Hey Traders,
Markets have been all over the place lately, but if you’ve been following me for a while, you already know my stance:
We don’t guess. We don’t chase. We follow the trend.
And right now, I want to walk you through the exact steps I take to find the best stocks to trade — whether the market is flying high, crashing down, or just grinding sideways.
Let’s dive in.
Step 1: Start with the Broad Market
Before I even think about placing a trade, I always start by checking the health of the broad market.
First things first, I use my Custom-built TrendPoint software, but you can set up similar kind of indicators by setting up 3 indicators: a 20-day, a 50-day and a 200-day exponential moving average on your chart.
If you make the 20-day green, the 50-day blue and the 200-day red, you’ll have very 3 very similar trend lines on your chart like what you’ll see in my charts.
Next, I look up 3 key tickers which give me a quick sense of how the broad market is doing:
- SPY (S&P 500 ETF) – This tracks the overall market through 500 of the biggest stocks.
- DIA (Dow Jones ETF) – A good measure of blue-chip stocks.
- QQQ (Nasdaq ETF) – Covers tech stocks and growth stocks.
Pull up a six-month chart with daily bars and check where each of these is trading in relation to their trendlines.
When you do, you’ll see something like this, which is what the SPY looks like right now:
As you can see, the SPY is currently above all 3 trend lines. It still hasn’t passed the highs it made back a few months ago, but it’s above the 3 trend lines, which tells me its bullish.
In my opinion, the SPY is setting up for either a sideways move or a move up.
Next, the DIA is also bullish:
Again, you can tell, because it’s above all 3 trend lines.
Finally, let’s look at the QQQ:
QQQ is also bullish — above all 3 trend lines.
Right now, all three indexes are above their three key trend points, which tells me we’re in a bullish environment — even if we’re not hitting new highs just yet.
That’s a great sign, but we’re not done yet.
Step 2: Find Stocks That Are Outperforming the Market
Once I know the broad market conditions, I’m in a great position. Because I want to use market-driven strategy. What that means is that if we’re in a bullish market — and you can see that we are from the analysis I just did — I want to trade stocks that are trending in a bullish way.
When you use a market-driven approach, I estimate that you will improve your odds of success by up to 85%.
So I start looking for stocks that are trending better than the overall market.
That means I want stocks that are:
✔ Moving higher in a smooth, steady trend
✔ Not overextended or gapping wildly
✔ Holding above the three moving averages
I ran my scans today, and here’s what stood out:
📈 DASH – Looks awesome
📈 FTNT – Nice steady trend, no major red flags
📈 RELY – Now this one looks fantastic. I always say that when trendlines cross to the upside, (meaning the blue and green cross above the red), it’s one of the best buy signals out there — and that’s exactly what happened on RELY back in early November 2024
📈 TDS – Reall good, smooth upward trend
Make sure to watch the video above, because I quickly go through a lot of stocks and just by seeing the patterns that I quickly skip over, you’ll see what catches my attention and what I don’t give a second look at.
Step 3: Avoid the Traps
Just as important as finding the right stocks to trade is knowing which ones to avoid.
🚩 Stocks with wild, unsustainable spikes (watch the video to see the ones I point out)
🚩 Stocks that gap up too much (these can come crashing back down just as fast)
🚩 Stocks that don’t match the trend of the overall market
For example, I saw a few names today that had huge pops — but that’s actually a warning sign.
If you’re already in the stock before the move? Great! But if you’re thinking about buying in after a 40-point jump, you’re probably late to the party.
Instead, I stick to steady, predictable trends. In my experience, those have the highest probability of success.
The Key to High-Probability Trading
Once I find stocks that match the market’s trend and have clean, stable price action, that’s where I focus my trades.
And as you know, I don’t buy options. I only sell them. Here’s a couple of high-probability options selling strategies you can use over and over once you find strongly trending stocks.
And this is exactly why I always start with the market first, then narrow my focus to the best opportunities.
It’s simple, it works, and it keeps me trading high-probability setups week after week.
Stay tuned — I’ll have another update for you later this week.
Trade well,
Jack Carter
P.S. Here’s another high-probability strategy I use several times per month.
