Good morning, traders…
I’m sure you’ve noticed it.
Since the big SPY sell-off on October 10, the market has been on shaky ground.
The VIX has been trending higher, stocks have been choppy, and “market bubble” concerns are circulating once again:
Want to know what’s causing the disruption? Follow the money.
The answer lies in liquidity, not the charts.
Liquidity drives the market. When money flows into the system, stocks have tailwinds. When liquidity dries up, stocks have headwinds.
Right now, we’re in a “liquidity desert” due to the government shutdown…
But liquidity doesn’t stay dry forever. And when it returns, the moves are explosive.
Once the government reopens and money starts flowing again, I expect a rally. I’d place it closer to mid-November (based on betting markets and public pressure).
Prepare now, and you’ll be ready to strike when liquidity returns.
Ignore what’s happening underneath the hood, and you’ll miss one of the biggest trading opportunities of the year.
Don’t Let The “Liquidity Desert” Dry Up Your Trading.
How Liquidity Runs The Market
If you’re only thinking about your individual trades on 5-minute charts … you’re missing a huge piece of the puzzle.
The big picture is just as (if not more) important than your intraday charts.
Liquidity is key to the big picture. Everything else is a granular detail.
When commercial banks lend, the Fed adds liquidity, or the government spends money … that cash flows into the system.
Stocks go up because there’s more money chasing the same assets.
Right now, two of those three sources are paused.
- The Fed stopped quantitative tightening, but they’re not actively adding liquidity yet.
- The government shutdown has frozen spending, which removes a massive source of liquidity from the system.
That’s why the market’s been choppy. There’s no fuel.
But once the government reopens, spending resumes, and money flows back into the system, that changes.
And when it does, I want to be positioned for the move — not chasing after it’s already happened.
6 Options Trades I’m Considering
I’m already positioned for upside in crypto and options. I’m holding positions in Ethereum, Bitcoin, and SPDR S&P 500 ETF Trust (NYSE: SPY) January 16 $700 Calls.
I’m showing you my positioning so you understand the process: identify the macro driver (liquidity), predict when it returns (mid-November), and position before the biggest move happens.
These are the six charts I’m watching for potential trades into this November move:
Southwest Airlines Co. (NYSE: LUV)
Watching for a move above $31.70. If LUV breaks that level, I’m targeting November 21 $33 Calls.
Chime Financial, Inc. (NYSE: CHYM)
Strong support near $16, breakout watch above $19.50. If CHYM clears that resistance, I’m looking at December 19 $20 Calls.
The GEO Group, Inc. (NYSE: GEO)
Strong volume coming in despite a downtrending chart. The Smart Money is betting on a big reversal. Set an alert above $18 for December 19 $20 Calls.
Berkshire Hathaway Inc. (NYSE: BRK.B)
Buffett & Co. chart has a serious accumulation pattern forming. I’m interested in December 5 $505 Calls if BRK.B continues building.
Alphabet Inc. (NASDAQ: GOOG)
GOOG is one of the strongest tech stocks right now. Watching for a move above $290 for December 12 $300 Calls.
Tesla, Inc. (NASDAQ: TSLA)
Mark my words: TSLA is a $1,000 stock in the making. I’m watching November 21 $490/$500 Call Spreads or January 16 $500 Calls, depending on your time preference.
If you want cheaper exposure with no expiration date, you can use TSLL (a leveraged Tesla ETF) to play the move.
Now is the time for selectivity.
Market conditions aren’t perfect right now.
But that doesn’t mean there aren’t great trading opportunities … if you know where to look.
Happy trading,
Ben Sturgill
*Past performance does not indicate future results