How do you trade in this kind of environment?
What we’re seeing now falls under what we know as herd behavior. And contrary to what many believe, this type of behavior follows identifiable patterns—and can be highly profitable.
- It’s unidirectional. There may be temporary pullbacks, but the move runs in one dominant direction.
- Swings are wider and more violent than in a “normal” market—volatility is the norm.
- We’ll see what economists call overshootings—prices that move far away from the mean. Spotting them opens the door to trade opportunities. That’s our goal.
- News and rumors shape sentiment. It becomes essential to observe how prices react to each headline to see where the market is most sensitive.
- Volume, its average, and especially its standard deviation will tell us the pace of the move.
These are the rules of the game now. We know how the opposing team plays—now it’s just about adapting.
Trading in the Middle of a Herd Run: Available Tools.
• Timeframe granulation: Shift your operative timeframe. Monthly becomes weekly or even daily. Weekly becomes daily or 12-hour. And so on.
• Volume: Analyze it from every angle, volume profile, volume by period, average, and standard deviation. You’ll see the waves form first in the lower timeframes.
• Momentum: There are many oscillators, but your best bet is to track price action at key break levels. Highs and lows across multiple timeframes define entry points, timing, stop levels, and when to reload or reduce positions.
• Position sizing:The most critical tool in this market. Mastering size is what keeps you in the game.
Who’s Playing in the Market Right Now?
Speculators. Retail. Mostly small capital. This matters because part of the volatility comes from weak hands. Squeezes in either direction find fertile ground.
The Real Economy and Endogenous Shocks:Permanent shocks? Transitory ones?
We’re out there hunting for overshootings.
This pattern confirmed, from a technical perspective, the entry of our macroeconomic and intermarket hypotheses into the market.
It’s rare to see it so clearly drawn—it’s textbook—and it sets a target for the 10-year yield at 3.525%.
First overshooting—right in the heart of the real economy.
The 10-year yield—is the foundational rate of the real economy.
It operates independently from the Fed (for now at least), reflects market expectations in their purest form, and influences every economic decision.
A wave of rumors followed the move, speculating on what caused it. Irrelevant!
At the end of the day, an asset—10-year Treasury bonds—fell in price because the central rate of the economy went up.
Of course, this has immediate and direct consequences for the real economy.
Economic decision-making freezes, at least temporarily—consumption propensions, saving, investment, credit—everything slows down.
Economic life doesn’t go on as usual.
This isn’t the same as a currency devaluation, a bit more or less inflation, a wider fiscal or trade deficit, rising unemployment, or money printing.
This is different!
It sits above all of that, and has the power to influence every other variable directly. That’s why this overshooting has the potential to be deeply damaging if it persists.
Even assuming it’s a transitory and corrects quickly, this shock leaves a mark.
The ecosystem where this overshooting emerges.
We definitely don’t believe this will be the only one.More are likely to emerge as a consequence of this one. You have to go looking—that’s where the trades are.
Of course, they need to be in the direction the herd is running—and in this case, it’s short!
Money markets — A historical perspective from 1950 to today.
Money Markets — Current Trend.
There’s a mountain of money sitting in the money markets. It’s denominated in U.S. dollars, and as of today, it’s yielding around 4.5%. Not bad, given the current environment.
But the real questions:
- What happens when that yield starts to drop?
- Where will that mountain of money go?
- In what currency?
Those are the uncertainties.
What’s certain is that yields will fall—and we believe very quickly.
The probabilities the market assigns to Fed rate moves.
You can follow that data here. Naturally, these probabilities change daily as new information flows into the market.
Rate cut probabilities for May 7 — as of today, April 10.
How does it work in practice?
Today, the market sees a 17.5% probability of a rate cut on May 7.
It’s important to understand that when these probabilities approach 0% or 100% as the meeting date gets closer, it’s almost certain there will be no surprises.
The Fed doesn’t want to catch the market off guard.
In more uncertain situations—when probabilities hover around the middle—there’s no clear signal ahead of time.
This is the leading indicator to watch right now. Why?
Because it determines the yield on money markets.And given everything we’re seeing, that yield is likely to drop—and it could happen abruptly.
When that happens, we’ll see a massive outflow from money markets, and that capital is going to need a new home.
Some assets are going to receive a powerful inflow.
Explorer Tier
Technical Setup: Trading Overshootings
#1 Miners
- Micro Analysis.
- Macro Analysis.
- Iner Market Analysis.
- Full technical analysis proving entry points, stop and Exits.
#2 Tecs, Hibs, Spxs
- Position management of our open trades — with real-time notes on procedures and timing. You can se this, en real.
#Frontilear: Three technical full set ups, one of them with a time horizon between a month or two.
Frontliner Tier
In parallel, we’ve developed three additional setups with different targets, position sizes, time horizons, supporting arguments and the more convenient vehicules
That’s all for this episode—I hope it brings you value.
Once again, this is our work, shared publicly for marketing purposes.
You already know where to find us.
Frontliners have fun. You got the best cards.
Martin