Macro Drivers: Geopolitics and Sector Rotation

Before we jump in — if you want to see the tools mentioned in this episode in action, including the 0DTE Trend Spread Engine and the 1DTE Bias indicator, visit AlphaCrunching.com to learn more and join the trading community.

In this episode, Eric discusses the recent market breakdown and how current geopolitical tensions, volatility, and upcoming economic data are shaping trading decisions. With SPX experiencing sharp moves and uncertainty rising, he walks through how he’s adapting his approach and managing trades during this environment.

A major theme is market structure and key levels. Right now, gamma positioning appears scattered across large round numbers, suggesting institutional traders themselves are uncertain. As a result, Eric is watching major SPX levels every 100 points (6600, 6700, 6800, etc.) as potential support and resistance zones while the market “ping-pongs” between them.

He also reviews the macro backdrop driving volatility, including geopolitical tensions, sector rotation away from AI stocks, and a busy week of economic data with CPI, jobless claims, and PCE all ahead. These events could determine whether the market stabilizes or pushes lower toward the mid-6600s.

Eric then explains how he’s positioning his portfolio:

1. Maintaining a core SPY position while actively trading around it
2. Using covered calls and rolling positions to manage downside while leaving room for upside participation
3. Pausing many longer-duration spreads due to increased uncertainty

Much of the current trading activity has shifted toward shorter-term strategies, particularly SPX 0DTE trades.

The episode highlights how the AlphaCrunching 0DTE Trend Spread Engine (TSE) is being used in practice. The system ranks the best times of day for 0DTE spreads based on historical performance and now posts the short strike levels from the highest-probability trades. These levels act as data-backed areas where SPX has historically stayed away from by expiration, allowing traders to use them as reference points for structuring credit spreads.

Eric also introduces progress on the 1DTE Bias indicator, an experimental tool that evaluates market regimes using factors like trend behavior and VIX conditions. By comparing current conditions to historical matches over the past three years, the tool estimates the probability of the market closing higher the next day. The recent volatility spike has highlighted one of the challenges of building this model: unusual market conditions sometimes produce very small historical sample sizes.

The episode closes with an important reminder about patience and risk management. In volatile environments, it’s often better to wait for conditions to settle rather than forcing trades. Sometimes the best position is simply holding cash until clearer opportunities emerge.

Overall, this discussion provides a real-time look at how Eric is navigating a volatile market using a combination of macro awareness, probability-based levels, and adaptive options strategies.