Anyone can learn to trade.
The market runs on rules, and rules can be taught.
You don’t need to be a genius. You just need a process and the discipline to follow it.
For example, follow my process every morning, and the noise fades. What’s left is a short list of setups that are truly worth our money.
My #1 watch…
I’ll share my top watch with you today. But make sure to write down this process.
And commit it to memory.
I run the same system every day to find the best setups in the market.
The Rules Come First
I trade with a specific framework. Every morning I ask the same questions in the same order, and the answers point me to the best trades.
- Where does the broad market sit?
- I pull up the daily chart and read the trend. Climbing, falling, or stuck sideways.
- What do the internals tell me?
- The VIX tells me more about the overall mood. A falling VIX means fear drains out and buyers step up. A rising VIX means fear climbs, and I tighten my trade positions.
- What does the tape let me do?
- A trending market hands me room to hold longer-dated trades. A choppy market does not. It punishes anyone who overstays.
For example, let’s point this system toward the current market…
Stuck In The Middle
I ran this system this week, and I came to a clear conclusion: it’s choppy out there.
Look at the SPDR S&P 500 ETF Trust (NYSE: SPY). It’s up 7.8% on the year.
That’s healthy at a glance. But zoom in, and the price has been trapped between $720 and $760 since May.
Neither side can commit. But every day that goes by, the market’s anticipation grows larger.
The VIX was cooling off in recent weeks after the two AI scares this summer, but on July 8, it spiked toward recent highs.
That shows increased investor anxiety and a possible dip toward the $720 support once again…
This standoff changes how I trade.
A choppy market doesn’t give us follow-through strength. So I quit reaching for longer-dated trades. And I hunt short-dated ideas instead.
Think about holding a position for days, not weeks. I shrink my size too. Smaller bets keep me in the game while the market makes up its mind.
Then I turn away from the weak corners of the tape and lean on what already shows us strength…
Tech carried the market for years. But fears about overvaluation are causing weak price action.
So the question becomes: what’s climbing while everything else stalls?
Energy Steps Into The Light
The answer sits in the Energy Select Sector SPDR Fund (NYSEARCA: XLE).
XLE is up 19.3% over six months. While the broad market chopped sideways, energy pulled back, found a base, and now it’s rallying (at least on a short time frame).
That’s the exact setup a choppy market rewards. Look for the strongest sector, and make a play based on key price levels as the sector continues to show us strength.
Here’s the intraday price action on XLE from the recent spike…
I’m looking for short-dated contracts with a small size and a strike price near my entry.
If the price slices through my support level, sellers own the tape, and I step aside with a small loss.
React to what the chart shows you. Quit predicting what it might do.
One Read, Every Morning
Let me leave you with the official list:
- Read the market.
- Read the VIX.
- Set your timeframe and your size.
- Focus on the hottest setups.
This week, that process alerted chop in the broad market and strength in the energy sector.
So I’m shrinking the duration of my trades, shrinking my size, and stalking XLE for a pullback into support.
I’m not calling a bottom or a top. That’s not my job. My job is to read strength, mark levels, and let the trade come to me.
Patient people take money from impatient people.
Use my process, wait for your spot, and trade the setup that’s already doing the work.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
