Good morning, traders…
Anyone can make money in a simple uptrend.
It’s only when the market starts to wobble a bit that the wheat is separated from the chaff.
Choppy conditions breed competent traders … if you follow your rules and survive the swings.
Big moves up, big moves down. Days apart.
Trump says something bearish on Friday. By Monday, he’s tweeted something else that sends the market soaring.
That’s been the cycle of the past two weeks.
Plus, economic data releases are few and far between right now because of the government shutdown.
We’re flying through rough weather with less visibility than usual…
More volatility, less hard data to work with, and news that’s constantly changing.
This market went from a smooth, easily-tradeable uptrend to an unadulterated chopfest in less than two weeks.
While most charts are whipsawing traders left and right, a few hidden gems are actually benefiting from the chop.
There’s a specific type of setup that thrives in exactly these conditions. Tight technical consolidation, clear Smart Money backing, and defined risk levels.
They’re the quiet movers sitting just below resistance, coiling up while everyone else is distracted by the day-to-day moves of the S&P 500…
These Charts Look Even Better In This Choppy Market.
Market Internals
As usual: Before I get to the charts, I look at the market internals.
The government shutdown has lightened the economic calendar because The Bureau of Labor Statistics isn’t meeting regularly.
But we do have one critical piece of data coming: the core consumer price index (CPI) on Friday.
At the next Fed meeting, it’s not a question of if we’ll get a rate cut … only how big the cut will be.
The market is currently pricing roughly a 98% chance of a 0.25% cut.
If the CPI is hotter than expected, it might give the Fed a reason to make a 0.50% cut.
If the CPI is in-line or cooler than expected, it’ll almost guarantee another 0.25% cut.
If we get anything less, or something unexpected … we could see some fireworks in the stock market.
Plus, the CBOE Volatility Index (VIX) is creeping back down toward 20-22 territory. This is a return to a more “normal” level of vol after several months of averaging closer to 16.
That means you need to be pickier with your setups. Keep an eye on the big macro flows and focus your energy on spots where the risk/reward is undeniable.
Which Setups Can Beat The Chop?
I’m waiting for the setups that fit my process perfectly.
Like yesterday, when my OMEN Scanner kept flashing an insane about of calls on Merck & Co Inc. (NYSE: MRK).
I couldn’t resist. The chart looked amazing and the calls were extremely cheap.
I bought the OCT 24 $88 calls at $0.52:
Less than 30 minutes later, I was already scaling out of my second batch for $0.76 — a 46% gain.*
That’s the power of low-priced options. A mere 24-cent move on these options gave me 46% gains.
I’m still holding some with a target of $1.02.
And any of these four setups could be my next play:
Hims & Hers Health, Inc. (NYSE: HIMS)
Smart Money has been hammering the $55 calls. Trading above ask, big size, coming late in the session.
I’m waiting for a break above $52. Create that alert.
Contracts to Watch: October 24 $55 Calls.
CAVA Group Inc. (NASDAQ: CAVA)
The chart’s consolidating with a nice, beautiful base forming between $60 and $62.
If the $65 level gets taken out, the multi-month range will break (and the chart can move higher).
Contracts to Watch: November 21 $65 Calls.
Denison Mines Corp. (NYSE: DNN)
No, not CNN. DNN is in a rip-roaring uptrend on the daily and weekly charts. If it can close over $3.10, it can move much higher. I’m watching the April $3.50 Calls over $3.10.
Contracts to Watch: April $3.50 Calls.
Tesla, Inc. (NASDAQ: TSLA)
Tesla’s reporting earnings tomorrow. The chart is showing a “run-rest-run” pattern, one of my favorites for an imminent breakout.
I’m holding November $415 Calls, December $520 Calls, and January $500 Calls. If the pattern stays intact and earnings cooperate, this could be a big one.
Contracts to Watch: November $415, December $520, and January $500 Calls.
The 1 Strategy That Works 80% of the Time*
Yes, the market is choppy.
No, it isn’t as easy to trade as it was two weeks ago.
But that’s the game.
We trade within the uncertainty, not against it.
But what if I told you there’s 1 strategy that works in 80% of market conditions?*
I’m talking about the same approach I used to turn $50 into $1,260 in just 2 months…*
And I’m about to reveal exactly how YOU can weaponize this strategy during my Simpler Options 2-Day Virtual Bootcamp.
If you’ve been wanting to understand how options really work, now is the time…
The market won’t wait for you to figure this out on your own.
The market won’t wait for you to figure this out on your own.
Happy trading,
Ben Sturgill
*Past performance does not indicate future results
