Who Wins the Bull/Bear Battle? | With Dale Pinkert

Episode Overview

• This episode features veteran trader Dale Pinkert discussing how to navigate volatile markets by prioritizing price action over external news or fundamental narratives.
• The discussion centers on distinguishing between gambling on binary events (like elections or earnings) versus trading the "dust settling" reaction after the news breaks.
• Pinkert breaks down specific technical patterns, including the "Turnaround Tuesday" phenomenon, momentum divergences in Silver, and the danger of "confirmed lows" versus the opportunity in "divergent lows."
• A significant portion of the episode focuses on risk management, explaining why "hope" is destructive in trading and how to adjust sizing when trading high-beta assets like commodities or crypto.

Key Concepts

• The "No Reversal Signal" Phenomenon A strong market close near the daily highs typically negates the immediate threat of a bearish reversal. Even amidst bad news, if an index closes high with momentum, it indicates buyer dominance and suggests "follow through" buying will occur in subsequent sessions.

• Reactive vs. Predictive Trading Novice traders often bet before major news events (like elections or payroll reports), effectively gambling on "red or black." Professional traders wait for the news to hit, observe the market's reaction, and trade the resulting price action once the volatility stabilizes. This shifts the strategy from guessing to reading confirmed flow.

• The "Turnaround Tuesday" Effect Markets have a weekly rhythm. A strong close on Friday usually leads to follow-through momentum on Monday. However, the true test of a trend's sustainability often occurs on Tuesday. Traders watch Tuesday/Wednesday to see if the momentum holds or if the initial excitement fades into a reversal.

• Positive Divergence vs. Confirmed Lows Pinkert warns against buying "confirmed lows" (where price and momentum both drop), as this often indicates strong selling pressure and lower prices to come. Instead, he looks for "positive divergence," specifically the "Three Drives to a Bottom" pattern where price makes three pushes lower, but momentum indicators (like RSI) begin making higher lows, signaling seller exhaustion.

• Volatility-Adjusted Asset Selection Not every asset is suitable for every account size. High-beta assets (like Silver or Bitcoin) often have wide trading ranges that require stop-losses exceeding a small account's risk limits (e.g., >5%). In these cases, traders must stand aside to avoid being "meat for the algos" or seek lower-beta setups where risk is strictly defined.

• Intermarket Analysis as a Warning System Analyzing cross-asset behavior reveals "cracks" in a bullish narrative. Even if major indices rally, divergences—such as bonds holding support, or specific leaders like Google failing to participate—serve as early warning signs. This bifurcation suggests a market where "generals" are leading but "soldiers" aren't following.

Quotes

• At 3:02 - "There were no reversal signals. Anyone that knows how to buy a close like this... I want to move all my money to them. And it's not the first time it happened." - * Highlighting that a strong market close is the ultimate truth, overriding intraday volatility or bearish narratives.*
• At 9:56 - "When you have a strong close on a Friday, usually you get follow through on Monday... Then there's a probability for that move to end, they call it Turnaround Tuesday." - Explaining the weekly flow of market psychology and when to expect trend tests.
• At 14:00 - "If we get a break here in the next couple weeks for one more low and the RSI stays above 30, I'm long." - Describing the specific technical divergence required to justify a contrarian entry in Silver.
• At 16:15 - "Someone once... said, 'Dale, I bought the Euro before the NFP [Non-Farm Payrolls]... and the Euro rallied 100 pips.' And I said, 'Good guess.' Because that's all it is. It's a roulette bet." - Illustrating that winning a bet based on a binary news guess is luck, not a repeatable trading skill.
• At 30:30 - "The volatility is going to pick off your stops if you're trying to trade with tight stops. You're just meat for the algos." - Warning that tight stops are ineffective in high-volatility environments, necessitating smaller position sizes or different asset selection.
• At 37:37 - "Hope is the oxygen in our lives and the carbon dioxide in our trading." - A metaphor explaining how an emotion that sustains us personally can kill a trading account by preventing objective exit decisions.

Takeaways

• Wait for the "Dust to Settle" Stop placing bets before binary news events like Fed meetings or earnings. Shift your strategy to entering positions after the event has occurred and the market has declared its direction. This moves you from gambling to trading.

• Predetermine Risk to Eliminate Hope Before entering any trade, define exactly how much capital you are willing to lose. Once the trade is live, if that level is hit, exit immediately. Do not use "hope" as a strategy to stay in a losing position; accept the loss so you have capital left to be right later.

• Monitor the Weekly Rhythm Use the "Turnaround Tuesday" framework for short-term timing. Be skeptical of Monday moves that are simply echoes of Friday's close, and look to Tuesday or Wednesday price action to confirm if the week's trend is genuine or a fake-out.