Let’s talk about what happened this week. After riding a wave of new all time highs, steady gains and low volatility, the market finally took a breather this week.
SPY ended the week down right over 2%
QQQ - tech ended a little closer down 3% on the week
The Fed cut rates by 0.25%—no big surprise—and Chair Powell hinted that we might not see more cuts until 2025. Everyone kind of expected this. The 'dreaded' dot plot from the meeting:
We also had the looming threat of a government shutdown. But here’s the thing: none of this was really “new” info. So why the sudden drop?
In my recent posts, I’ve been pointing out the euphoria, the FOMO, and how the market kept drifting higher with barely any pullbacks. Meanwhile, I sat tight, keeping trades small because we were extended so far above key averages. In other words, I was just waiting for volatility to come back.
Look at how Volatility spiked on Thursday and how much it faded (pulled back on Friday)
Here’s my take: people who chase stocks higher on emotion tend to panic-sell just as fast. After a long, mostly one-way ride up, even a hint of uncertainty can trigger profit-taking. This isn’t weird; it’s just human nature at play in the market. As soon as we got a reason—however thin—people started selling, and that selling snowballed.
Look at the Fear & Greed Index: it swung from “Greed” at the end of November to “Neutral” by December 10th, and then all the way to “Extreme Fear” by December 19th. That’s exactly when I started stepping in. This is the heart of the Good Kids Trading (GKT) approach. We don’t need to understand every headline’s deeper meaning. We just know that high fear usually means better pricing for option sellers. When volatility’s low, I hold back. When volatility spikes, I lean in.
This change in conditions last week finally opened the door to new trades. On Friday morning, I started selling premium—just enough to take advantage of the moment. Some trades closed profitably by lunchtime. Others I rolled and they’re now in better shape than before the pullback.
If you missed this opportunity? Don’t sweat it. You'll have enough chance. Markets are like a roller coaster; there will be more dips and rises ahead. The point today isn't to brag about how well we did. It's to help you be ready for the next time when fear is high and prices are better.
Sure, the market could’ve kept falling on Friday, or might still go lower on Monday. But I’m okay with that. I focus on strategies like selling puts on stocks I don’t mind owning, or setting up put ratio spreads and 1-1-1 trades. When the market gives you a shot, you take it. That’s the GKT way.
Next week is Christmas, and volume might be lower. That doesn’t mean nothing will happen—it just means liquidity will be thinner and we should stay alert. Keep that in mind if you’re trading around the holidays.
To everyone in this community, I appreciate your participation. I know this season can be joyful for many and difficult for some. Please remember that you’re never truly alone here.
We’ve built a supportive network, and I’m grateful for each and every one of you. Enjoy the holidays, and let’s look forward to more learning and opportunity in the new year.
growing together. Reach out if you need anything, and let’s look forward to what’s next.
Merry Christmas, and here’s hoping Santa’s good to all of us!
Happy Trading Good Kids,
-$Maxwell
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