Don Kaufman here.
What do you do for a living? I'm short crap. For 27 years. And I'm loving it.
That's my response when strangers ask about my career. While most traders are getting chopped up in today's fourth straight losing session, I'm sitting pretty - having closed my XLE position for a 30% gain in one day and my XLF trade for a 56% winner.
The secret? I never forgot how to dance on the dark side.
Jeff Bierman and I are both better shorts than we are longs by far. When people ask what I do, I tell them I've been shorting stuff for decades and loving every minute of it.
Taking Profits While Others Take Beatings
While analysts debate AI valuations and partnership announcements, I've been closing profitable positions left and right. My approach isn't complicated - wait for markets to show their hand, then strike fast.
Pretty much everything I've thrown at this marketplace has come off profitable.
The XLE energy play? Closed in a day for 30%.
The XLF financials trade? 56% gain before most traders even noticed the setup. The volatility created opportunities everywhere.
The Christmas Tree Psychology: Embrace the Pain
My current position tells the whole story. I'm running a Christmas Tree spread - a complex options strategy that requires crawling through a river of crap to come out smelling sweet.
This is the Andy Dufresne of trades. You have to crawl through hell to get to paradise.
The trade is currently down 38%, and I couldn't be happier about it. Christmas Tree spreads are designed to profit from exactly the kind of market chaos we're seeing today. Right now we're at the inflection point - we can go down to 560 on the SPY and I'm still making money.
But here's the beautiful part: while everyone else is puking, I'm sitting here with minimal positions, waiting for the real show.
The Level That Actually Matters
Stop trying to marry news to market action. That Microsoft, Nvidia, and Anthropic partnership announcement? Nobody cares. Three wrongs don't make a right.
What matters are the levels. We hit the lower edge of the expected move this morning. I've been watching that 6570 level all day because that's where things get interesting. Break through there and we're looking at 130 points down on the S&P. Maybe more.
This isn't technical analysis BS. It's about understanding that this marketplace hasn't paved that road yet. Once you get down to those levels - the fast, violent, reactionary levels - nobody's hedged off any risk below there. You're gonna get a crap load of selling hitting the tape.
Correlation is a Ghost
Most people think being bearish means you're negative. Wrong. Being a bear means you understand that markets go up AND down - shocking concept - and you position yourself to profit when gravity kicks in.
The marketplace right now is seeing products trading in completely different directions. Correlation is a freaking ghost right now. You can't find the damn thing. But when real selling kicks in, when we get that full court press hitting the marketplace, everybody pukes.
The Bitcoin Bleeding Effect
I've been saying this for weeks - if Bitcoin sells off, it bleeds into the marketplace. Bitcoin's now officially down year-to-date. This is supposed to be the hottest thing going under Trump, and it's negative for the year.
Dogecoin? Half of where it started. Ripple? Down on the year. Ethereum? Flat. There's nowhere to hide, and that's hitting retail markets hard.
What I'm Actually Doing
I've got very limited positions right now. Closed almost everything profitable. The only trades I have are TLT (betting on flight to bonds if things get crazy) and Starbucks (needs the marketplace to sell off).
But I'm watching that 6570 level like a hawk. Break through there and all hell breaks loose because this is not a paved road. Think driving through snow nobody else has touched - it's a lot harder than following existing tracks.
The volume at these levels has been huge. That tells me institutions are moving, not retail. When the big boys start moving in size, things get ugly fast.
When Not to Trade
Here's what separates pros from amateurs: knowing when NOT to trade. Everyone's trying to catch falling knives or buy the dip. I'm sitting here watching the show unfold.
If the S&P drops another hundred points, then we'll talk about doing something. Until then? I'm doing nothing. Everybody's doing something, I'm doing nothing.
Sometimes the best trade is the one you don't make. But when correlation finally kicks in and we get that full selloff, that's when bears feast.
And after decades of this, I'll be ready.
To your success,
Don Kaufman
P.S. Speaking of the Dark Side, I will be live tonight at 7 pm ET talking to the only guy I trust to trade my money.