Good morning, traders…
We’re at a fork in the road.
The SPDR S&P 500 ETF Trust (NYSEARCA: SPY) opened around $685 yesterday.
Above $688 opens upside momentum, below $675 triggers full defense.
The index is rangebound heading into one of the heaviest data weeks of the year.
Non-farm payrolls, retail sales, and unemployment numbers all drop this week.
Plus, it’s quad witching week, when weekly, daily, monthly, and quarterly options all expire simultaneously (this Friday, December 19).
That combination usually sparks some wild price action, driven less by genuine directional conviction … and more by options market makers.
I’ve tracked the last 10 times similar events coincided…
9 out of 10 times, the SPY made the same move.
If this week rhymes with history, there’s a 90% chance of one particular outcome…*
…but you have to know what you’re watching for.
The 4 Crucial SPY Levels
I marked the range SPY has been stuck in all month…
$685 is the current decision zone, what I call “the point of control.”
$689 is major resistance. The market needs to break and hold above this level to unlock upside momentum. Without a clean break above $689, we’re stuck in chop.
$678 is “The Alamo”: the level that must be defended.
Below $675, it’s time for full defensive posture. All cash and puts as hedges. No questions.
The Triple Header
There are three huge data releases this week:
- Non-farm payrolls
- Retail sales
- Unemployment numbers
The government shutdown created gaps in recent data, so these upcoming reports carry extra weight.
The market is trying to figure out if the economy is slowing faster than expected (or holding up better than feared).
Retail sales could read bullish if strength continues in big-box department stores. That sector has been a bright spot.
Core inflation readings could also support upside, as the current trend has shown inflation cooling.
But if recent history is any indicator, this avalanche of economic information could cause some major volatility…
How I’m Trading This Week
Looking at the last 10 historical trading days when these economic releases occurred, SPY closed red 9 times.
But this week is unique in the options market.
It’s Quad Witching Week, when weekly, daily, monthly, and quarterly options expire simultaneously.
This creates erratic, market-maker-driven moves. I’ve seen share prices whip dozens of % in both directions within minutes.
Could Quad Witching break the historical trend (90% red)?
Again, not if history is an indicator…
SPY has closed red on 7 of the last 10 quad witching days.
No one knows how this week will play out…
But with so much uncertainty (and a historically bearish tilt), play it safe.
Smaller position sizes, shorter holding times, and a higher bar for entry.
I expect chop between $680–$690 early in the week as the chart builds a coil formation (compression before a “decision move” one way or the other).
And the next major directional move in the SPY will be driven by economic data.
Don’t try to predict which way it breaks.
Wait for confirmation, then trade the follow-through.
A sustained break above $688 opens upside potential toward $695 and possibly higher if the data supports it.
A crack below $678 will break the range to the downside. Below $675, full defensive posture.
Your edge comes from sizing small enough that a -20% stop doesn’t wreck your week.
From taking profits at +20% instead of holding for +100% (and giving it all back in a brutal reversal).
This is a decision week. Position yourself accordingly. Don’t get caught 100% on the wrong side of the options chain when the move happens.
Happy trading,
Ben Sturgill
P.S. Look at the 4-day returns on my recent Smart Money trade ideas:
- CIFR December 19 $13 Calls: $2.80 to $4.30 (56% gain)*
- TJX November 28 $149 Calls: $1 to $3.50 (250% gain)*
- WMT December 5 $106 Calls: $0.50 to $1.93 (200% gain)*
- GOOGL December 5 $300 Calls: $5.50 to $21.00 (281% gain)*
You might’ve missed these wins, but you don’t have to miss the follow-through trades…*
*Past performance does not indicate future results
