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- I Was There When It Broke: ’87 Crash, Tudor’s Trap, and Why This Tape Still Smells Heavy
I Was There When It Broke: ’87 Crash, Tudor’s Trap, and Why This Tape Still Smells Heavy
Danny Riley
April 29, 2026
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Our View
Paul “Tudor” Jones And The 1987 CRASH - I Was There
Historical Context: The 1987 Crash
Everyone talks about Monday, October 19, 1987, but the crash actually started on "Black Friday," October 16, 1987. While Black Monday gets all the headlines because of the record-breaking percentage drop, the structural collapse was already in full swing during the previous session.
It was called the "waterfall" decline on Friday, when the DJIA fell 108 points, which at the time was the largest one-day point drop in history. It was also a "triple witching." On Friday, there was a big wave of portfolio insurance selling that triggered automated selling on Monday morning.
Adding to the selling was the US attack on Iranian oil platforms over the weekend, which turned into panic selling on Monday. By the time the markets opened on Monday, Tokyo and London had already crashed.
Personal Trading Philosophy
I can only speak for myself; I am back to staying away from all the headline BS. Someone in the Impro chat said Trump was saying the US won the war. I swear I didn't look up the story because I am all headlined out, and I do not think it helps in any way, shape, or form.
I don't want to say it's simple, but if you are going to make money trading, it's going to be because you made the right choices/decisions, not off some wayward headline. Like I told a trader yesterday, you could be right with the trade at just the wrong time, and now more than ever, it's about being patient and not forcing the trade.
The other part is knowing that if you miss a trade, don't worry—another one will come along.
Paul Tudor Jones and the 1987 Strategy
Yesterday, Patrick O'Shaughnessy (@patrick_oshag) interviewed Paul Tudor Jones: Invest Like the Best. While there were a lot of well-known traders who used my desk, Paul stuck out; he also put in his own trades in the weeks/days leading up to the 1987 Crash.
There is a laundry list of things that make a good trader, but one of the first ones is having a plan, and clearly, Paul Jones did. In the months leading up to the 1987 Crash, Jones was very vocal, combining macro analysis with an analog overlay model that compared the 1980s market to the run-up of the 1929 Great Depression.
Beyond his charts, he talked about how interest rates were climbing in 1987, which typically acts as "gravity" on stock prices. He also talked about extreme investor euphoria, using his contrarian logic that "when everyone is in, there’s no one left to buy," and viewed the market as dangerously overextended.
Lastly, he identified a structural weakness in the market known as portfolio insurance, a popular strategy at the time that used computer algorithms to automatically sell futures as the market dropped to hedge against losses. In the background of this video was his partner at the time, Peter Borish.
Here is a video of Tudor before the '87 crash: Tudor Jones 1987 Documentary.
Notable Figures and the "Advertised" Crash
Tudor was not the only one calling for a crash back then; Stanley Druckenmiller, Robert Prechter, Elaine Garzarelli, Mark Ritchie, George Soros, and Jack Dreyfus were all prominent figures who were either positioned for or famously called the 1987 market crash.
This was one of the most advertised crashes in my over 35 years on the trading floor; it wasn't if, it was when. It was also a day that I was doing the Cap-Com business for the Royal Saudi family, who found out Cap-Com had bought their 3k lots short on the Friday before the crash.
I sold the 3k when Cap-Com called me at 10:45 am and asked me what I thought; I said the S&P was crashing, and 35 seconds later they screamed into the phone, "Sell 3,000 lots now." Do the math: that was when the multiplier was $500 a point per 1 lot; 3k lots was $1.5 million a point, and as the order was getting executed, I was 100% sure Paul Tudor Jones was saying... I got ‘em!
The Reality of the Decline
As the days rolled on, the NYSE started to blame the CME’s S&P 500 index arbitrage or program trading for the steep declines, but that was not the truth.
The real reason was that the NYSE 'pipe' was not able to keep up with the record volume. I know I because I was there...
I wrote this when MrTopStep was partners with Yahoo Finance in 2014 titled:
Our View
U.A.E.’s OPEC Exit Deals Major Blow to Cartel Amid Middle East Oil Squeeze
While most people think Trump is crazy, I have to ask, is there a method behind the madness? The UAE leaving OPEC is a big boost to the US and the dollar... Why?
The proposed U.S. Treasury currency swap line for the UAE represents a strategic effort to stabilize the region's economy and protect petrodollar dominance amid ongoing disruptions in the Strait of Hormuz. Treasury Secretary Scott Bessent noted that this facility addresses a critical "dollar-revenue gap" that has left the UAE with a liquidity shortage despite its $2 trillion asset base, a situation that could otherwise force the settlement of oil trades in Chinese yuan.
Furthermore, the UAE's departure from the oil cartel signals a significant regional leadership shift away from Saudi Arabia, potentially positioning the UAE as the Middle East's primary financial hub. These diplomatic maneuvers aim to prevent a disorderly sell-off of U.S. assets while Crude Oil WTI maintains a high level of volatility, recently trading near $99.40.
Yes, I used Aa for this story, but I was the one asking the question, and the last question I asked was how does this affect BRICS? Good question, right? And this is what I got back:
While the UAE is a member of BRICS, these moves signal a re-alignment with U.S. financial systems over the alternative financial structures (like the "petroyuan") favored by China and Russia.
Impact on the BRICS De-Dollarization Agenda
Neutralizing the "Petroyuan" Threat: A core goal of BRICS has been to settle oil trades in local currencies (like the Chinese yuan or the "BRICS currency") to bypass the U.S. dollar. By requesting a dollar swap line from the U.S. Treasury, the UAE is effectively signaling that it prefers the stability and liquidity of the dollar over shifting to the yuan, despite pressure from Beijing.
A "Not-So-Subtle" Message to China: Analysts view the swap line request as a signaling tool. By demonstrating that it can still secure U.S. financial backing, the UAE is leveraging its position to force China to exert more diplomatic pressure on its ally, Iran, to stop the regional instability affecting trade.
Internal BRICS Friction: The UAE's decision to leave OPEC+ puts it in direct competition with fellow BRICS members like Russia and Iran. While Russia wants to keep production low to maintain high prices, the UAE wants the flexibility to raise production to capture market share and monetize its massive reserves.
The UAE's exit from OPEC+ and its pursuit of a U.S. dollar swap line represent a major strategic pivot that directly counters the current "de-dollarization" narrative pushed by the BRICS bloc.
I get it... Everything is moving so fast, but this is a big deal for the US and the UAE and could force other Middle Eastern countries and India to continue to use the US dollar for their oil purchases.
We don't see a lot of this, but the ES and NQ have closed lower in 3 out of the last 7 sessions. However, when you look at the charts, it looks like a big low-volume back-and-fill. Like I pointed out in yesterday's LEAN, the index markets have been going up since 3/31/26 and are overextended; the ES has not had a 1% decline since 3/27/26, and that goes for the NQ also (down 0.99% yesterday). I think this is significant, but so far, this has not mattered.
Today will see a pick-up in economic reports and the second-to-the-last Fed meeting for Jerome Powell.
Our lean: Barring some big headlines, I expect it to be another low-volume grind. The late-day rally makes me think we could see higher prices on Globex and chances of a higher close today.
Part of the reason I say you can sell the gap-ups or the early strength is that the sell-offs or pullbacks seem to fuel the rallies / push back up. As I said above, I’m laying off the Iran headline stuff; it doesn’t do anything for my trading, and I’m sure I’ll get any news in the MrTopStep chat or from LiveSquawk London.
If you have never used it, here is the link to a free trial: https://www.livesquawk.com/#sign-up
Below are the Claude ES Market Profile levels. I have to admit I still haven't figured out the best codes or format, but I am trying.
2-Month Chart of the ES, NQ, & YM,
The ES traded up to 7210.50, sold off down to 7147.50, and opened Tuesday's regular session at 7172.00, down 35.25 points or -0.49%. After the open, the ES traded down to 7175.00 and sold off to 7161.75. It then rallied 21.25 points up to 7183.00 at 9:40, before selling off 21.5 points down to a higher low at 7163.50 at 9:55.
The ES rallied up to a lower high just above the VWAP at 7177.50 at 10:05, then sold off 31.25 points down to 7146.25 at 10:50. It bounced to 7164.75, but sold off 17.5 points down to a higher low at 7147.25 at 11:50. It traded up to 7159.75 at 12:25, then sold off to retest the low of 7147.25 at 12:40. The ES rallied back up to the 7157.75 area, pulled back into a small back-and-fill, and then rallied up to 7169.75 at 2:20.
After that, it pulled back to 7162.25, traded back up to 7171.00 at 3:00, and rallied up to 7176.25 at 3:10. It then pulled back 10 points to 7166.25 at 3:35, traded back up to 7172.25 at 3:48, and traded 7171.25 as the 3:50 cash imbalance showed $1.6 billion to buy. The ES traded up to 7171.50 on the 4:00 cash close.
After 4:00, the ES flatlined and settled at 7171.00, down 36.25 points or -0.35%; the NQ settled at 27,168.75, down 271.75 points or -0.99%; the YM settled at 29,297, down 45 points or -0.09% and down 4 sessions in a row; and the RTY settled at 2,767.40, down 32.20 points or -1.15% on the day.
In the end, I can't say that I called for the decline, but a large part of yesterday’s LEAN was dedicated to how much the futures indices have rallied since 3/31/26 and that they were overextended. In terms of the ES and NQ’s overall tone, they acted tired, but the real weakness came from the RTY, which fell 1.15%. In terms of the ES's overall trade, volume was higher but still low at 1.3 million contracts traded.
Economic Calendar
Wednesday: Durable Goods, Housing Starts and Permits, Advanced U.S. Trade Balance; 2:00 FOMC Meeting; 2:30 Fed Chair Powell press conference.
Thursday: 8:30 Initial Jobless Claims, Employment Cost Index, GDP, Personal Income, PCE; 9:45 Chicago Business Barometer (PMI); 1:00 Leading Indicators.
Friday: PMI, ISM.
Guest Posts — Polaris Trading Group
🎯 @ES Scenarios in Play
🎯 Cycle Day 1 Focus
Scenarios for today’s trade
🟢 Bull Case — Buyers Stay in Control
Acceptance north of 7175 ±5
Upside objectives:
• 7190
• 7200
• 7210
🔴 Bear Case — Rotation / Reset
Acceptance south of 7175 ±5
Downside objectives:
• 7165
• 7155
• 7145
📊 Key Reference Levels
• PVA High Edge: 7175
• PVA Low Edge: 7155
• Prior POC: 7171
⚠️ Tactical Takeaway
Of course, nothing changes for PTG…Simply follow your plan. Take only Triple A setups and manage the $risk. ALWAYS HAVE HARD STOP-LOSSES in-place on the exchange.
PTG’s Primary Directive (PD) is to ALWAYS STAY IN ALIGNMENT with the DOMINANT FORCE.
ES
Full DTS Briefing Report
— PTG
The MOC opened with a solid buy-side tone, showing $1.087B to buy at 15:50 and expanding to $1.398B by 15:51. The early read was constructive, with the all-market lean at +62.2% dollar-weighted and +57.4% by symbol count. NASDAQ was the strongest pocket at the open, showing a +70.7% dollar lean and +73.5% symbol lean, which put the auction closer to wholesale buying than simple rotation. The S&P 500 was also firm at +63.9%, while the NYSE was more balanced at +53.4%, suggesting broader participation but less conviction.
The transition was the story. After the 15:51 snapshot, the auction flipped aggressively. By 15:53, the total imbalance turned negative at -$263M, and by 15:55 it reached the session low near -$3.454B, with $6.830B for sale versus $3.377B to buy. The dollar lean at that point was -66.9%, a notable threshold because it moved from rotational selling into a more wholesale sell program. The imbalance then moderated into the close, finishing at -$235M, with the final lean near -54.5%, still sell-side but much less extreme than the 15:55 washout.
Sector activity was mixed but leaned positive on the final sector table. Communication Services led with +$400.07M and a +76.0% dollar lean, a clearly notable buy imbalance. Health Care, Consumer Discretionary, Real Estate, and Basic Materials also showed strong buy leans above +70%. Energy stood out on the other side, with -$131.90M and a -75.3% dollar lean, indicating wholesale selling.
On the symbol level, the largest buy imbalances were concentrated in mega-cap growth and tech: NVDA +$273.22M, GOOGL +$155.20M, TSLA +$137.15M, AAPL +$118.52M, META +$96.94M, PLTR +$76.29M, AMAT +$71.68M, and MSFT +$71.02M. The sell side was led by TMUS -$161.54M, AMD -$157.75M, MCHP -$65.95M, MRVL -$64.86M, ADI -$64.50M, LLY -$62.45M, CVX -$49.79M, V -$45.40M, FTNT -$42.43M, and UNP -$41.25M. Overall, the close showed a sharp sell-side transition after an early buy-side open, but the final print was more rotational than panic-driven.
You can watch this week’s events on YouTube or inside the Pit Room. |
We’re going live today with a special double-stack show from the Pit Room.
Get your invite here: https://pitbulltraders.com/l/thepit
Or watch live on YouTube or X.
Starting at noon ET, Dani and Lauren will kick things off with their regular show—a mix of trading insights with a focus on commodities, mindfulness, and trader discipline.
That will roll straight into live coverage of the FOMC announcement, including real-time trading around the event.
Join us for a high-energy session with plenty of Q&A, war stories, and practical trading tips.
Technical Edge
Fair Values for April 29, 2026:
SP: 29.42
NQ: 131.75
Dow: 139.73
Daily Breadth Data 📊
For Tuesday, April 28, 2026
• NYSE Breadth: 47% Upside Volume
• Nasdaq Breadth: 37% Upside Volume
• Total Breadth: 38% Upside Volume
• NYSE Advance/Decline: 43% Advance
• Nasdaq Advance/Decline: 36% Advance
• Total Advance/Decline: 39% Advance
• NYSE New Highs/New Lows: 73 / 21
• Nasdaq New Highs/New Lows: 135 / 117
• NYSE TRIN: 0.86
• Nasdaq TRIN: 0.99
Weekly Breadth Data 📈
For the week ending Friday, April 24, 2026
• NYSE Breadth: 45% Upside Volume
• Nasdaq Breadth: 52% Upside Volume
• Total Breadth: 49% Upside Volume
• NYSE Advance/Decline: 41% Advance
• Nasdaq Advance/Decline: 42% Advance
• Total Advance/Decline: 42% Advance
• NYSE New Highs/New Lows: 307 / 56
• Nasdaq New Highs/New Lows: 677 / 266
• NYSE TRIN: 0.86
• Nasdaq TRIN: 0.68
ES & NQ Futures trading levels (Premium only)
Polaris Trading Group Summary - Tuesday, April 28, 2026
The day started with bearish pressure driven by macro headlines (geopolitics + AI spending concerns), and importantly, sell algos were turned back on early. Futures had already tumbled overnight, with downside targets not only hit but exceeded before the regular session even got going.
This set the tone: weak structure, downside already extended, and traders needed to be cautious about chasing.
Morning Session – Opportunity with Structure
Despite the bearish backdrop, the room found quality structured trades, particularly around:
D-Level reclaim / pyramid plays
First pullback entries after breakout
Avoiding “falling knife” trades
A standout theme was learning and executing the “recover of D-level”:
Traders identified that entering on reclaim offers lower risk and confirmation
Emphasis on waiting for structure instead of guessing bottoms
Nice execution examples included:
Scaling out into targets (78–85 area mentioned)
Using trail stops to protect gains
Recognition of dynamic D-levels and cycles (CD3)
There was also a strong reinforcement of process over prediction:
Don’t trade in the middle of ranges
Wait for break → first pullback = higher probability entry
Confirmation from David that a key move was the first pullback after range break
Mid-Morning – Transition to Chop
As the session progressed:
Price action became choppy and range-bound
Traders correctly identified “don’t click yourself broke” conditions
Key lesson reinforced:
When the market is in the middle or balancing → stand down or reduce size
This discipline likely protected profits from the earlier structured trades.
Afternoon Session – Dead Tape
As anticipated:
Lunch and afternoon were extremely quiet (“Deads-ville”)
No meaningful continuation or trade setups
David stepped away midday, already signaling:
Expect low opportunity
No need to force trades
Key Wins & Takeaways
What went well:
Strong recognition of overnight extension → no chasing
Clean execution on D-level reclaim setups
Good use of first pullback entries
Traders actively scaled and managed risk
Room engagement around how to trade, not just what to trade
Big lessons reinforced:
Structure > prediction (wait for reclaim, break, pullback)
Avoid mid-range trades
Chop = capital preservation mode
Patience pays more than activity
Looking Ahead
Positioning ahead of FOMC (Wednesday) and MAG-5 earnings
Expectation: higher volatility coming → “should be a party”
Discovery Trading Group Room Preview – Wednesday, April 29, 2026
Macro Focus: Markets centered on Fed decision, Mag 7 earnings, and rising geopolitical risk (Hormuz).
Fed / Policy:
Likely Powell’s final FOMC as Chair amid ongoing investigation uncertainty
Fed nominee Warsh signaling potential “regime change” (less guidance, smaller balance sheet, new inflation framework)
Key events: FOMC @ 2:00pm ET, presser @ 2:30pm ET
Geopolitics (Oil):
U.S. reportedly preparing extended Strait of Hormuz blockade to pressure Iran
Seen as lower risk than direct conflict but could tighten global oil supply
բանակցations potentially developing in coming days
Earnings / AI Trade:
Mag 7 (GOOGL, AMZN, META, MSFT) reporting after close
AI sentiment hit after OpenAI growth concerns → weakness in ORCL, AVGO, CRWV, NVDA
Today’s results critical for AI trade direction
Economic Data:
8:30am ET: Housing, Durable Goods, Trade Balance, Inventories
10:30am ET: Crude Oil Inventories
Positioning / Vol:
Volatility elevated but slightly easing
No meaningful overnight “whale” activity
ES Technicals:
Market compressed, primed for breakout post-Fed/earnings
Resistance: 7204–7207
Support: 7178–7183
Broader: 7700 upside / 6885–6890, 6165–6160 downside
Trend bullish (50-day MA above 200-day)
Bottom Line:
Market coiled into major catalysts → expect significant directional move depending on Fed + earnings outcomes
