S&P 500 + Trade Ideas
S&P 500 + Trade Ideas
8 Trade Ideas Across 3 Categories
Each month, the weekly newsletter reviews a series of trade ideas, which has quickly become one of my favorite pieces to write in the month. As the newsletter has grown over the past year, it has developed a structured rhythm that readers can now rely on week after week. Here's what you can expect:
Week 1: Monthly Opening Note – A comprehensive review of market health, analyzing the short-term trend, market breadth, and momentum. I also cover near-term navigation of the S&P 500, give a quick snapshot of traditional and modern small cap performance, and, when relevant, include bonds. This issue is available to all readers.
Weeks 2 & 3: Market Health Check – These mid-month editions focus on assessing the market’s condition, beginning with a review of the S&P 500 trend, market breadth across the NYSE and Nasdaq, and momentum indicators. Together, these factors help determine whether the market is in a risk-on or risk-off environment. Brief discussions of potential trade ideas and updates on existing positions round out these notes, which are exclusively for paid subscribers.
Week 4: Trade Ideas – This issue features a full market health assessment followed by detailed chart updates on each trade idea. The aim, like any market participant’s, is to seek outperformance. This year, trade ideas have included U.S. Small Cap Equities, Outside of US Equities, and The Gold Trade. Each idea is presented with an accumulation zone and a defined risk area. While the pace of my trading isn’t rigid, trades typically last anywhere from weeks to months. This final note of the month is also reserved for paid subscribers.
Extreme Greed— Not So Fast
The S&P 500 dropped 1% last week, marking its first decline since early September. Interestingly, the time before last we saw a down week that was followed by a month-long pullback. However, based on my analysis, I view last week’s decline as a healthy correction. It’s always intriguing to see how even a modest decline can shift market sentiment so quickly. Just last week, the Fear & Greed Index showed extreme greed, but now sentiment has nearly swung back to neutral.
In last week’s newsletter, it was highlighted that a 100-point decline in the S&P 500 (around 1.7%) would still be considered healthy. The market dropped 102 points at its lowest point on Wednesday before rebounding to finish the week down just 57 points. This analysis proved valuable, as it allowed a viewing of the correction with a level perspective— giving the pullback the benefit of the doubt.
Risk Off Criteria - 1/3
Three components define the market environment as either risk-on or risk-off.