The Nasdaq Composite is maintaining its upward trend with few bearish influences and positive growth impulses. Recent lower-than-expected US inflation figures and robust US activity data are supporting this trend without concerning inflation developments.<\/p>\n
An upcoming August 1 tariff deadline may create some defensive market behaviour, but past experiences suggest that outcomes could be positive. Potential risks include tariff-induced growth scares or changes in interest rate expectations. However, if the Federal Reserve opts to wait or cut rates, the market may continue its upward movement.<\/p>\n
The daily chart shows the Nasdaq Composite consistently reaching all-time highs due to the lack of bearish influences. Buyers have favourable risk-to-reward ratios around previous highs at 20,202, complemented by a trendline. Sellers would seek a price break below this to consider increasing bearish investments towards 19,200.<\/p>\n
On the 4-hour chart, prices are within a rising channel. Buyers utilise the channel’s lower bound to aim for new highs, while sellers target the upper bound for potential breaks downward to 20,202. Similarly, the 1-hour chart indicates buyers are likely to continue capitalising on the lower bound for new highs, while sellers anticipate breaks for pullbacks.<\/p>\n
Upcoming US Jobless Claims and Flash US PMIs data will provide further economic insights.<\/p>\n
Given the upward bias, we see opportunities in strategies that profit from rising prices, like buying call options or selling put spreads. The Nasdaq 100’s gain of over 20% year-to-date is fueled by conditions like the recent core PCE inflation rate holding steady at 2.6%, easing concerns of aggressive rate hikes. This environment validates taking on calculated bullish risk.<\/p>\n
Strong economic signals, such as the recent S&P Global Flash US Composite PMI hitting a 26-month high of 54.6, support this positive momentum. Therefore, we would view any pullback towards the 20,202 support level as a chance to initiate or add to bullish positions. Selling cash-secured puts at or below this level could be an effective way to collect premium while setting a favorable entry point.<\/p>\n
The primary risk on the horizon remains the August 1 tariff deadline, which could introduce volatility, especially with Mr. Trump’s unpredictable policy shifts. To hedge against a potential growth scare from this event, traders could consider buying short-dated put options as a form of insurance. This strategy provides downside protection without forcing the liquidation of core bullish holdings.<\/p>\n
In the bigger picture, the Federal Reserve’s dovish lean provides a significant backstop for the market. Historically, periods following a Fed pivot to a more accommodative stance, like we saw in 2019, have been highly favorable for growth-oriented assets. This precedent suggests that even if rate-hike fears or tariff shocks cause temporary dips, they are likely to be buying opportunities.<\/p>\n
The index is currently trading within a well-defined rising channel, presenting clear boundaries for traders. We can use this pattern to structure trades like bull call spreads, buying calls near the channel’s lower bound to play for a bounce. Conversely, if the price approaches the upper bound, it may be prudent to take some profits or hedge, as sellers have historically become more active there.<\/p>\n
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