Hey everybody, JD here with your Rational Trader market analysis daily.
In today’s video, I want to talk about profiting from patterns — not just any patterns, but the kind I use every day to get an edge.
Patterns are crucial to trading in so many ways, but I think I bring a slightly different lens to the idea — one that can be helpful in how you approach your own trades.
This newsletter should be a regular read for anyone out there trading, because what I talk about here can be added to your mental toolbelt — used and reused across all kinds of setups.
A Screaming Opportunity Today
Today was the perfect example of what I mean.
There was a pattern in the premarket that was screaming opportunity. I’m guessing most people didn’t see it — maybe a few did — but it stood out like a sore thumb to me.
Let me show you exactly what I saw.
Step One: Check Bitcoin
You’ve heard me say this before — and I’ve done videos on it — but Bitcoin has taken on a leadership role when it comes to risk appetite. I don’t even know what to call it anymore… it’s not really a stock or a currency, but for our purposes, it’s one of the best risk-on indicators out there.
If Bitcoin is rising, the market’s likely in “risk-on” mode. If it’s falling, that’s a “risk-off” signal.
This morning, when I got up and checked the markets, I saw that Bitcoin had deteriorated throughout the night, and by the open, it was down 3–4%. That’s not noise. That’s a message.
And that message is: today’s probably going to be a risk-off session.
So Why Was Circle Ripping?
Here’s where it gets interesting.
As I looked across the risk-on names — the kinds of stocks that thrive when sentiment is bullish — one name jumped out: Circle Internet Group (CRCL).
Ironically, Circle is a stablecoin company.
A stablecoin is a type of cryptocurrency that’s designed to stay pegged to the U.S. dollar — which makes it part of the broader crypto ecosystem and loosely tethered to Bitcoin’s fate.
But that’s not why it caught my eye.
What caught my eye was that Circle was up significantly in premarket trading… at the same time Bitcoin was tumbling.
I thought to myself: That’s odd.
The pattern didn’t compute. If Bitcoin is down sharply, why is Circle — a momentum stock — running?
A Familiar Setup
Now, I had already flagged Circle earlier this week.
On Monday, the stock was trading more than two standard deviations above its mean — which, for me, is a classic mean-reversion setup. When a stock stretches that far from its average, especially a volatile one, I look for a snapback.
So I sold the $200 call, expiring this Friday, for about $5 per contract.
Today, with Circle pushing higher again, I didn’t need to double down — I was already in the trade. But if I weren’t, I’d be looking to fade this irrational move.
It was an easy pattern to identify. Bitcoin was weak. Circle was irrationally strong. That disconnect doesn’t last long.
Then Came Oklo
A similar situation unfolded with Oklo (OKLO) — the nuclear component stock that’s been riding a lot of speculative energy.
Oklo was also trading higher premarket, even though the broader market was sending a risk-off message.
This is another name I’d flagged earlier in the week. I recommended selling the $87 call. You could have gotten a dollar for it yesterday. It’s likely already down to pennies now. I didn’t even check — I’m that confident it’ll expire worthless.
Same setup, different ticker: momentum stock rallies while Bitcoin is flashing warning lights.
And again, by the end of the day, both Circle and Oklo had reversed lower — just as the pattern suggested they would.
A Note on Geopolitical Risk
One reason I’ve been especially cautious on risk-on names is the geopolitical climate. If we get a flare-up — especially something involving Iran’s nuclear facilities — then all bets are off.
But even in a limited engagement scenario, I still expect traders to avoid speculative stocks and rotate into safety. And that’s why today’s rallies didn’t make sense — and why I felt comfortable leaning against them.
Final Word: Pattern Recognition Pays
So here’s the takeaway:
When sentiment and price disagree, I trust sentiment.
Bitcoin was telling us loud and clear that today was going to be risk-off. Circle and Oklo ignored that message. The pattern was obvious.
And by the end of the day, it played out just as expected.
I didn’t open a new trade today — because I already had positions on — but this is exactly the kind of setup I look for.
You don’t always need a fancy scanner or algorithm. Sometimes, all you need is to recognize the pattern beneath the price.
I’ll see you tomorrow.
Talk soon,
JD
The Rational Trader
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