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Here's why you might bet on more record highs for the market

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Trader bets on more record highs for stocks

Trader Todd Gordon sees more record highs ahead for stocks, and he's got the charts to back him up on it.

The TradingAnalysis.com founder says the will move higher and finally break through the relative quiet of the past few months.

"I think the consolidation is about over, as we're heading into earnings season," he said Thursday on CNBC's "Trading Nation." "I think the market's going to move higher, [especially] through the end of July and into August, and I want to take advantage of that."

On a chart of the S&P-tracking ETF SPY, Gordon sees an "uptrend channel" that has formed this year. And despite the SPY being stuck in a range for the last month or so, he believes the ETF is bouncing off the lower trendline, which he sees as "support" in the channel.

To determine how high the SPY could go, Gordon looks at the last big upswing as a reference point. There was a "push" in the SPY from late May through June, and Gordon thinks the ETF can now mirror the past move. That means that it could hit close to $250, which should roughly correspond to a 2,500 level in the S&P 500 itself. It closed on Thursday at $244.42.

As a result, Gordon wants to buy the August monthly 243 call and pair that with a sale of the August monthly 248 call for about $2.60 total, or $260 per options spread. If the SPY rallies and closes above $248 on Aug. 18, the expiration date for the trade, Gordon would make about $240 on the trade.

Based on his levels for the trade, however, Gordon would actually start making money at around $245.60. But if the SPY closes below $243 on Aug. 18, the entire premium paid would be lost.

However, to mitigate potential losses, Gordon plans to exit the trade once the call spread loses half its value.

"If the stock market begins to drop and the premium remaining is about $1.30 on this SPY call spread, then let's cut it, close the trade, and move onto the next one," he said. "Otherwise, we're going to be looking for [the S&P to push] from that consolidation and headed to 2,500."

Despite the quiet start to summer, the S&P 500 is still up over 13 percent this year.

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