“Reversal days are the most powerful type of market moves, especially for traders like us,” Milman says. “You see stocks that are negative and [then] every stock goes positive and you can just close your eyes and pick a stock and speculate that the stock is going to go positive with the market.” As the market sinks lower, these reversal days become less frequent. With less trading comes less volatility to exploit—which is why Milman has scrawled on the group’s bulletin board, I HATE BEAR MARKETS.
Milman sees a new entry point forming, a clumped-up series of zigzags, three of them in a row, that he believes is a setup for a renewed spike, like the market is pumping itself up for its next pole vault. Milman mounts a short position with Skiff, betting financials will go up rather than down. He points to the level over which he needs the market to break. “If we can start breaking through this level, this previous high, if we can consolidate a little bit, test it, test it, and then rip through, I’ll be really, really big,” he says.
He observes what he calls a typical bull flag in the candlestick chart of the S&P 500. “There’s an up move, which is the pole,” he explains, pointing to the bobbing 30-second buy-sell candlestick, which has popped straight up, tall and green, meaning buyers have overwhelmed sellers and are possibly poised for a renewed run. “There’s the consolidation at the level, and the breakout is the tip of the pole.”
The reversal seems to be taking off in earnest now. Milman pans back for a wider view of the day’s S&P chart and points to the deep drop it made earlier and the arrowlike point—the V-shape—at which it began bouncing back just after lunch. Milman reviews: “This was called a bear trap,” he says, describing how short-sellers were suddenly forced to cover their bets, which has the effect of pushing up a stock’s value, sometimes very quickly. It’s one of the customary ways short-sellers get burned. “It rips back in their faces,” says Milman, “and the bears are like, ‘Holy shit, now what do we do?’ ”
By the end of the day, market-news reports seem to be groping around for a solid explanation behind the reversal. One trader tells the Associated Press that it’s just “a herd mentality. We started going higher, and you don’t want to be the last one on the boat.”
The green candlesticks are now punching upward in quick strikes. “Wow, that thing is moving so fast,” he says. “Fucking sick.”
Milman’s words are getting quicker, his breath shorter, his whole body more alert. As the market regroups for another surge, so does he. He quickly triples his short position on Skiff, going long on financials. The market climbs. He jams on the keys, makes several thousand dollars in a few seconds, exhaling with relief as he gets out before it zags back down. “That was a magic trick, but that was very risky,” he says, leaning back to collect himself.
“Oh my God!” says a nearby trader.
Flush with the last win, Milman sets up for another trade. “Nothing crazy, nothing crazy,” he says, rocking back and forth. “Test it, test it, and really rip through.”
“Right back up, Futures,” he says, talking to the S&P 500 gauge. It stalls for a few seconds, testing his patience: “Stop fucking around.”
He punches out an IM to his colleagues: “Looking to get absolutely monkey-ass long soon.”
From here, his monologue starts to sound like Luke Skywalker leading his squadron of X-wing pilots into the Death Star: “Futures are breaking out. We’re breaking above 81,” he intones, referring to the 881 mark on the S&P 500 Futures. A minute later, he’s up to $12,000. Moments later, $17,000. Then $21,000. He’s constantly adding to his short position on Skiff, betting on the upside for financials. The S&P agrees. Seconds tick by. The green candlestick spurts up rhythmically, green, green, green. “My God,” says the trader named Chad.
“C’mon, let’s see some buy programs kick in,” Milman says, hoping banks and hedge funds will give chase and move the prices even higher.
At 3:27 p.m., he’s made $24,700. “Oh my Skiff!” declares Milman. “Are you serious? Oh my God!”
There is disbelief all around. A big trader friend messages him on the screen: “$270k swing today for me on 2m!!”
3:45 p.m.: “We’re going higher!” Milman says, his profit-and-loss gauge whizzing past $27,000. His fingers flick away at the computer keys, buying several thousand shares on the down dips, selling off in 100-share increments as it climbs and crests on its next run.