Insights 
VT 
The Nasdaq rebounded following a dip triggered by the NFP report, with the trend leaning upwards due to anticipation of Fed rate cuts. The market is currently anticipating three rate cuts by the end of the year, totalling 68 basis points. There’s also an 8% chance of a 50 basis point cut in September, dependent on a soft CPI report. A soft CPI report could propel the stock market to new all-time highs.
Despite negative forecasts from analysts, the market remains optimistic about future growth. This optimism is supported by expected rate cuts and the belief that economic conditions aren’t as bleak as perceived. The uncertainties earlier in the year due to political policies are diminishing, and potential rate cuts may stimulate economic activity.
Analyzing The Daily Chart
On the daily chart, the Nasdaq has been ranging but remains skewed to the upside, trading near all-time highs. Buyers are eyeing increased bullish bets and a break into new highs, while sellers are poised for a drop to the 23,050 level. On shorter timeframes, there is a minor upward trendline, with buyers using it to push to new highs and sellers targeting a drop if it breaks lower. Upcoming economic reports include the US CPI and Jobless Claims, followed by the University of Michigan Consumer Sentiment report.
The market is being held up by strong expectations of Federal Reserve rate cuts. With the latest Consumer Price Index (CPI) report for August 2025 coming in softer than expected this morning, these dovish bets are solidifying. The Bureau of Labor Statistics reported a monthly core CPI increase of just 0.1%, below the 0.2% consensus forecast.
This reinforces the view that we are in a bullish environment, making long positions attractive. For derivative traders, this suggests buying call options on the Nasdaq 100 index (NDX) or related ETFs like QQQ could be a primary strategy. The CBOE Volatility Index (VIX) has been hovering near a low of 13, making option premiums relatively inexpensive and offering an attractive risk-reward setup.
Probabilities for aggressive rate cuts have increased following the soft inflation data. According to the CME FedWatch Tool, the market is now pricing in an over 20% chance of a 50 basis point cut this month, up from just 8% yesterday. We can expect this sentiment to continue supporting asset prices in the near term.
Evaluating Market Risks And Strategies
However, we are trading near all-time highs, which presents a clear risk of a reversal. Traders should consider hedging their bullish bets by purchasing out-of-the-money put options. This provides a cheap form of insurance against a sudden market downturn if sentiment were to shift unexpectedly.
The 23,050 level on the Nasdaq remains a key area of support. A more conservative strategy involves selling cash-secured puts with a strike price at or slightly below this level. This allows traders to collect premium while defining a price at which they would be willing to buy into the market on a dip.
We are moving past the economic uncertainty that we believe was caused by administration policies in the first half of 2025. The upcoming University of Michigan Consumer Sentiment report will be an important indicator to see if this optimism is shared by the public. A strong reading would further support the case for continued market gains.
This situation feels similar to what we saw in late 2019, when the Fed was cutting rates to support a slowing but still-growing economy, leading to a strong market rally. Implied volatility remains a key metric to watch. If the VIX starts to climb back towards the 17-18 range, it could signal that the market is beginning to price in more risk.
