With the S&P 500 (SPX) pressing toward the psychological 7,000 level, I’m seeing something on the charts that has me building defensive positions rather than loading up on fresh longs.
It’s a rising wedge pattern — a clean one — and if you’ve traded technical setups long enough, you know what this structure typically signals when it appears at all-time highs.
The highs keep stretching, the lows keep rising, but those trend lines are squeezing together in a way that often hints the move is running out of steam.
My approach is straightforward. If we poke the highs and roll over, I view that as a buying opportunity, letting the market reset and offer a better entry.
So today I’m walking through how I’m positioned heading into the Federal Open Market Committee (FOMC) meeting, and why this pattern matters more than the headline price action.
The Technical Setup I’m Watching
The rising wedge I’m tracking shows higher highs and higher lows, but the converging structure suggests potential exhaustion.
Buyers are still in control, yet the path forward is narrowing. That’s why I’m not chasing the market here.
If we pop through the highs and immediately fade, that sets up a clean technical retest and a compelling place to buy.
If we break higher through 7,000 instead — SPX closed at 6,978.60 on Tuesday — that simply delivers the correction later and opens the door for the next leg up.
Either way, I’m prepared without forcing a directional prediction.
How I’m Actually Positioned Right Now
Rather than trying to guess which way this wedge resolves, I’ve structured defined-risk trades built for either scenario.
Rather than trying to predict the exact direction, I’ve structured two broken-wing butterflies for Engineered Options that profit if we pull back from the wedge top.
The first position is 6,930 / 6,940 / 6,955 for $1.65 credit, risking $335. The second is $6,945 / 6,955 / 6,970 for $1.95 credit, risking $305. Both expire Jan. 30.
To balance these, I added a defensive upside spread: buying the 6,985 call, selling 7,000 and selling 7,015 for 95 cents debit with $1,400 max profit potential.
This creates a hedged structure where I win if price breaks the wedge lower — the broken-wings profit — or if it surges through 7,000, where the defense trade kicks in.
It’s all about shaping exposure so that I’m not leaning too hard one way or the other at these stretched levels. Defined risk lets me stay objective even if the market refuses to cooperate short term.
Looking at the current probabilities, the 6,945 broken-wing shows only a 38% chance of profit. It’s not great on paper but that’s the nature of positioning around inflection points — you’re trading structure, not certainty.
If FOMC pokes the top and fails on Wednesday’s high and then Thursday and Friday sell off, the wedge breaks and the retest sets the trade up perfectly.
If the market pushes to new highs into Friday and only then pulls back in February, that’s fine too. Risk is clearly capped at $335 and $305.
This is how I approach major market inflection points.
I’m not trying to nail the exact top or bottom.
I’m building defined-risk structures that let the market choose the path while I stay ready for either outcome.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
Follow along and join the conversation for real-time analysis, trade ideas, market insights and more!
- Telegram:https://t.me/+av20QmeKC5VjOTc5
- YouTube:https://www.youtube.com/@FinancialWars
- Twitter:https://x.com/realchrispulver
- Facebook: https://facebook.com/therealchrispulver
Important Note: No one from the ProsperityPub team or Chris Pulver Trading will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. 1 Daily Trade Delivered 362 Winners in 2025…
JUST by aligning every single trade with the market’s expected range for the day!
And in the first 11 trades this year, this same approach has delivered 10 winners.
Want to see how to get in on the next opportunity?
DISCLAIMER: We develop tools and strategies to the best of our ability, but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. Stated results are from live published alerts between 8/26/24 and 1/22/25. The win rate has been 89.3% on the options with an average return of 14.62% over a one-day hold time.
