Tiger Woods wears red on Sundays. I wear it when futures are negative.

Tiger Woods wears red on Sundays.

I wear it when futures are negative. 

Woke up this morning, saw the S&Ps were down, put on the red shirt. 

Just kidding…I didn’t plan it…just happened. 

After I got dressed I did what I do every single morning before I read a word of news or open a single app. 

It’s four things: Inject myself with caffiene, look at oil futures, S&P futures, and check out what the XLF is doing.

That is how I start my pre-market prep. 

You see, oil tells me about geopolitics. When oil spikes, something is happening in the world that the energy market has already priced before the headlines catch up. 

The S&P futures tell me where institutional money is positioned overnight. And the XLF tells me whether the fear is real or rotational. 

Financials going up in a down tape means money is moving, not fleeing. That is a completely different morning than financials down in a down tape.

This morning I looked at oil and saw it was moving. Then I looked at the S&P futures and saw we were down. My immediate read before touching a single headline was that we must be firing again on Iran. That has been the pattern. Oil up, S&Ps down, geopolitical escalation. 

Then I looked at the XLF. Financials were up. That narrative did not fit. Something else was happening.

That sequence took about 30 seconds. By the time I touched any news I already knew the move was rotational, not a risk-off panic. The news confirmed it. OpenAI missed its revenue targets and its user targets. Everything connected to OpenAI in hardware got hit at the open. The UAE announced it is leaving OPEC and OPEC Plus, which sent oil moving in the opposite direction you would expect during a conflict. The XLF holding told me the real story before either of those headlines crossed.

The other number I ran was the expected move. 

When a move stays inside the range the options market already priced, the market is functioning exactly as designed. 

When it breaks outside and snaps back, that tells you the panic was short-lived and the real trade is somewhere else. This morning it snapped back. That told me more than any headline.

Most traders do this backwards. They read the news first and then try to figure out what the market is going to do with it. By the time they form a view the order flow has already decided. The pre-market move is noise. 

The order flow at the cash open is the signal. The pre-market read, oil, futures, XLF, gives you a hypothesis before the open. 

And the expected move tells you whether what follows is inside or outside the range. Everything else is confirmation.

Run that process every morning. Write it down if you have to. It does not matter what the news is. The market tells you what it thinks before you read a word.

Tomorrow is the biggest single earnings session of the year. 

Microsoft, Alphabet, Amazon, and Meta all report after the close alongside the FOMC decision. 40 percent of the S&P 500 in one afternoon. 

Gianni and Mac are going live at 4 PM ET tomorrow to break down every piece of it as it happens. 

Be in the room when it happens.

Join Gianni and Mac Live Tomorrow at 4 PM ET

To your success,

Don Kaufman