Insights 
VT 
In early trading, US stock indices show mixed performance. The Dow Jones Industrial Average is at 45,493.95, down by 71.28 points or 0.16%. The S&P 500 stands at 6,476.84, decreasing by 4.56 points or 0.07%, while the Nasdaq Composite is slightly up by 4.28 points, reaching 21,594.42. Nvidia’s shares have slightly decreased after its earnings report.
The S&P 500 marked its 19th record close for the year, now aiming for the 6500 mark. Despite the slight gain, the Nasdaq remains below its peak of 21,713.14, achieved on August 13. Technically, the Nasdaq stays above its 100-hour moving average of 21,483.92. A fall below this line would change the current upward momentum.
Recent Market Movements
Last week, the Nasdaq dropped below its 100- and 200-hour moving averages, causing concern. Nonetheless, Fed Chair Powell’s speech on Friday led to a market recovery, pushing the Nasdaq above these averages. This resurgence shifted the short-term bias upwards, with the 100-hour moving average being an important indicator for future movement.
The market is showing clear signs of consolidation after hitting another record high. With the S&P 500 hovering near the 6500 level and the VIX trading at a low 14.5, implied volatility is cheap. This suggests selling out-of-the-money put spreads on the SPX could be a prudent way to collect premium, assuming the market remains in this tight range.
We are paying close attention to the Nasdaq’s ability to hold its 100-hour moving average near 21,480. A break below that level could signal a loss of momentum, especially as market breadth has been weakening, with only 52% of Nasdaq 100 components currently trading above their 50-day average. For traders anticipating a potential pullback, buying weekly puts on the QQQ would offer a defined-risk way to profit from a move lower.
The positive reaction to Fed Chair Powell’s Jackson Hole speech last week showed how sensitive we are to monetary policy. However, with the July 2025 PCE inflation report coming in at a persistent 2.8%, we should not get too complacent. This lingering inflation makes any upcoming economic data a potential catalyst for a sharp move, making long straddles on volatile tech names like Nvidia an interesting play around future data releases.
Market Strategies
This situation of new highs accompanied by low volatility reminds us of the market environment in late 2021, before the aggressive rate hikes of 2022. Given that history, a calendar spread on the SPY, selling a front-week option against a longer-dated one, could position us well. This strategy would benefit from the current market’s sideways drift while providing exposure to a potential increase in volatility as we head into the autumn months.
