The Liquidity Event

aka the Macdulio doctrine

Equity hedging should happen in 3 steps.

40%, then 50% of the remainder, then all.


Don’t forget to adjust the hedging direction for less surprises.

A liqidity event is when people get margin calls en masse.

A push means having to hedge in full size at the last weekly terminal for a beat or a liquidity enent.

Being in a push means that there are only forced enents and no support levels.

A push that did not make it outside the window envelope can be faded the next week 30-40 pips out.

A push that did make it outside the window envelope may be followed by another push – this would be a liquidity event.

During a push all secondary buy signals must be ignored; only primary buys are good enough for defiance.

Ask yourself the question: is this a primary buy? If not, it is a sell.

The buyable sells (green slanted) must be ignored. The run ups have to qualify. Price was outside the channel & pushed against it as well as against the trendlines.


, here’s why I think there will be a lower low – the spike into the overdrive line plus the inertia of having reached 6x stretch from the mean