The S&P 500 reached a new all-time high following the US CPI report, which aligned with expectations and did not prompt a reassessment of a September rate cut. The Fed’s expected easing by year-end increased from 57 bps to 61 bps after the report, with many Fed members aligning for a cut.
Attention now shifts to Fed Chair Powell’s speech at the Jackson Hole Symposium, where he may support his colleagues or note that decisions will be based on comprehensive data. The stock market benefits from the Fed’s dovish approach, suggesting an upward growth trend unless the Fed alters its position or negative economic events occur.
Technical Analysis Of SP 500
Technically, on the daily chart, the S&P 500 is at all-time highs, with FOMO contributing to this rise. The potential for a pullback exists, with the trendline offering a better risk-to-reward setup for buyers. Sellers may target a deeper drop if the trendline breaks.
On the 4-hour chart, a minor trendline supports bullish momentum, and the price is just above a previous high. Buyers aim to build on these levels, while sellers seek a break lower.
For the 1-hour chart, the 6,460-6,475 support area is crucial, with potential buyer engagement and seller break targets. Upcoming catalysts include US PPI, Jobless Claims, Retail Sales, and Consumer Sentiment data.
With the S&P 500 pushing past 6,500 into new highs, the path of least resistance remains upward. Yesterday’s US CPI report on August 12, 2025, came in at an expected 3.1%, which was not enough to challenge the Federal Reserve’s dovish path. We see the market has now priced in 61 basis points of cuts by year-end, fully expecting the first move in September.
Derivative Trading Strategies
For derivative traders, this environment supports bullish strategies. The CBOE Volatility Index (VIX) has fallen below 13, making long call options or bull call spreads on the SPX relatively cheap for capitalizing on further upside. The primary focus should be on the upcoming Jackson Hole Symposium in late August for any change in tone from Fed Chair Powell.
The consensus for a September rate cut is strong, with the CME FedWatch Tool showing a probability over 90%. We will need a significant shock, like a Non-Farm Payrolls report showing over 300k jobs added, to seriously challenge this view. Until then, any minor dips towards the 6,460-6,475 support area should be viewed as buying opportunities.
We must remain aware of potential risks, as the sharp pullback in April 2025 reminded us how quickly sentiment can shift. A break below the minor trendline, currently near 6,420, could signal a deeper correction and be a trigger to purchase protective puts. This strategy offers a hedge against an unexpected hawkish shift from the Fed or a negative growth event.
In the immediate days ahead, traders should watch tomorrow’s Producer Price Index and Friday’s Retail Sales figures for signs of economic slowing or accelerating inflation. Using weekly options could be an effective way to trade around these data releases without committing to longer-term positions. The key is to follow the bullish trend while defining risk below established short-term support levels.
