The stock market goes through seasons. It’s not always “up and to the right.” 

And this month, it’s far from “T-shirt weather.” It’s overcast.

But 1 sector is breaking through the clouds.

These weather patterns shouldn’t be blowing your mind…

State Street SPDR S&P 500 ETF Trust (NYSEARCA: SPY) has returned about 11.6% on average over the past 30 years. 

The market needs pullbacks to create the upside. You can’t have expansion without contraction. You can’t have spring without winter.

This period is rough, but I can’t say I’m shocked by the price action. 

I’ve been warning you about the near-perfect year-to-date gains on the CBOE Volatility Index (VIX) … the least bullish uptrend in history.

It’s a classic bullish pattern, higher lows into a breakout. 

And when the VIX is uptrending this steadily, it means price swings are faster, larger, and less predictable. 

So please, be careful out there. But don’t panic…

Relax. Tranquilo.

In a market this choppy, remember what Billy Madison said: 

I’ll Say It Again…

When the market speeds up, you should slow down.

That doesn’t mean you shouldn’t trade anything. It just means you need to tighten your risk management.

Did I have long-term call or share exposure going into this month? Yes, in Tesla, Inc. (NASDAQ: TSLA) and Amazon.com, Inc. (NASDAQ: AMZN).

But thanks to my VIX rules, those positions were small. The downside was manageable.

This is why I gauge my trading around the volatility index. It’s saved me from brutal red days more times than I can count. 

What The SPY Chart Is Telling You

Now, to the most important chart in the world…

Mark $678 on SPY. 

If we reclaim that level, the bottom might be in. 

If not, we probably see a rejection (and further downside).

We’re not back below $650 yet. Could we get there? Sure. And if that level breaks, we could see downside to the $610 area. 

And what does that set up? 

A bounce opportunity (on these 6 names especially)…

6 Smart Money Call Setups

The Boeing Company (NYSE: BA) broke a downward trendline. If it can get back above $231.50, that’s a strong demand zone. If that happens, I’m watching the March 20 $250 calls.

NVIDIA Corporation (NASDAQ: NVDA). It’s not looking amazing, but not terrible either. If it gets back above $179, I’ll watch it for the March 20 $185 calls.

Novo Nordisk A/S (NYSE: NVO). The stock dropped but it’s strong today in a weak market. If it gets above $39.50, watch that level. I’m eyeing April 17 $40 calls.

JD.com, Inc. (NASDAQ: JD). Chinese stocks are gapping up from Friday. If JD gets above $27.35, I’d be interested in the September 18 $32 calls.

Netflix, Inc. (NASDAQ: NFLX). Netflix has relative strength in a weak market. But it keeps getting rejected at $100. If Netflix breaks above $100, pay attention. Over $100, this could move to $110. I’m watching the March 20 $100 calls on this pullback towards $95.

Tesla Inc. (NASDAQ: TSLA). Tesla’s sitting near a key risk zone around $391. If it breaks that level, it’s done in the short term. But I’m extremely bullish in the long term. I’ve been buying small batches of shares, slowly accumulating… 

Why? Tesla’s Optimus robot will change the world.

Hindsight’s 20/20

Now’s the time to slow down and study what’s happening. 

Step back. In hindsight, couldn’t you have tightened up your portfolio by looking at the VIX … before any meaningful drops in the indexes?

The clues were there. The VIX was warning us. Then the news (and the downside) followed. 

So, how am I planning from here?

I’ll be watching Nasdaq (NQ) futures. 

If I see an uptrend, I’ll look for morning strength in the index and buy pullbacks on some of the names above. 

If there’s a downtrend, I’ll look for morning weakness and sell pullbacks. This is a time for both puts and calls. Short-dated day trades.

If that’s not your speed, sit back and watch. Slow down and learn.

We have our levels. Wait and respond.

Be good (and be good to others),

Ben Sturgill

*Past performance does not indicate future results