Last week I said SPX confirmed weakness, and what ended up playing out (so far) was that the two day, 3% pullback we had from July 31 to August 1, may have just been that, a pullback. My downside bias was strong and I personally realized a ton of losses because I was trying to call a continued decline.

This is an error I’ve made before…the “this is it!” energy where I see weakness and stay in positions with bearish blinders on. It comes from FOMO. Anyone who has been able to be in position before the dam breaks knows that the gains are so easy and so wild. The part that tripped me up though was that there were names tanking, but there were also names soaring.

So I reached out to my mentor to help clear the fog. He clarified that what I was seeing was a mixed (or choppy) market. He then shared some super helpful insights about trading in this environment. I spent some time going back over our conversation, digging into my own notes, and created a summary to share here.

Reading a Mixed (Choppy) Market

When I say “choppy,” I mean a market where participation is uneven, some stocks are rallying, others are pulling back, and others are just drifting. Breadth is inconsistent, leadership changes quickly, and follow-through is harder to find.

In these conditions, the index can mask what’s really happening underneath. It might look calm or slightly trending, while individual stocks are moving in opposite directions. Strength in one area can be offset by weakness in another. Trends rarely move cleanly, and setups often take longer to play out or can fail faster and sharper.

Below is a snippet from my mentor that really helped me internalize what to expect in this environment, and how to play it.

I highlighted that last part because it really epitomizes the skillset that separates amatuer traders from the pros. Being able to read the market and your players as the market unfolds, in real time, and pivoting quickly to address any shifts, is the skillset we are mastering.

And so I’ve summarized these three points below:

1. Market “Age” Impacts Movement

Earlier this year, the market was fresh off the April bottom. Stocks were climbing together and you could throw money just about anywhere and win. It is easy to catch moves when everything is running in the same direction.

Now, we’re in a more mature phase. Participation has narrowed. Some stocks are pulling back, others are resting, and a few might be setting up again, but not in sync. This shift in character means you can’t treat all setups the same. Timing, selectivity, and position management matter a lot more than they did earlier in the year.

2. You Can’t Just Put Anyone In the Game

Think of your watchlist like a group going through a grueling tryout. On day one, everyone looks fresh and ready. But as the sessions go on, some start to fade, others get inconsistent, and only a handful keep showing up strong. In a choppy market, that’s exactly what happens with stocks. You can’t assume the early standouts will keep performing, and you have to keep re-evaluating who still deserves a spot in your lineup.

Selectivity here means:

• Stick to your best setups — the patterns and structures you trade well, and that are showing clean price action in the current environment.

• Wait for clear triggers — do NOT anticipate. Let price reclaim a key EMA or break a level with conviction.

• Favor cleaner technical structure — tighter ranges, less random volatility, and well-defined support/resistance tend to hold up better in chop.

• Watch volume — confirming volume on breakouts or pullbacks increases the odds of follow-through.

• Be cautious with countertrend trades — only take them if the chart structure clearly supports it.

• For options — be picky about both the setup and the strike/timing; avoid names where erratic movement will crush the premium before the move can develop.

3. Be Quick To Pivot

In a choppy market, you can’t always pinpoint exactly what’s changing, but when your read on price action starts to feel off, that’s your cue. This isn’t about fear, it’s about recognizing doubt in what you’re seeing. When that doubt creeps in, the trade comes off, either to cut the loss or lock the gain.

Those clean, extended moves, the easy put from February or March, or the call that ran hard in April, are rare in chop. Most trades now may not give you that runway. With options especially, quick reversals and smaller moves mean premium fades faster. If the market and the stock aren’t set up for a strong, sustained move, the premium won’t expand much, and if it turns against you, the drop in value will be even sharper. The adjustment is simple: be pickier on entry, keep size tighter, and take profits sooner.

Let’s take this mindset and move into our objective outlook for the SPX.

SPX Review and Outlook

Previous Week
High: 6,395.16
Low: 6,271.71
Close: 6,389.44

I’ve kept the previous uptrend line from the April lows just for reference, and I’ve also drawn a new, slightly shallower uptrend connecting the June and August wicks, and added a third uptrend line to denote the sharper ride up from the recent pullback.

From last Friday’s low, SPX has retraced almost the entire pullback. It’s back above the 10 and 20 EMA, which keeps the trend intact for now. Whether we grind along the new steeper uptrend line (anchored August 1st to August 7th) or drift back toward the June–August line near the EMAs will likely depend on whether buyers keep stepping in on dips.

Here are a few scenarios:

• Grind higher: Holding above the 10 EMA (6338) and 20 EMA (6310) keeps the uptrend intact, with potential to retest the all-time high at 6427 and break to new highs.

• Range trade: Price could consolidate between 6298 support and 6426 resistance, with alternating tests of both levels.

• Break toward 6200: Losing both EMAs with momentum could send price back into July’s consolidation zone (~6200 to ~6300), with 6200 as the key level to watch.

Whichever scenario starts to play out, the job is to assess at each level. Even if price pushes toward a new all-time high and looks like it could break through, once we’re there, it’s time to re-evaluate. Same thing if we test support. We always want to stop and ask whether the chart, the price action, the volume, and whatever indicators you use are confirming the move or telling a different story. The idea is to stay open to new information, not get locked into what you thought would happen when the week started.

We’re in a market where selectivity and adaptability matter as much as the setups themselves. The recent pullback reminded us how quickly momentum can shift in chop, and SPX’s sharp recovery back above the 10 and 20 EMA shows how easily downside can be retraced when buyers step back in.

This week’s focus is straightforward: watch the key levels, respect the scenarios, and be ready to act if conditions change. Whether SPX grinds higher, trades in a range, or retests the slower uptrend line, the priority is to keep bias in check and let price action confirm the next move. The clean, extended runs we saw earlier this year are rare in this environment, so take the opportunities the market gives, manage risk quickly, and stay sharp.

Til next time!