are the Assets & Liabilities portions. Within those, you have Current and Long-term. Current is due within a year, non-current is longer. Inventory is composed of items that will be consumed in the revenue process. For a retail business, this is basically the stuff on the shelves. Fixed Assets are items that are long-term by nature and help to run the business (PP&E, buildings, etc). But aren't for sale as part of the normal, recurring business model. Fixed Assets are depreciated over time as well. But it's key that people understand the difference. As a certain level of fixed assets is required and maintained to run a business. But inventory should flex with revenue. Meaning I'll have a plan/budget where I model out what I expect to sell in coming months, and I will raise/lower my inventory to meet that. You only want enough inventory on the shelves to meet upcoming sales forecast. Nothing more, nothing less. Intangibles are a thing on the B/S, but I don't see a lot here so for brevity I'm skipping it.
On the liabilities side, same deal. Current (less than a a year) Liabilities are going to be debt typically incurred in the normal course of business, AP, gift card sales, taxes payable, etc. Notes are long-term. Lease accounting has tightened up over the years substantially. It's a bit much for here, but know when you see an operating lease liability, it's something the business can't usually easily get out of in the short term. So short of looking through the footnotes for details, I'd peg it as long-term unless they split out the current portion of the operating lease from the long-term portion of the operating lease.
BBBY & GME Q2 Balance Sheet Review. I know these companies operate on different fiscal years, but for ease I'm just going to compare both Q2 statements. So I'll just start with Assets, and then work my way down. I'll explain each section with what I'm looking for. Side note I'm just here to point the math out, so this will read a bit clinical. Where this falls into the current valuation is up to you.
Assets:
In thousands, so multiply by 1k to get full value. For simplicity's sake on my ratios I'll just take the figures as shown rather than multiply out both sides by 1k.
Starting with assets, couple things jump out. Cash is way down Aug 2022 as compared to Aug 2021. Inventory is flat, but at least prepaid has drawn down. This is good as it means we used less cash as we consumed prepaid items that we bought awhile back.
Property & Equipment (PP&E) is up slightly, and Operating lease Assets is down slightly. So maybe they moved some things off lease into PP&E. Other assets is down as well, but we don't have visibility into that.
Poking at inventory means we need to go look at the income statement to see what's going on with revenue. I'm okay with inventory being flat if sales are also flat to up for the same period.
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https://preview.redd.it/affgytqw0p5a1.jpg?width=635&format=pjpg&auto=webp&s=e453e2cb1a7e5cb532b3655baa3eb68faaa3e882
So definitely not flat. Q2 over Q2 (QoQ) it looks like ~$550M drop. $550M drop on a starting figure of 1.984B is a 27% drop. Since this is inventory, I do like to check for flat-ish gross profit. Since if we're not moving things for the price we used to, could point to a looming inventory revaluation. Again not super likely just yet in this scenario, but something to consider. For Aug 2021, gross margin was 30.2%. For Aug 2022, it fell to 27.7%. Which a 1% gain/loss on gross margin is kind of a thing, negative change of 2.5% is something.
Pausing right here for a second: Gross profit (GP) is (Revenue - Cost of Goods Sold). Gross Margin (GM) is (Gross Profit / Revenue). Cost of Goods Sold (COGS) is only expenses directly consumed in producing that inventory. So if we're selling shoes, just the cost of building that shoe, the labor, materials, and overhead. Both figures are important for different reasons. But I'll pause there as this is more of a P&L thing and I'll post a write-up on that statement as well next week.
Liabilities:
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https://preview.redd.it/vmvnkdng2p5a1.jpg?width=923&format=pjpg&auto=webp&s=e140c8e15f4327b6bd16ef3df60a99f6eec8ec6c
Same deal here, but on the liabilities sign. Looks like total current liabilities is down, my leases are down, and the only thing that's up is LT debt. Looks like a LT debt jump of almost 50%. But current liabilities down in the face of lower revenue is a good thing. LT debt we need a little more info to make a judgement call.
Ratios:
Current ratio is a solid indicator ( Total Current Assets / Total Current Liabilities). It measures a company's liquidity in paying current bills. We do this every pay period in our own lives. If my monthly paycheck is $5k and I have $10k in bills due every month, that's a problem. Same deal here. A value of 1-2 is good, depending on your risk tolerance is where you'd fall within that. But looking here I have CA $1,904 / CL $1,828, so CR of 1.04. A little on the low end, so I'll pull in the quick ratio to confirm my hunch that liabilities are a bit high
Quick ratio: Is a stricter liquidity test, it's meant to focus only on the items that can be quickly turned into cash to pay the bills. Couple different ways to define this ratio, but it's (Current Assets - Inventory - Prepaid / Current Liabilities). Like payday is two weeks away and I owe $5k today - what can I quickly pawn off to cover that bill. If we think about it, inventory isn't really that liquid. Since if you need cash that badly, and could quick-turn inventory, you probably wouldn't be in this spot you're in without some deep discounts. Again we're looking for a ratio of at least 1-2, but it varies. For Q2, this formula is (135,270 / 1,828,468) = 0.07. Which is one of the lowest I've seen in awhile.
Even at a high level, you can see AP is about 6 times what current cash is. And AP is almost always items due with in the coming 30-45 days.
Inventory: Inventory turnover (COGS / Average Inventory) is a key metric, it measures how quickly a company can turn over it's inventory in a given period. Higher turns is good as it means inventory is moving and demand is high(er). This is important as inventory that sits on a shelf and ages is a problem. It's costly to maintain, susceptible to theft, damage, write downs, etc. Looks like this ratio has dropped from 3.73 in Aug 2021 to 2.77 in Aug 2022. Which is a sizeable drop. Also suggest to me that inventory is risking going stale and I'm sure the auditors will be poking at that.
Sidebar: All these inventory ratios are already available, so not a real need to re-calc yourself. Just like to show my math on stuff. I'm being a bit lazy with these turn calcs so I took a shortcut via google. There's a whole world to inventory management, but it's beyond the scope here.
GME:
https://preview.redd.it/v4hgycys5p5a1.jpg?width=1154&format=pjpg&auto=webp&s=d9cd9a52e158964e195f29a25b7c800aac68ffcd
So out of the gate, Current Ratio here is 2.16 (2,019.2 / 932.4). Quick ratio of ((908.9+99.6)/932.4) is 1.08, so pretty liquid. Inventory turnover for Q2 2022 was 5.16, Q2 2021 was 6.13. So also a drop, but percentage wise not as bad. Comparing the two stores we see that GME is turning over its inventory almost twice as fast as BBBY, which is helpful in generating cash. Since inventory sitting on a shelf is cash that is tied up. Furthermore GME has borderline excess cash, depending on who's looking at these numbers. Whereas if BBBY is facing a cash crunch. Not impossible, but it's a tough spot.
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Equity: Equity is important for a company as it shows the owner's have skin in the game and the company is generating recurring profits. Going back to the house example, if you're moving in a house for the long term, odds are you going to put more cash into the house. As opposed to a house I'm flipping, where I'm only putting in enough cash to secure the property, pile on the debt, and subsequently sell it for a gain (hopefully).
Equity deficits should be noted. In our original house example of our house that costs 500k, we put a mortgage of 400k, leaving us with equity of 100k. When there's a deficit, it flips the script. So in this is scenario, let's say the current economy tanked our house's value down to 350k. So what was a healthy setup:
500k house = 400k note + 100k equity
Is now not as fun to look at:
350k house = 400k note + (-50K) equity.
Main thing here is to look at the amount of long term debt against equity. The more you believe in the company, the more equity you're going to have. But if you're a PE looking for all that sweet EBITDA and cash draws with eventual sale based on multiples, suck it all out and move along.
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https://preview.redd.it/pim9ujdcep5a1.jpg?width=931&format=pjpg&auto=webp&s=1c50edbac20cc6e577002e5a39dd3c729bf8d69d
BBBY: Main takeaway here is there's actually a deficit. Which means we've either been incurring repeated loses or paying dividends. With only this B/S information, I'm already leaning towards sustained losses given how Cash/AP/Inventory looks.
My main concern with is the equity deficit, against the long term debt of $1.729 and operating leases of 1.479B. That's a mountain to climb.
GME: Looking in my above screenshot, it appears Equity is also decreasing (1,852.0 to 1,343.5). So without looking at the P&L I know there's some issues, but long term debt is pretty minimal. It's almost too conservative, could be leveraged more, but the accountant in me is sleeping easy on this.
Key takeaways. There are ratios for everything, so below is just a summary of the ones I use. It's not all-inclusive, there's tons, but for my job it generates enough questions that I can go to Operations and start working through some things. For you as you learn more, it'll be about which ratios provide you comfort in a company's dealings and you being able to invest on that.
For BBBY, there's some obvious headwinds and the B/S is looking a bit rough. I've seen worse B/S and those people survived. But long-term management has to grab this one by the reins as it's a burning platform type scenario and decisive action is needed to save this. I know $3 looks pretty cheap now, but the way this B/S looks, without strong action to turn this around, $3 could look high in a few months.
I did glance at their Q2 cash flow statement, and it's more of the same. Sizeable cash outlays for Operating & Investing, buoyed by taking on additional debt in the Financing section. So hopefully they've stopped the bleeding and can start shoring up some cash via increased margins. I stopped short of looking at their P&L since I already have enough to go on for now.
For GME, it's honestly kind of boring as this is pretty textbook of a solid B/S. Strong cash, almost too little debt, good equity, inventory is moving. Given the war chest of cash, it implies they have room to be strategic with their future moves. Without having someone to force them to do so. Not a lot to add here.
Assets methodology: In the asset section, first I'm checking for liquidity (Current Ratio / Quick Ratio). Then I want to see inventory flexing with revenue. I also want to see A/R flat to down over time to show we don't have problems collecting. Lastly I do want to see some amount of fixed assets, but just enough. Which there are ratios to gauge this. But too much fixed assets implies a high break-even to cover the fixed costs. Too little suggests future improvements might be needed or the company is running on some jack-legged stuff in constant need of repair
Liabilities methodology: Just like you would in your household budget, is the Current Liabilities section reasonable considered the Current Asset and Revenue figures? Is the long term debt appropriate for the amount of equity we have? Can we service these payments via our incoming cash? Lastly is the level of debt we're carrying as compared to other figures appropriate to other companies in our industry?
Equity methodology: I check Retained Earnings over time, look for deficits, and look at these values compared to the liabilities section as well as equity ratios against my competitors.
Summary: If you've made it this far, appreciate your time. I'm off work today and interest was high, so wanted to push this out and go knock back a few beers while watching some soccer. Hopefully this post has sparked enough of an interest to dive deeper. I do think the B/S gets passed over for sexier looking P&L's since that's where the action is. But my hope is you see it's almost more interesting over here. Shameless plug: I do this type consulting for a number of businesses in my network. So if you know any businesses that want any sort of Accounting or FP&A services, feel free to reach out :)
Or if you're interested in an Accounting career, ping me and we'll talk. My life is more of a cautionary tale, so hopefully I can help you avoid some of the mistakes I made.
Thanks :)

As the Fed begins their journey into a deflationary blizzard, they are beginning to break markets across the globe. As the World Reserve Currency, over 60% of all international trade is done in Dollars, and USDs are the largest Foreign Exchange (Forex) holdings by far for global central banks. Now all foreign currencies are crashing against the Dollar as the vicious feedback loops of Triffin’s Dilemma come home to roost. The Dollar Milkshake has begun.
The Fed, knowingly or unknowingly, has walked into this trap- and now they find themselves caught underneath the Sword of Damocles, with no way out…
​
Sword Of Damocles
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“The famed “sword of Damocles” dates back to an ancient moral parable popularized by the Roman philosopher Cicero in his 45 B.C. book “Tusculan Disputations.” Cicero’s version of the tale centers on Dionysius II, a tyrannical king who once ruled over the Sicilian city of Syracuse during the fourth and fifth centuries B.C.
Though rich and powerful, Dionysius was supremely unhappy. His iron-fisted rule had made him many enemies, and he was tormented by fears of assassination—so much so that he slept in a bedchamber surrounded by a moat and only trusted his daughters to shave his beard with a razor.
As Cicero tells it, the king’s dissatisfaction came to a head one day after a court flatterer named Damocles showered him with compliments and remarked how blissful his life must be. “Since this life delights you,” an annoyed Dionysius replied, “do you wish to taste it yourself and make a trial of my good fortune?” When Damocles agreed, Dionysius seated him on a golden couch and ordered a host of servants wait on him. He was treated to succulent cuts of meat and lavished with scented perfumes and ointments.
Damocles couldn’t believe his luck, but just as he was starting to enjoy the life of a king, he noticed that Dionysius had also hung a razor-sharp sword from the ceiling. It was positioned over Damocles’ head, suspended only by a single strand of horsehair.
From then on, the courtier’s fear for his life made it impossible for him to savor the opulence of the feast or enjoy the servants. After casting several nervous glances at the blade dangling above him, he asked to be excused, saying he no longer wished to be so fortunate.”
—---------------
Damocles’ story is a cautionary tale of being careful of what you wish for- Those who strive for power often unknowingly create the very systems that lead to their own eventual downfall. The Sword is often used as a metaphor for a looming danger; a hidden trap that can obliterate those unaware of the great risk that hegemony brings.
Heavy lies the head which wears the crown.
​
There are several Swords of Damocles hanging over the world today, but the one least understood and least believed until now is Triffin’s Dilemma, which lays the bedrock for the Dollar Milkshake Theory. I’ve already written extensively about Triffin’s Dilemma around a year ago in Part 1.5 and Part 4.3 of my Dollar Endgame Series, but let’s recap again.
Here’s a great summary- read both sides of the dilemma:
​
Triffin's Dilemma Summarized

(Seriously, stop here and go back and read Part 1.5 and Part 4.3 Do it!)

​
Essentially, Triffin noted that there was a fundamental flaw in the system: by virtue of the fact that the United States is a World Reserve Currency holder, the global financial system has built in GLOBAL demand for Dollars. No other fiat currency has this.
How is this demand remedied? With supply of course! The United States thus is forced to run current account deficits - meaning it must send more dollars out into the world than it receives on a net basis. This has several implications, which again, I already outlined- but I will list in summary format below:

1. The United States has to be a net importer, ie it must run trade deficits, in order to supply the world with dollars. Remember, dollars and goods are opposite sides of the same equation, so a greater trade deficits means that more dollars are flowing out to the world.
2. (This will devastate US domestic manufacturing, causing political/social/economic issues at home.)
3. These dollars flow outwards into the global economy, and are picked up by institutions in a variety of ways.
4. First, foreign central banks will have to hold dollars as Foreign Exchange Reserves to defend their currency in case of attack on the Forex markets. This was demonstrated during the Asian Financial Crisis of 1997-98, when the Thai Baht, Malaysian Ringgit, and Philippine Peso (among other East Asian currencies) plunged against the Dollar. Their central banks attempted to defend the pegs but they failed.
5. Second, companies will need Dollars for trade- as the USD makes up over 60% of global trade volume, and has the deepest and most liquid forex market by far, even small firms that need to transact cross border trade will have to acquire USDs in order to operate. When South Africa and Chile trade, they don’t want to use Mexican Pesos or Korean Won- they want Dollars.
6. Foreign governments need dollars. There are several countries already who have adopted the Dollar as a replacement for their own currency- Ecuador and Zimbabwe being prime examples. There’s a full list here.
7. Third world governments that don’t fully adopt dollars as their own currencies will still use them to borrow. Argentina has 70% of it’s debt denominated in dollars and Indonesia has 30%, for example. Dollar-denominated debt will build up overseas.

The example I gave in Part 1.5 was that of Liberia, a small West African Nation looking to enter global trade. Needing to hold dollars as part of their exchange reserves, the Liberian Central Bank begins buying USDs on the open market. The process works in a similar fashion for large Liberian export companies.
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Dollar Recycling
​
Essentially, they print their own currency to buy Dollars. Wanting to earn interest on this massive cash hoard when it isn’t being used, they buy Treasuries and other US debt securities to get a yield.
As their domestic economy grows, their need and dependence on the Dollar grows as well. Their Central Bank builds up larger and larger hoards of Treasuries and Dollars. The entire thesis is that during times of crisis, they can sell the Treasuries for USD, and use the USDs to buy back their own currency on the market- supporting its value and therefore defending the peg.
This buying pressure on USDs and Treasuries confers a massive benefit to the United States-
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The Exorbitant Privilege
​
This buildup of excess dollars ends up circulating overseas in banks, trade brokers, central banks, governments and companies. These overseas dollars are called the Eurodollar system- a 2016 research paper estimated the size to be around $13.8 Trillion USD. This system is not under official Federal Reserve jurisdiction so it is difficult to get accurate numbers on its size.
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https://preview.redd.it/92wcmhdb0uq91.png?width=691&format=png&auto=webp&s=20dbaf63f75ff6f2e255fff06e6f48c03170b11b
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This means the Dollar is always artificially stronger than it should be- and during financial calamity, the dollar is a safe haven as there are guaranteed bidders.
All this dollar denominated debt paired with the global need for dollars in trade creates strong and persistent dollar demand. Demand that MUST be satisfied.
This creates systemic risk on a worldwide scale- an unforeseen Sword of Damocles that hangs above the global financial system. I’ve been trying to foreshadow this in my Dollar Endgame Series.
Triffin’s Dilemma is the basis for the Dollar Milkshake Theory posited by Brent Johnson.
​

The Dollar Milkshake

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Milkshake of Liquidity
In 2021, Brent worked with RealVision to create a short summary of his thesis- the video can be found here. I should note that Brent has had this theory for years, dating back to 2018, when he first came on podcasts and interviews and laid out his theory (like this video, for example).
Here’s the summary below:
-----
“A giant milkshake of liquidity has been created by global central banks with the dollar as its key ingredient - but if the dollar moves higher this milkshake will be sucked into the US creating a vicious spiral that could quickly destabilize financial markets.
The US dollar is the bedrock of the world's financial system. It greases the wheels of global commerce and exchange- the availability of dollars, cost of dollars, and the level of the dollar itself each can have an outsized impact on economies and investment opportunities.
But more important than the absolute level or availability of dollars is the rate of change in the level of the dollar. If the level of the dollar moves too quickly and particularly if the level rises too fast then problems start popping up all over the place (foreign countries begin defaulting).
Today however many people are convinced that both the role of the Dollar is diminishing and the level of the dollar will only decline. People think that the US is printing so many dollars that the world will be awash with the greenback causing the value of the dollar to fall.
Now it's true that the US is printing a lot of dollars – but other countries are also printing their own currencies in similar amounts so in theory it should even out in terms of value.
But the hidden issue is the difference in demand. Remember the global financial system is built on the US dollar which means even if they don't want them everybody still needs them and if you need something you don't really have much choice. (See DXY Index):
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DXY Index
​
Although many countries like China are trying to reduce their reliance on dollar transactions this will be a very slow transition. In the meantime the risks of a currency or sovereign debt crisis continue to rise.
But now countries like China and Japan need dollars to buy copper from Australia so the Chinese and the Japanese owe dollars and Australia is getting paid in dollars.
Europe and Asia currently doing very limited amount of non-dollar transactions for oil so they still need dollars to buy oil from saudi and again dollars get hoovered up on both sides
Asia and Europe need dollars to buy soybeans from Brazil. This pulls in yet more dollars - everybody needs dollars for trade invoices, central bank currency reserves and servicing massive cross-border dollar denominated debts of governments and corporations outside the USA.
And the dollar-denominated debt is key- if they don't service their debts or walk away from their dollar debts their funding costs rise putting great financial pressure on their domestic economies. Not only that, it can lead to a credit contraction and a rapid tightening of dollar supply.
The US is happy with the reliance on the greenback they own the settlement system which benefits the US banks who process all the dollars and act as gatekeepers to the Dollar system they police and control the access to the system which benefits the US military machine where defense spending is in excess of any other country so naturally the US benefits from the massive volumes of dollar usage.
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https://preview.redd.it/yq1f1anq0uq91.png?width=1140&format=png&auto=webp&s=27447e2acec884848a5c70ab3651820e487fc0f3
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Other countries have naturally been grumbling about being held hostage to the situation but the choices are limited. What it does mean is that dollars need to be constantly sucked out of the USA because other countries all over the world need them to do business and of course the more people there are who need and want those dollars the more is the pressure on the price of dollars to go up.
In fact, global demand is so high that the supply of dollars is just not enough to keep up, even with the US continually printing money. This is why we haven't seen consistently rising US inflation despite so many QE and stimulus programs since the global financial crisis in 2008.
But, the real risk comes when other economies start to slow down or when the US starts to grow relative to the other economies. If there is relatively less economic activity elsewhere in the world then there are fewer dollars in global circulation for others to use in their daily business and of course if there are fewer in circulation then the price goes up as people chase that dwindling source of dollars.
Which is terrible for countries that are slowing down because just when they are suffering economically they still need to pay for many goods in dollars and they still need to service their debts which of course are often in dollars too.
​
So the vortex begins or as we like to say the dollar milkshake- As the level of the dollar rises the rest of the world needs to print more and more of its own currency to then convert to dollars to pay for goods and to service its dollar debt this means the dollar just keeps on rising in response many countries will be forced to devalue their own currencies so of course the dollar rises again and this puts a huge strain on the global system.
(see the charts below:)
JPY/USD
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GBP/USD
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EUUSD
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To make matters worse in this environment the US looks like an attractive safe haven so the US ends up sucking in the capital from the rest of the world-the dollar rises again. Pretty soon you have a full-scale sovereign bond and currency crisis.
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https://preview.redd.it/72nlain01uq91.png?width=1141&format=png&auto=webp&s=cbaa411acc88acb3849949d84a36624d75d6cfc4
​
We're now into that final napalm run that sees the dollar and dollar assets accelerate even higher and this completely undermines global markets. Central banks try to prevent disorderly moves, but the global markets are bigger and the momentum unstoppable once it takes hold.
And that is the risk that very few people see coming but that everyone should have a hedge against - when the US sucks up the dollar milkshake, bad things are going to happen.
Worst of all there's no alternatives- what are you going to use-- Chinese Yuan? Japanese Yen? the Euro??
Now, like it or not we're stuck with a dollar underpinning the global financial system.”
—-------------
Why is it playing out now, in real time?? It all leads back to a tweet I made in a thread on September 16th.
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Tweet Thread about the Yuan
​
The Fed, rushing to avoid a financial crisis in March 2020, printed trillions. This spurred inflation, which they then swore to fight. Thus they began hiking interest rates on March 16th, and began Quantitative Tightening this summer.
QE had stopped- No new dollars were flowing out into a system which has a constant demand for them. Worse yet, they were hiking completely blind-
Although the Fed is very far behind the curve, (meaning they are hiking far too late to really combat inflation)- other countries are even farther behind!
Japan has rates currently at 0.00- 0.25%, and the Eurozone is at 1.25%. These central banks have barely begun hiking, and some even swear to keep them at the zero-bound. By hiking domestic interest rates above foreign ones, the Fed is incentivizing what are called carry trades.
Since there is a spread between the Yen and the Dollar in terms of interest rates, it thus is profitable for traders to borrow in Yen (shorting it essentially) and buy Dollars, which can earn 2.25% interest. The spread would be around 2%.
DXY rises, and the Yen falls, in a vicious feedback loop.
Thus capital flows out of Japan, and into the US. The US sucks up the Dollar Milkshake, draining global liquidity. As I’ve stated before, this has seriously dangerous implications for the global financial system.
For those of you who don’t believe this could be foreseen, check out the ending paragraphs of Dollar Endgame Part 4.3 - “Economic Warfare and the End of Bretton Woods” published February 16, 2022:
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Triffin's Dilemma is the Final Nail
​
What I’ve been attempting to do in my work is restate Triffins’ Dilemma, and by extension the Dollar Milkshake, in other terms- to come at the issue from different angles.
Currently the Fed is not printing money. Which is thus causing havoc in global trade (seen in the currency markets) because not enough dollars are flowing out to satisfy demand.
The Fed must therefore restart QE unless it wants to spur a collapse on a global scale. Remember, all these foreign countries NEED to buy, borrow and trade in a currency that THEY CANNOT PRINT!
We do not have enough time here to go in depth on the Yen, Yuan, Pound or the Euro- all these currencies have different macro factors and trade factors which affect their currencies to a large degree. But the largest factor by FAR is Triffin’s Dilemma + the Dollar Milkshake, and their desperate need for dollars. That is why basically every fiat currency is collapsing versus the Dollar.
The Fed, knowingly or not, is basically in charge of the global financial system. They may shout, “We raise rates in the US to fight inflation, global consequences be damned!!” - But that’s a hell of a lot more difficult to follow when large G7 countries are in the early stages of a full blown currency crisis.
The most serious implication is that the Fed is responsible for supplying dollars to everyone. When they raise rates, they trigger a margin call on the entire world. They need to bail them out by supplying them with fresh dollars to stabilize their currencies.
In other words, the Fed has to run the loosest and most accommodative monetary policy worldwide- they must keep rates as low as possible, and print as much as possible, in order to keep the global financial system running. If they don’t do that, sovereigns begin to blow up, like Japan did last week and like England did on Wednesday.
And if the world’s financial system implodes, they must bail out not only the United States, but virtually every global central bank. This is the Sword of Damocles. The money needed for this would be well in the dozens of trillions.
The Dollar Endgame Approaches…
—-------------------------------------------------------------
​

Q&A

(Many of you have been messaging me with questions, rebuttals or comments. I’ll do my best to answer some of the more poignant ones here.)

—-----
Q: I’ve been reading your work, you keep saying the dollar is going to fall in value, and be inflated away. Now you’re switching sides and joining the dollar bull faction. Seems like you don’t know what you’re talking about!
A: You’re mixing up my statements. When I discuss the dollar losing value, I am referring to it falling in ABSOLUTE value, against goods and services produced in the real economy. This is what is called inflation. I made this call in 2021, and so far, it has proven right as inflation has accelerated.
The dollar gaining strength ONLY applies to foreign currency exchange markets (Forex)- remember, DXY, JPYUSD, and other currency pairs are RELATIVE indicators of value. Therefore, both JPY and USD can be falling in real terms (inflation) but if one is falling faster, then that one will lose value relative to the other. Also, Forex markets are correlated with, but not an exact match, for inflation.
I attempted to foreshadow the entire dollar bull thesis in the conclusion of Part 1 of the Dollar Endgame, posted well over a year ago-
​
Unraveling of the Currency Markets
​
I did not give an estimate on when this would happen, or how long DXY would be whipsawed upwards, because I truly do not know.
I do know that eventually the Fed will likely open up swap lines, flooding the Eurodollar market with fresh greenbacks and easing the dollar short squeeze. Then selling pressure will resume on the dollar. They would only likely do this when things get truly calamitous- and we are on our way towards getting there.
The US bond market is currently in dire straits, which matches the prediction of spiking interest rates. The 2yr Treasury is at 4.1%, it was at 3.9% just a few days ago. Only a matter of time until the selloff gets worse.
—------
Q: Foreign Central banks can find a way out. They can just use their reserves to buy back their own currency.
Sure, they can try that. It’ll work for a while- but what happens once they run out of reserves, which basically always happens? I can’t think of a time in financial history that a country has been able to defend a currency peg against a sustained attack.
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Global Forex Reserves
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They’ll run out of bullets, like they always do, and basically the only option left will be to hike interest rates, to attract capital to flow back into their country. But how will they do that with global debt to GDP at 356%? If all these countries do that, they will cause a global depression on a scale never seen before.
Britain, for example, has a bit over $100B of reserves. That provides maybe a few months of cover in the Forex markets until they’re done.
Furthermore, you are ignoring another vicious feedback loop. When the foreign banks sell US Treasuries, this drives up yields in the US, which makes even more capital flow to the US! This weakens their currency even further.
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FX Feedback Loop
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To add insult to injury, this increases US Treasury borrowing costs, which means even if the Fed completely ignores the global economy imploding, the US will pay much more in interest. We will reach insolvency even faster than anyone believes.
The 2yr Treasury bond is above 4%- with $31T of debt, that means when we refinance we will pay $1.24 Trillion in interest alone. Who's going to buy that debt? The only entity with a balance sheet large enough to absorb that is the Fed. Restarting QE in 3...2…1…
—----
Q: I live in England. With the Pound collapsing, what can I do? What will happen from here? How will the governments respond?
England, and Europe in general, is in serious trouble. You guys are currently facing a severe energy crisis stemming from Russia cutting off Nord Stream 1 in early September and now with Nord Stream 2 offline due to a mysterious leak, energy supplies will be even more tight.
Not to mention, you have a pretty high debt to GDP at 95%. Britain is a net importer, and is still running government deficits of £15.8 billion (recorded in Q1 2022). Basically, you guys are the United States without your own large scale energy and defense sector, and without Empire status and a World Reserve Currency that you once had.
The Pound will almost certainly continue falling against the Dollar. The Bank of England panicked on Wednesday in reaction to a $100M margin call on British pension funds, and now has begun buying long dated (10yr) gilts, or government bonds.
They’re doing this as inflation is spiking there even worse than the US, and the nation faces a currency crisis as the Pound is nearing parity with the Dollar.
​
BOE announces bond-buying scheme (9/28/22)
​
I will not sugarcoat it, things will get rough. You need to hold cash, make sure your job, business, or investments are secure (ie you have cashflow) and hunker down. Eliminate any unnecessary purchases. If you can, buy USDs as they will likely continue to rise and will hold value better than your own currency.
If Parliament goes through with more tax cuts, that will only make the fiscal situation worse and result in more borrowing, and thus more money printing in the end.
—----
Q: What does this mean for Gamestop? For the domestic US economy?
Gamestop will continue to operate as I am sure they have been- investing in growth and expanding their Web3 platform.
Fiat is fundamentally broken. This much is clear- we need a new financial system not based on flawed 16th fractional banking principles or “trust me bro” financial intermediaries.
My hope is that they are at the forefront of a new financial system which does not require centralized authorities or custodians- one where you truly own your assets, and debasement is impossible.
I haven’t really written about GME extensively because it’s been covered so well by others, and I don’t feel I have that much to add.
As for the US economy, we are still in a deep recession, no matter what the politicians say- and it will get worse. But our economic troubles, at least in the short term (6 months) will not be as severe as the rest of the world due to the aforementioned Dollar Milkshake.
The debt crisis is still looming, midterms are approaching, and the government continues to deficit spend as if there’s no tomorrow.
As the global monetary system unravels, yields will spike, the deleveraging will get worse, and our dollar will get stronger. The fundamental factors continue to deteriorate.
I’ve covered the US enough so I'll leave it there.
—------
Q: Did you know about the Dollar Milkshake Theory before recently? What did you think of it?
Of course I knew about it, I’ve been following Brent Johnson since he appeared on RealVision and Macrovoices. He laid out the entire theory in 2018 in a long form interview here. I listened to it maybe a couple times, and at the time I thought he was right- I just didn’t know how right he was.
Brent and I have followed each other and been chatting a little on Twitter- his handle is SantiagoAuFund, I highly recommend you give him a follow.
​
Twitter Chat
​
I’ve never met him in person, but from what I can see, his predictions are more accurate than almost anyone else in finance. Again, all credit to him- he truly understands the global monetary system on a fundamental level.
I believed him when he said the dollar would rally- but the speed and strength of the rally has surprised me. I’ve heard him predict DXY could go to 150, mirroring the massive DXY squeeze post the 1970s stagflation. He could very easily be right- and the absolute chaos this would mean for global trade and finance are unfathomable.
​
History of DXY
​
—----------
Q: The Pound and Euro are falling just because of the energy crisis there. That's it!
Why is the Yen falling then? How about the Yuan? Those countries are not currently undergoing an energy crisis. Let’s review the year to date performance of most fiat currencies vs the dollar:
Japanese Yen: -20.31%
Chinese Yuan: -10.79%
South African Rand: -10.95%
English Pound: -18.18%
Euro: -14.01%
Swiss Franc: -6.89%
South Korean Won: -16.73%
Indian Rupee: -8.60%
Turkish Lira: -27.95%
There are only a handful of currencies positive against the dollar, the most notable being the Russian Ruble and the Brazilian Real- two countries which have massive commodity resources and are strong exporters. In an inflationary environment, hard assets do best, so this is no surprise.
—------
Q: What can the average person do to prepare? What are you doing?
Obligatory this is NOT financial advice
This is an extremely difficult question, as there are so many factors. You need to ask yourself, what is your financial situation like? How much disposable income do you have? What things could you cut back on? I can’t give you specific ideas without knowing your situation.
Personally, I am building up savings and cutting down on expenses. I’m getting ready for a severe recession/depression in the US and trying to find ways to increase my income, maybe a side hustle or switching jobs.
I am holding my GME and not selling- I still have some shares in Fidelity that I need to DRS (I know, sorry, I was procrastinating).
For the next few months, I believe there will be accelerating deflation as interest rates spike and the debt cycle begins to unwind. But like I’ve stated before, this will lead us towards a second Great Depression very rapidly, and to avoid the deflationary blizzard the Fed will restart QE on a scale never seen before.
QE Infinity. This will be the impetus for even worse inflation- 25%+ by this time next year.
It’s hard to prepare for this, and easy to feel hopeless. It’s important to know that we have been through monetary crises before, and society did not devolve into a zombie apocalypse. You are not alone, and we will get through this together.
It’s also important to note that we are holding the most lopsided investment opportunity of a generation. Any money you put in there can be grown by orders of magnitude.
We are at the end of the Central Bankers game- and although it will be painful, we will rid the world of them, I believe, and build a new financial system based on blockchains which will disintermediate the institutions. They have everything to lose.
—------
Q: I want to learn more, where can I do? What can I do to keep up to date with everything?
You can start by reading books, listening to podcasts, and checking the news to stay abreast of developments. I have a book list linked at the end of the Dollar Endgame posts.
I’ll be covering the central bank clown show on Twitter, you can follow me there if you like. I’ll also include links to some of my favorite macro people below:

• Peruvian Bull (my only account)
• Lyn Alden
• Luke Gromen
• Brent Johnson
• Raoul Pal
• Andreas Steno Larsen
• Jeffrey Snider

I’m still finishing up the finale for Dollar Endgame- I should have it out soon. I’m also writing an addendum to the series which is purely Q&A to answer questions and concerns. Sorry for the wait.
—-------------------
Nothing on this Post constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person.

A month ago, I made a post about Breakouts. A few people asked me to write a similar one for Pullbacks. Although this is a very simple setup, there are a lot of nuances which I will try to explain without writing an entire article. Here goes...
Much like the Breakout, the Pullback is also one of the most popular and oldest setups around. Jesse Livermore—who I love to quote—traded this pattern over 100 years ago. In his words:

I become a buyer as soon as a stock makes a new high on its movement after having had a normal reaction.

Let’s translate that to 2022 English, Fam.
Livermore is probably rolling over in his grave right now

A Framework to View the Markets: The Market Cycle

Before we look at pullbacks in detail, we first must understand a fundamental concept called the Market Cycle. In laymen’s terms, there are four stages that an instrument goes through in some shape or form.
Four Stages of the Market Cycle - Applies to all tradable assets
I won’t bore you with the human psychology and emotions behind this theory; please look into Richard Wyckoff's body of work for more information. Just know that many institutional traders view the market through this lens. When 'they' initiate buy/sell programs, that moves prices. And when big money acts in unison, that creates trends.
Price can do one of three things: it can go up (Stage 2), down (Stage 4), or sideways (Stages 1 & 3). Pullbacks are trend-following patterns and therefore can only occur in stage 2 and 4. Here are two simple rules that should keep most traders out of trouble:

1. During Stage 2 Uptrends: Buy the Pullbacks and Breakouts
2. During Stage 4 Downtrends: Sell the Rallies and Breakdowns

The Fundamental Pattern

On a micro scale, the Market Cycle presents itself as buying and selling waves. Price rarely goes up/down in a straight line. It ebbs and flows as Bulls/Bears rotate between buying, adding, taking profit, shorting, and covering. This is the beautiful symphony also known as Price Action.
When buying waves are stronger than selling waves, there is more demand pressure (market buy orders hitting the Ask). This causes price to go up. Bulls are in control. When the opposite occurs, there is more supply pressure (market sell orders hitting the Bid). This causes price to go down. Bears are in control.
The Fundamental Pattern - The Art and Science of Technical Analysis, by Adam Grimes
A lot of money is required to keep price moving in one direction. That usually means institutional involvement—they don’t like to lose. So, guess who buys the next pullback to keep the trend going? That’s right: those who are already holding positions from earlier (and those who missed out and are now FOMO’ing). Not to mention all the traders caught on the wrong side of the move. When they are forced to stop out, it adds fuel to the fire. The side which is currently in control is now better able to sustain control; there's a snowball effect.

Fractal and Multiple Timeframe Analysis

The fundamental price action pattern of impulse, retracement, impulse exists on all timeframes. Each leg is composed of smaller iterations of the same pattern. This is called a fractal. I’ve zoomed down to the 10-second—and even 1-second chart—to observe this magical dance occurring in real-time.
The fractal nature of markets—there's levels to this
Price action in the wild is never as clean as described in literature. But once you start viewing the market in cycles which ebb and flow, the day-to-day movement rarely surprises you. Here’s the post-FOMC chart from November 2. It shows a failed continuation move up (oops), followed by multiple legs down. Impulse, retracement, impulse.
November 2, 2022 - The fundamental pattern still visible during post-FOMC chaos

Pivots and Building Blocks

Below are two very basic shapes. They are little arrowheads—or pivots—each with a green line to indicate strong buying, and a red line to indicate strong selling. The apex is the point where control was lost to the opposing side.
Two simple pivots where price reversed
You may remember this shape from such charts as: 'I Bought the Absolute Top’ or ‘I Sold at the Very Bottom.’ And who can forget, ‘Every Time I Enter a Trade the Market Immediately Goes Against me!’
Jokes aside—pivots are typically not a cause for concern. They are normal market behavior as new entrants join the trade, existing positions take profit, add, trim, etc. Not every turn in price is a reversal. By definition, a trend must pullback before going on to make a new high/low.
Look at what happens when I start stacking or combining these basic pivots to build a trend.
The development of a classical uptrend, with price respecting prior resistance as new support
Let’s use these exact same building blocks to construct my favorite pattern, the Base Breakdown.
Rectangle base breakdown - Impulse, sideways, impulse
The best breakouts/breakdowns rarely offer a second entry on the re-test. Once they go, they are gone.

Trading the Pullback

That was fun. Let's snap back to reality, oh there goes gravity! Here are illustrations using candlesticks rather than MS Paint (still my favorite software since Windows 95 was launched).
Uptrend: Higher-highs and higher-lows. Buy the pullbacks
Downtrend: Lower-highs and lower-lows. Sell the rallies
The textbook entry is after the pullback is complete once the pivot has formed. That means when the current candle has taken out the prior bar’s range by making a new high (uptrend), or new low (downtrend). Some traders draw a trendline during the pullback and enter on the break of that diagonal line. Both methods are valid since they are relative to price action. Note that the stop loss is below the pivot low for long, and above the pivot high for short.
Some traders enter during the pullback, before confirmation that a pivot has formed. But how do you know the retracement is complete if a new high/low hasn’t printed? You don’t.
Entry off the rising 20 MA and $60 whole dollar
This style of pullback trading requires timing and experience. The main reason behind entering during the reversal is to tighten the stop and have a better reward-to-risk. You must be willing to re-enter if you are initially wrong. Personally, I do this at key levels as seen above. You can fine-tune the entry by going down to a smaller timeframe for better resolution. Often there is a pullback pattern on the 1 or 2-minute chart not visible on the 5-minute.

Two-Legged

Sometimes when price gets too extended, one pullback isn’t enough. Despite an initial attempt to rally, buyers fail to push price higher and there is a second corrective leg. If you zoom into a lower timeframe, these are often miniature downtrends in their own right.
Two-legged pullback, aka the Bi-pedal Pullback
When you start seeing more than 2 legs of retracements, it’s probably time to start questioning the integrity of the trend (change of character). Are there enough lower-highs and lower-lows to signal the beginning of downtrend? Break in pivot structure often leads to trend termination—and sometimes reversals—but this is the topic for another day.

Moving Averages

You may have noticed most of the above charts contain moving averages (MA). These squiggly lines are useful to gauge the trend at a glance. I use them as visual shortcuts. If price is surfing above a 45-degree sloping MA, it means we are most likely in an uptrend. This is when we look for pullbacks to go long. If price is bobbing below a 45-degree sloping line, we are probably in a downtrend. This is when we look for rallies to go short.
I use two MA’s to monitor the quality of a trend. When both lines are parallel, the trend is moving at a healthy pace relative to time (not extended). These directional moves are considered sustainable until there is evidence to believe otherwise; the trend is your friend till the end.
November 3, 2022 - $FIS 5-minute chart downtrend with multiple pullbacks
There’s very little difference between using the 8, 9, or 10 as your small MA. The same goes for using the 20 or 21 as your big MA. Also, EMA vs. SMA is a matter of preference. Any combination of common MA’s should provide the same picture. The slope simply measures the velocity at which buying or selling is occurring.
Note: Some trend traders use moving averages as their trailing stop. They wait for a candle to close below the MA during an uptrend. Using trade management criteria such as this allows them to capture the bulk of a move. Traders who don’t have clear exit rules often lament about leaving money on the table. How can you know if a move is over if you have no objective way of measuring?!
October 28, 2022 - $SPY all-day trend. Can you spot the pullback entries and stops?

Don’t Go Chasing Waterfalls

I’ve stated before that trading patterns without context is like trading in a vacuum. These shapes and setups appear countless times throughout the day. However, there are additional criteria that make some pullbacks better than others. They include:

• Fresh catalyst or good daily chart with room to run
• Position relative to key areas (intraday levels, pre-market, VWAP, etc.)
• Number of candles during the retracement (2, 3, 4, etc.)
• Cleanliness of the pullback (fluid with minimal wicks)
• Depth of retracement (Fibonacci anyone?)
• Low volume during pullback and increasing volume upon triggering
• Bottoming/topping tail on the reversal candle that forms the pivot
• Doji/indecision/narrow candle before a new high/low is made
• Change in color bar before the turn (aka the pivot)
• Respecting prior support/resistance areas in pivot structure
• Trend maturity (the probability of continuation decreases on each subsequent impulse leg)
• Distance from MA’s (extended or not)
• At major support/resistance areas on the higher timeframes

Regarding that last point: One crucial skill every trader should learn is the ability to draw relevant levels. Below is the 60-min chart of SPY from Friday. I use this example because somebody asked me why the uptrend stalled where it did.
November 4, 2022 - $SPY hourly chart showing relevant levels for the day
Here’s the 2-minute chart showing HOD hit that level at 378.50-ish. LOD also turned out to be the 371 area from above. Those two zones became the spots where the Stage 2 uptrend and Stage 4 downtrend terminated, respectively.
November 4, 2022 - Levels respected on $SPY during the Market Cycle Phases
Significant levels are like magnets—price is attracted to them due to the market's natural tendency to chase liquidity. The trend's final leg pushed into those areas and rejected them. And that formed the apexes for the day. It would have been useful to be aware of these zones beforehand if you are a pullback trader, no?

I See Dead People...They’re Everywhere

If the entire market is composed of the fundamental pattern on all timeframes, then shouldn’t day trading be an ATM for anyone who can catch every single pivot? The first part of that statement is true—the market consists of the same patterns over and over. Only a small portion are worth trading, however.
Not every chart looks as clean as the examples I presented above. Knowing when NOT to get involved is half the battle in trading. Additionally, the lower the timeframe, the more noise is observed in price action. This is why I believe that beginners should first learn to read price action on at least a 5 or 15-minute chart before attempting to scalp off the 1-minute.
Lastly, the market spends more time ranging than trending. Trying to trade pullbacks in these types of conditions will lead to you getting chopped up—in both directions.
A ranged, or trendless, market - Equal highs and equal lows
There are many traders who actually prefer to trade ranges. The peaks and troughs are well-defined and offer great reward-to-risk from end-to-end. Personally, that isn't my cup of tea. I scan for individual stocks which are trending and have the potential to keep moving in one direction.
Even while day trading, my analysis always starts from the top-down: Daily, Hourly, 15-min, 5-min, and finally the 2-min for entry. It's much easier to catch intraday moves when institutional, position, and swing traders are on the same side as you.
And there you have it: my second favorite day/swing trading setup of all-time. Yikes—looks like I just wrote another article! Please feel free to share your own charts since we can now add images to comments :)

US markets suffered its worst session in months as the Federal Reserve’s 2-day annual meeting unfolded at Jackson Hole on Saturday morning (AEST).
The Dow crashed more than 1,000 points (-3.03%) while the Nasdaq and S&P 500 fell 3.37% and 3.94% respectively after Fed Chair Jerome Powell reassured higher rates were to stay longer to beat inflation.
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US30 Hourly Chart
At the Grand Teton National Park, Powell delivered his 5-page speech and emphasised “restoring price stability will likely require maintaining a restrictive policy stance for some time.” Powell’s comments were also echoed by several other Fed presidents.
Technically, US30 has sharply penetrated the upward trendline formed since mid-June. In a rather textbook alike example, bearish candles reversed earlier gains before the speech to turn dramatically south following a long legged Doji.
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USD Index (DXY) Hourly Chart
USD (DXY) also reclaimed most of its lost territories by succeeding in a V-shaped rebound. EURUSD crashed into parity once again, AUDUSD fell below the 0.70 milestone while GBPUSD’s retreat was relatively graceful.
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Note- I am avoiding TA on Futures (ES) because tradingview updated ES to the new contract which caused a gap in price and will make the technical of the daily not make any sense right now.
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Looking back at my weekly TA from last Friday… the move of the week would have been 12/9 expiration 390P/419C bought at market close… by Tuesday you would have been up at least 700% on your put side. Pretty insane… didn’t quite hit that 390.1 support but we came pretty close.
This morning we got PPI.. interestingly enough we had a beat on CORE PPI YoY, a beat on PPI ex food/energy/ transport YoY and a beat on PPI YoY (though they did come in over forecast). However, we had a miss on CORE PPI MoM and no change in PPI MoM.
The markets reacted pretty negatively to it with a red open. We did however recover intraday. So this now brings up the question for CPI next week… Will markets ignore a beat on CPI and focus on MoM or Core more?
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Lets take a quick look at CPI numbers now that we FINALLY have consensus numbers…
CPI YoY= consensus-7.3 (previous 7.7) CPI MoM= consensus-0.3 (previous 0.4) CORE YoY= consensus- 6.1 (previous 6.3) CORE MoM= consensus- 0.3 (previous 0.3)
best case= CPI YOY- 7.1 (big beat) CPI MoM- 0.1 (beat) CORE YoY- 5.9 (beat) CORE MoM- 0.1 (beat)
worse case= CPI YOY- 7.5 (beat) CPI MoM- 0.5 (miss) CORE YoY- 6.3 (no change) CORE MoM- 0.5 (miss)
Looking at this (and I will go WAY more into detail this weekend when I have some more time to look at the numbers and I will make a full on trade plan for next week… hope to post it tomorrow morning).
Overall the best case scenario is a bullish beat. We still don’t get negative MoM numbers which markets might not receive well but this scenario should result in a big green open again. However, the worst case scenario puts us at a miss on everything but CPI YoY… If CORE doesn’t change and we get a MoM increase on CPI and CORE I think this is going to be received terribly. This is actually the exactly scenario that played out in September.
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Interestingly enough though When we look at the trend leading into last CPI we are seeing a very similar pattern. We had a breakout followed by a pretty nice sell off, followed by a big recovery with a doji candle and then a sell off leading into CPI. If this pattern and the technical play out we should see 390.1 support test on Monday.
I mentioned that black and blue diamond pattern over night yesterday. We not only tested the resistance of that black bear channel we also fell out of the support line of the diamond pattern. With that and a rejection of the daily 8ema while closing under the daily 20ema and also confirming the key level of 395 as resistance now I am looking for a fairly large break down Monday.
Strictly technical and not even factoring in the CPI sell off that could happen like last month this gravestone doji using the previous candle body support level of 395 and turning it into resistance and falling back under the daily 20ema is an extremely bearish pattern.
I had mentioned previously for the last month really we traded in a tight 395 to 402.3 pattern. We broke back into that channel yesterday, however, we lost I and had a pretty impressive sell off EOD.
Looking at the last 11 CPIs the day before… 6 out of 11 of those CPIs closed red with an average drop of -1.15% and 5 out of 11 of those CPIS closed +1.27%. Not really enough to take a trade off of.
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Taking a look at last CPI we had a pretty impressive sell off EOD dropping a total of 1.4% in 4 hours at the EOD. Historically in the beginning of the year and also in the summer time we would very often see 1 to 1.5% sells that started anywhere between 12pm and 1pm and pretty much continued till the EOD. We saw that return last pre-CPI day.
The one thing I can almost guaranteed though is that Monday will be yet again another very choppy day.
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The interesting thing is that the technical are actually setting us up for a pretty big drop over the next few weeks. Whether that is fueled by CPI, FOMC, both or something else is to be determined. The weekly chart is showing that last weeks resistance touch was the actual top and we should with this close lower look for more downside.
Support- 390 -> 375
Resistance- 399 -> 407 (2022 bear channel resistance) -> 408.8
A few scenarios I have in my head right now…

1. CPI misses -> huge 3-4% drop -> FOMC confirms 50bps and 50bps next meeting -> huge 3% drop -> market goes into another downward trend for a few weeks.
   
2. CPI beats -> 3-4% pop (possibly a flat open could be on the table… we have only had one of those this year) -> FOMC confirms 50bps and 50bps next meeting -> huge 3-4% drop to erase all of CPI gains -> market goes in sell off mode again
   
3. CPI misses -> huge 3-4% drop -> FOMC confirms 50bps and 25bps next meeting -> huge 3% rally-> market goes into bull mode and runs hella high till January earnings
   
4. CPI beats -> 3-4% pop (possibly a flat open could be on the table… we have only had one of those this year) -> FOMC confirms 50bps and 25bps next meeting -> huge 3% rally-> market goes into bull mode and runs hella high till January earnings
   

Personally I believe option 1 and 2 are the most realistic and I believe that 1 is the case that we might get…
I just feel too many people are expecting another massive 3% green open on a beat and are expecting JPOW to “slow rate hikes/ pivot” and that there is going to be a lot of people disappointed.
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I am seeing a really nice bull flag forming on the VIX daily chart right now too. WE have been trading in this very narrow and very tight channel for 6 full days now. We did retouch and confirm 22.2 as support today also. This is the 3rd doji close in a row. I will be looking with Monday being the day before CPI for a push up on the VIX to that 23.6 level.
Fun fact - the lowest VIX close (day before) for CPI (since june) is 21.76 and the highest VIX close (day before) for CPI (since june) was 33.58. The average close (the day before…. Dating back to June) was 26.71.
I mentioned that I was suspecting this to play out similar to the September CPI (in regards to a CPI YoY beat but miss on MoM/ core and we see a huge dump). When we compare the VIX in September to now the vix closed at 23.86 the day before CPI and currently we are projected to close somewhere between 23 and 25.
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One more thing about the VIX which also supports my narrative that we are about to start the next major leg down is that as you can see here I mentioned a few times now that every single bear top was put in once the VIX touched 19.7… IF my scenarios play out correctly and we get that September type of miss… we could be looking that when the December 10th candle touched and rejected 410 that was the top of the current bear rally.
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This brings me back to my last weeks TA where I asked is the top of this rally in or not? IF last week truly was the top (December 1st) and we truly are about to see our next leg down… we should all be loading 60+DTE puts here for an impending dump to 320s by the first week of February.
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One last thing to mention… is the JPM collar that currently sits at 3425… historically speaking this year the trend has been a breakout to the CC area (currently 3870) followed by a pretty massive sell off leading into the quarter expiration where JPM rotates their collar. The expiration is December 30th. Now we do not usually break through that collar but last collar (I need to go back and see my TA to give you some better info on this (I will after next week shapes up).
This could mean that we really are headed to the mid 300s/3000s again… If we wanted to touch the puts (we don’t usually but are close) then over the next 21 days we should see SPY drop about 14%. While 14% in three weeks is quite impressive when we look at other CPI/ FOMC weeks we have had quite a few 10%+ sell off weeks this year.
What do I actually think? Do I think the tops in? Do I think we really see 320 by EOM? (if you only wanna hear TA based opinions top reading here this will be speculation).
My initial “conspiracy theory thought” is that EVERYONE is calling for a Santa Rally and I only am seeing people positioning themselves bullishly and I am hearing a lot more “when we see 430-440” talk than I am hearing “when we see 360 again” talk… there is no way that “they” let this run that high. This market works in cycles… the closer we get to the top and the more people that start thinking the cycles are over the better chance that the huge reverse is coming.
It is not lost upon me the “irony” (probs wrong choice of words) that we on December 1st touched the bear market resistance line and hard rejected. Its also not lost on me that Since Last CPI we have not had any upward movement. Besides the JPOW speech last week where SPY randomly shot up 3.15% which broke us out of our consolidation channel we have essentially been trading withing a $7 channel with a few outliers.
Something very interesting about this time frame from CPI to CPI is that this is the lowest +/- movement from CPI to CPI that SPY has had all year. We have only move about 3.8% total +/- (taking the high of CPI day and finding the highest/ lowest move over the month that happens from CPI to CPI). However, the average CPI to CPI +/- move (excluding this current 3.8%) is 8.2%. That means we have made 46% of the move that usually happens from CPI to CPI.
Whats even crazier to think about is the fact that 3.15% of that movement came from one single day (JPOW speech day). Why the low movement? Why have we been stuck in this tight range since CPI? My thoughts are that the markets do not believe the CPI beat from last month. I think Markets REALLY focused on the YoY beat and failed to take into consideration that we have not had a SINGLE negative MoM CPI or CORE MoM print this year.
Trend wise this year we have not had a single back to back green open on CPI day. Now is that because once we get a beat and a huge green day markets become more critical? Perhaps…
My thoughts are that this price action that occurred all week long where we had Monday and Tuesday dumping us on seemingly no news at all, impossible to trade price action where VOLD/ volume and premiums are completely disconnected from reality and this huge EOD sell off that we had today and the most critical thing is this reaction to the poor MoM PPI reading… I believe the top of this bear market rally is in and regardless of what we do next and what CPI brings JPOW is going to hard reality check this market and we are headed back to the mid 300s before EOY.
My prediction is we close somewhere near 390 (probably below it) on Monday. CPI YoY beats, CORE YoY (unchanged) and we get a decent miss on CPI/ CORE MoM and that markets react extremely negatively. I think markets see that while we are making YoY progress on CPI there really has not been much progress made on CORE and MoM consistently is rebounding. Now its POSSIBLE we get a super wonky reading and CPI YoY comes in unchanged but that would need a variance of 0.4% from consensus, Bloomberg terminal estimates and Cleveland fednowcast which has not happened. The biggest variance I have noted is 0.3% this year. But anything is possible…
I also think JPOW is going to stick with 50bps regardless of what CPI is but I think he is going to say its pre-mature to continue slowing and that we are getting another 50bops at next meeting (25bps is priced in and expected). I also think we are going to get a terrible dot plot/ fed funds rate trajectory and much like last two FOMCs we are going to end up with a massive EOD sell off once the presser starts.
We also have monthly options expiration on Friday too.
My expectation come Friday is that we close somewhere in my red channel from 370.7 to 378.1.
$5k/ 10% challenge weekly/ month recap-
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Monday and Tuesday thankfully were great trading days for me but I ended up putting in a red week for the challenge with a net profit of -$300…. I am still up $3,820 from the challenge itself though.
That means over the last month of strictly scalp one trade a day at $5000 with a goal of 10% and utilizing a 15% stop loss I have netted $3820 over a months time or about $955/ week on average. Nothing amazing but definitely something. I look forward to continuing this challenge.
Daily log weekly recap-
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I by some miracle scrapped out a green week. However, mentally this week was beyond exhausting. Monday and Tuesday were actually really great days and I had a great time trading. Price action was smooth and premiums paid as expected. However, Wednesday was the worst day mentally and results wise in a while. I could not seem to get a grasp on the technicals for a good entry.
It seemed by time I was eyeing my play and waiting for confirmation the move happened already. And the times where the move did not happen already I would enter and almost immediately take a 5-10% hit to my position and I would watch SPY move in my direction and my premium lose value. It was the most frustrating thing ever.
Thursday really wasn’t much better from a scalping standpoint. But I was able to play some decent level to level plays.
Today I did end up closing red due to my swing calls I played over night. I was expecting PPI to be received bullishly and that did not happen. Outside of my swing my intraday trading resulted in a green day but factoring in my swing I net a red day…
Overall I didn’t find any set ups I really felt confident in. I eyed a few scalps that did behave more as expected but I found that it was much of the same aspect that we were left with super long wicks and extreme volatility on candles that unless your entry was absolutely perfect you got wrecked. Today I played some good L2L plays. The only loss I took was on an L2L put at resistance that had been resistance all day long and then we got that rogue massive push before 11am that stopped me out. I felt playing the levels were better today but it was also still a struggle as it seemed we just pushed from one $1 range to the next $1 range. The technicals which mostly is DMI that I utilize in these L2Ls were also very off and prevented me a few times from getting into plays.
I honestly sat most of the day out and just traded in my head.
Like I said this week was beyond mentally draining and I know many of you struggled this week with this wonky price action and premium pay outs.
In the end remember this….
There will ALWAYS be another trading day… If you don’t like what you see or it doesn’t fit your strategy then don’t trade. Take the day off.
If you do not have set rules established for your strategy then you need to establish them now. If you have rules that I need XY and Z to be aligned for me to take a play and you stick to your rules you will succeed. The times we break out rules because of one how one day behaved is the moment you go from a successful trader to a gambler.
No doubt this price action was brutal today and there is a good chance that Monday is going to suck just as bad… but there are 252 trading days in a year… I will not let 3 or 4 terrible days break my rules nor will I let it change my strategy. As long as days like today and weeks like this week you can prevent your drawdown from being unsurpassable (aka walking away instead of continuing to lose) the good days will in the end out weigh the bad days.
Have a great weekend everyone! See you next week! Like I said trade plan for CPI/ FOMC will be posted tomorrow at some point.