War Volatility Returns, Opportunity Emerges? Here's A Specific Trade Setup We're Watching Closely

When VIX is back over 20, we get the best setups!

The market's been on a strong run since mid-April, no doubt about that. April lows shook out a lot of investors, but since then we've seen a steady climb, with a brief push in early June, t'd people thinking we'd break out for good.

But over the past couple of weeks? We've mostly just chopped sideways.

Recent Market Action

We're hovering just under the previous all-time high. And despite some strong individual performances, the broader market has struggled to punch through that resistance level. This kind of price action tends to frustrate both bulls and bears… It's not a clean breakout, and it's not a breakdown either.

That's the backdrop.

And toward the end of this post, we'll walk through one specific trade setup we're watching closely, especially for subscribers looking to stay tactical in the coming weeks.

Shifting Sentiment

What’s catching our attention now is the shift in sentiment.

A lot of people are starting to capitulate to this move.

Large speculators are positioning heavily, and we're seeing a clear uptick in exposure to risk assets across the board.

Even the AAII sentiment survey, which we watch closely, is flashing signs of optimism.

It just printed its lowest bearish reading since January, a meaningful shift.

That's notable… because just a month ago, the same survey was overwhelmingly bearish.

People didn't believe the rally.

They were hesitant, skeptical, calling it a dead-cat bounce or a trap.

Now?

Some of those same voices are turning bullish.

That's often when we start to see the dynamics change… not necessarily because the market is broken, but because sentiment is finally catching up to price, and that's usually when things get trickier.We're not calling a top here.

But we're also not ignoring the signals.

Our Positioning

If you've been following this newsletter, you know we've been bullish since April, leaning into strength when others were pulling back.

That positioning paid off. But as of last week, we've started to get a little more cautious.

We haven't liquidated the portfolio. We're not going risk-off.

But we are watching closely, tightening up our exposure where needed, and being more selective with new entries.

That said, we still stand on one core belief… we are in a bull market.

We may not know where the next 5% or 10% move lands… but we're confident the next 20% is higher.

Even $MSTR Strategy is bullish on the Prospero.ai app. We consistently refer to our favorite tool for sentiment and positioning checks.

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That's the bigger picture.

And that's where our conviction stays anchored.

Technical Levels and Trade Setup

Moving averages matter.

Since April, we've stayed above the 20-day moving average, and that's been our guide.

Our plan now is simple… We'll be looking to add exposure to leadership on this bounce as a swing trade.

(1) 20-day Moving Average; (2) 200-day Moving Average

And right now, leadership is showing up in Bitcoin.

If the S&P 500 tags the 5942 level, we plan to add more to our crypto exposure, specifically Bitcoin, which continues to act as a risk-on bellwether.

Looking ahead to mid-July, if the market stays above the 200-day moving average around 5800, we'll likely see a golden cross form… a historically bullish signal for equities. If that plays out, there's a good chance we'll already be sitting at or near all-time highs by then.

(Blue) Extension of 200-day MA; (Green) Extension of 50-day MA

Managing Macro Risks

The market doesn't give you guarantees. No one knows exactly what happens next.

But if we're trading, we need to bet on the highest probability outcome.

Right now, that outcome is still a bullish market.

Are we concerned about geopolitical risks like the Iran-Israel war?

Of course, it's a devastating and tragic situation, and no one wishes for conflict or loss of life.

But from a market perspective, we've seen time and again that wars don't always lead to major selloffs, unless they escalate dramatically. As long as the conflict remains contained, markets tend to look through the noise.

Final Thoughts

So we stay patient.

We stay disciplined. And most importantly, we don't get caught chasing the narrative just because the headlines flipped.

There's still an opportunity out there…

And the trade we're watching next is Bitcoin on a pullback in $SPX to 5942. We'll update with more details if we get the setup. Stay sharp.

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