📊 Pro Playbook: How to Trade a Strong Market With Tariff Risks

Three tactical setups—sector rotations, bull call spreads, and defensive hedges—to capture upside while staying protected.

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Hey there,

Yesterday, we talked about why the market is hovering near record highs despite the tariff fears floating around—remember? Strong earnings, potential rate cuts, and positive sentiment are keeping things afloat.

Today, I want to sit down with you and walk through how we can actually trade this environment.

Here's what I'm seeing: we've got this interesting mix of optimism with scattered pockets of risk. It's honestly one of my favorite setups because it's perfect for strategies that let us capture upside profits without leaving ourselves completely exposed if the headlines take a turn for the worse.

Let me share three approaches I'm using right now—and I think you should consider too.

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1️⃣ Rotate the Money: Follow the Earnings Strength

The recent earnings season has been telling us a clear story, and we should listen when the market speaks. Here's where I see real standout strength:

• Technology (XLK) — Microsoft, Apple, Google, and those semiconductor names just keep pushing to the upside. Artificial intelligence is the culprit.

• Financials (XLF) — With the potential of rate cuts coming in September, we could see the yield curve steepen, which would be great for more bank profits.

• Consumer Discretionary (XLY) — Retailers and service companies are still raking in profits, despite all the economic turmoil.

Here's my tactical approach:

• I'm investing in individual AI leaders like AMZN, AAPL, and NVDA—especially during their pullbacks like the ones we saw early last week.

  💡Pro tip: Consider using equal-weight ETF allocations in funds like (XLK, XLF, XLY) to spread exposure across the three strongest sectors. This way you can still focus on the winners while spreading your risk across hundreds of companies.

• I add to positions considerably on pullbacks to the 20-day or 50-day moving averages—patience pays here.

  

  AAPL testing its 50-day moving average on Aug. 5th, 2025 | Earn Out Loud, LLC

• Risk management is non-negotiable: I set stop-losses at 20% below ATR. No ego, just smart money management.

2️⃣ Options Strategy: Bull Call Spreads

Now, if you're like me and expect these sectors to keep climbing but want to be smart about the capital you're putting at risk, bull call spreads are a fantastic way to manage risk.

Let me show you an example setup for XLK: