Hey traders,
There’s been plenty of anxiety about the S&P 500 lately, so let’s look at what the market is actually telling us.
SPY, the ETF that tracks the S&P 500 tick-for-tick, has been grinding higher on a six-month view.
Each pullback has found support at my short-term moving average — the 20 day — and then pushed to new highs. That’s textbook bullish action and good news for bullish income setups.
Read the Indexes First
I always start with the “big three” — SPY (S&P 500), DIA (Dow 30), and QQQ (Nasdaq 100). They tell me the condition of the broad market.
If I run a market-driven strategy off those readings, I keep myself on the right side of the tape.
Right now, the message is clear:
DIA is pushing to new highs, similar to SPY:
QQQ is also making new highs:
With all three major indexes moving higher, I’ve got a green light to run my favorite bullish income plays in names that are trending with the market.
The “Triple Crown” of Income Trades
When the trend is up, I keep it simple and stick to what works. I call it my Triple Crown — three straightforward ways to get paid:
- Covered calls – collect rent on shares you own
- Naked puts – get paid to potentially buy at a discount
- Credit spreads – defined-risk income with a short option you sell and a long option you buy to back you up
In a bullish tape like this, it’s a sweet spot for all three.
Wrapping It Up
The market’s telling us the path of least resistance is still up.
Smart traders like us will Read the SPY, DIA, and QQQ first, then focus on stocks that are already trending higher. From there, use the Triple Crown trades I mentioned above to pull steady income while the trend does the heavy lifting.
Trade well,
Jack Carter
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