New 100 Point Zig Zag Record Automation MODE = OFF Update

About 30 minutes before the market opened yesterday, we issued an Automation MODE - OFF. We turned off automation and remained flat while the stock indexes plunged.

We also observed a new all-time high of 26 100-point pivots in Nasdaq 100 futures during the day session—exceeding the previous record by 5.

Historical Context:

In March 2025, we highlighted a record-setting day on March 5, 2025, when the Nasdaq 100 futures session (9:30 AM EST to 4:15 PM EST) produced 21 100-point pivots. This surpassed the old high of 19, which had been previously reached three times:

• March 12, 2020

• January 26, 2022

• August 5, 2024

Why Is This Important?

Many top-performing trading algorithms are designed to operate in steady-state market conditions. Even without deep technical expertise, it’s clear that major new policies—capable of reshaping the global economy—can trigger tail events in the market. Algorithms built to trade these rare occurrences often rely on foresight but may remain ineffective for extended periods before proving accurate. Tail events are unpredictable, and index levels can multiply between occurrences. As a result, algorithms developed 5–7 years ago—or during the previous tail event (designed specifically to trade tail events) —even when adjusted for higher index levels and broader daily ranges, might no longer align with current market dynamics. Such volatility can fundamentally alter market behavior.

Our Approach:

Instead of chasing tail events, we favor short-term strategies and day-trade algorithms developed for steady-state market conditions. We pause trading during periods of uncertainty or tail events to better manage risk.

Based on this data, we turned off Automation Mode for yesterday’s trades and stayed flat as stock indexes dropped by over 5% in a single day.

Every trader aspires to identify the next major short. However, capturing a significant short is typically a longer-term trade that may involve enduring substantial drawdowns—much like a tail event. Shorting this kind of market on a day-trade basis is especially challenging: a considerable portion of the price movement occurs overnight, and during the day, frequent swings may force traders to hold short positions through retracements ranging from 300 to over 500 points.

While many of our top strategies called short trades yesterday, they were not designed to handle 300 - 500 point retracements or trade a market that had on average 4, 100 point reversals per hour in the Nasdaq 100 futures.

The hypothetical results for the portfolios were down across the board yesterday, even though the majority of trades were short positions, based on the massive bounces. We do not want to trade the Nasdaq 100 futures with 500+ point stop losses.