The S&P 500 is hovering just below its all-time high, but look under the hood and the picture isn’t nearly as healthy. Fewer than a third of S&P 500 stocks are trading above their 50-day moving average, the equal-weight index has been lagging badly, and a handful of mega-cap names are doing most of the heavy lifting. That’s what poor market breadth looks like, and it’s been the story for weeks.

Seasonality adds another layer. Late September into October has historically been one of the choppiest stretches of the year, and this one is playing out that way, with sharp rotations and tech selling off hard on some days even while the index stays near its highs. The good news is that the calendar tends to turn more favorable as we move toward November and into year-end. That’s why I want to be selective now. In a narrow market, I don’t need the whole market to cooperate. I need individual stocks with their own setups, and that’s where the Stock Forecast Toolbox earns its keep. Try it out for free!

This week, the name that stands out is Yum! Brands (YUM), the parent of KFC, Taco Bell and Pizza Hut:

YUM has spent months basing right around the $150 level, which is exactly the kind of pattern that can precede a move when the stock finally gets going. It also isn’t dependent on the AI trade that’s driving the indexes, so if the mega-caps stumble, this isn’t the group I’d expect to get hit the hardest. Here’s what the Toolbox projects:

The model is pointing to a target just over $163. To play it, I’m looking at the November 20th $150 call, currently valued at about $4.30. If YUM reaches $163, that call would be worth at least $13, a gain of roughly 200%. I’m not counting on hitting the full target, and a simple double on this trade would be a great result.

One important note: YUM is scheduled to report earnings in the first week of November, well before this option expires. I have no interest in holding through the report, so my plan is to exit this call by Friday, October 30th regardless of where it stands. That gives the stock a little over two weeks to make its move, and it keeps an earnings gap from deciding the trade for me.

As a reminder, the Forecast Toolbox doesn’t just give me one prediction every week or every day. It models out high probability moves for most listed stocks in the market. I can check every stock in my portfolio to make sure I’m positioned right when I’m holding my investments, and when I’m looking for a new trade, it provides a filtered list of some of the most explosive setups so I can find the next great idea for my trading portfolio.

Make sure to take advantage of the free 7-Day Trial of the Stock Forecast Toolbox so you can see what it can do for you!

If you have any questions, never hesitate to reach out.

Keith Harwood

Keith@OptionHotline.com