There Is No Bull Or Bear.

The S&P has spent almost 80 days going nowhere. Same range since early May. May, June, most of July, all of it channeling inside the same box.

Most people call that indecision. It's not. You're not stuck because buyers and sellers can't agree. You're stuck because of open interest.

Zero DTE — options that expire the same day — is now more than half the volume. We do about 68 million contracts on an average day. Call it 30 to 40 million of them getting rolled forward, over and over, into the same strikes. 

You trade the same strikes day in and day out at that kind of size, you don't just pile up risk in one spot. You lock the market in that spot.

I've been talking about this since the early ThinkOrSwim days. Back then I called them gravity points. Name still fits. It's the price the whole market keeps getting pulled back to, because that's where all the open interest is packed.

This morning that was 7511 on the S&P futures. Hours later we were still sitting right on it. That's not a coincidence. That's gravity. Pull to the upside, you get dragged back. Pull to the downside, you get dragged back.

Time and time again.

So somebody comes on in the morning and tells you it's bullish today, it's bearish today. 

There is no bull, there is no bear, there is only Zuul — that's Ghostbusters, for the record. 

There's nothing here to get a read on. It's all BS. You've got 80 days inside a range. Period.

Now this is where you want to pay attention. There is no technical means to tell you which way a vol box breaks. None. Go back and look at every tight range in history. Every one. It's a 50/50 whether you break higher or lower. 

Period.

No pattern, no indicator, no line on the screen gives you the answer, because the answer isn't technical. What breaks a box is a catalyst. Some exogenous event knocks you off the level. 

Until that shows up, you channel. When it shows up, you go, and you find out the direction the same second everybody else does.

The box does tell you one thing, though. The further you get from the gravity point, the higher the odds of a violent break. Sitting on 7511, you're pinned, nothing happens. 

Get real distance from it and the probability of a dramatic move, up or down, climbs fast. That's the read. Not which way. How far.

Here's who gets hurt. Guys who've been doing this 30, 40 years. They look at the futures overnight, they look at the internals, they call their day. 

Last couple months? 

None of it has worked. The overnight tape has meant crap. The internals have meant crap. Markets are efficient. Whatever worked a couple months ago, it ain't going to work anymore.

So quit asking the box which way it's going to break. It doesn't know. Neither do you.

To your success,

Don Kaufman

P.S. Everything above is about a market you can't predict. Here's the part you can control. You can't tell which way the box breaks, but you can know exactly what you're paying and what you're risking before you ever click buy. 

That's the whole game right now. 

I put the five checks I run on every trade into a short report — the sizing check, the one that catches the cost bleeding out of your position every day even when you're right about the stock, the reason your stop-loss can fail you on the one day you need it. Five checks. Sixty seconds. 

It's normally $29.97, it's free today, and you don't need a credit card.