By 11 a.m., the S&P 500 is still cascading down, down, down. The cup-and-handle was a red herring, and Milman seems embarrassed by the poor showing. A laconic newsreader on Lightspeed’s intercom quotes hedge-fund manager George Soros as saying that “a deep recession is now inevitable and the possibility of a depression cannot be ruled out.” A nearby trader snaps, “Shut up.”
By 1:49 p.m., the cell phone, wallet, half-eaten bagel, and cold coffee are exactly where they were this morning, but now Milman is stripped down to his white undershirt, the pungent smell of fear and sweat hanging in the air. Milman’s only down $43 now, but getting out of the $12,000 hole seems to have taken its toll: He looks pale and rattled. He bums a cigarette from his neighbor and ducks out a side door.
All day, there have been brief, unproductive upticks, but much longer downticks. The S&P 500 has broken its 2008 low, according to CNBC, which after several hours is beginning to look more and more like an offtrack-betting monitor.
But just as the day’s market looks like a wash, the upticks in the S&P 500 start lasting longer, the downticks shorter. The market is constantly going up and down, but a new pattern starts to repeat, over and over, minute by minute, consistently breaking through the resistance levels the traders have drawn on their screens. Soon it’s clear that the S&P is going up more than it’s going down: There is a reversal happening. “There were some buyers stepping in, which is a really good sign,” Milman says, visibly relieved. “I couldn’t be happier right now.”
To monitor the S&P 500 even more closely, Milman looks at a so-called candlestick chart on one of his monitors, a series of green and red bars showing the trading direction over 30-second intervals. The bar looks like a segment of a stereo equalizer, pulsing to some invisible beat.
“Wait for setups, guys. Don’t just jump in,” says Milman, directing his team to wait for a signal that might predict the next upward strike. “You look for the chart to tell you this is a legitimate resistance point or support point,” he says. “Once my stock goes through, I’m going to get in.”
He cracks his knuckles. “Jesus.”
“There’s no pure science to it,” says Milman, recalling a day in October when he lost $100,000. “I made it all back in the next two days, but it was rough.”
Bush comes on the TV screen. He says free-market capitalism will prevail. “Is anybody listening to this?” asks a trader. “No,” says another emphatically and turns off the volume.
Milman jumps in but takes an unfortunate ride on Goldman Sachs, the chart of which suggested to him a renewed climb (the stock price broke a resistance level he’d been monitoring); instead, the stock peters out, taking Milman’s money with it. Milman urges it up, like it might hear him. “C’mon, Goldy, go! Go positive, you bitch … Come on, Goldy, get through this fucking level.”
He quickly sells off, takes a loss, and angrily clicks the Goldman chart off the screen. He’s now $600 in the hole. “Goldy, I’m disgusted with you.”
“It’s one of the go-to stocks that we trade,” Milman later tells me of Goldman Sachs. “It’s got volume, it’s got price fluctuations, it’s still one of the most expensive stocks.” Then, of course, there’s the most obvious data point of all: “It’s one of the few banks in business still.”
The other thing Milman and his friends spend a lot of their time trading is a single financial instrument called UltraShort Financials ProShares, which has the ticker symbol SKF and which they refer to as “Skiff.” A so-called exchange-traded fund, or ETF, it isn’t technically a stock but a combination of options meant to make a doubled-down bet against financial stocks, improving dramatically in value as companies like Goldman Sachs get hammered. (Just as often as he buys Skiff, Milman sells the fund itself short, effectively betting that financials will go up. He just uses it like a football, running it up or down the field.) Because Skiff tracks a broad index of stocks, it helps Milman avoid getting stuck on any individual stock that might behave unpredictably relative to the rest of the market. It’s hugely popular with day traders right now because it exploits the wild contortions in bank stock prices. It also tracks closely to the S&P 500 Futures Index, which Milman follows as a kind of canary in the coal mine, a second-by-second impression of the market’s overall direction.
Milman’s wife, Jenny, a professional caterer, checks in by IM. Milman tells her he’s trading poorly. “I love you,” she messages back, followed by a sly poke: “idiot.”
Milman sighs, slumping back into a funk. He has to wait for the next ride up, assuming it comes. Will it? There’s no telling. Nobody in the room was predicting a bounce this morning, and nobody can predict whether there will be another one now. But there’s a feeling of momentum starting to seep in, like this is it. You can actually feel it in the room, like somebody leaked laughing gas through the air vents. One by one, the traders are realizing the market’s going up now, kicking themselves for not buying in at the lower price, then immediately looking for a new low so they can buy in and chase the surge, be part of the momentum wave.