The Nasdaq saw a strong rally after comments from Fed Chair Powell suggested a shift towards a more dovish stance. Expectations for a rate cut in September are around 84%, with a potential 54 basis points of easing by year’s end. The upcoming US Non-Farm Payrolls report is expected to influence interest rate expectations significantly.
On the daily chart, the Nasdaq rebounded above a major trendline after Powell’s comments. The 4-hour chart indicates a price range between 23,375 support and 23,650 resistance, with buyers and sellers positioned accordingly. The 1-hour chart shows a minor upward trendline that buyers may rely on to push prices higher.
Key Developments In The Market
Key developments include Nvidia’s earnings release and the US Jobless Claims figures, concluding with the US PCE price index at the end of the week. These events are likely to affect market movements in the near future.
The recent comments from the Federal Reserve have shifted the landscape, creating a supportive environment for the Nasdaq. We’re seeing the market price in an 84% probability of a rate cut next month, according to the latest CME FedWatch tool data. This easing bias should be the primary factor guiding our short-term derivative strategies.
All eyes are now on the upcoming Non-Farm Payrolls report, which will be a major turning point. After July’s surprisingly strong report showed 215,000 jobs added, economists are now forecasting a much softer 160,000 for August. A number significantly above or below this forecast will cause a sharp move, making long volatility strategies like straddles on the QQQ ETF an interesting consideration.
Technical Analysis Considerations
On the technical side, we are watching the 23,375 level as a key area of support for the Nasdaq 100 index. Selling out-of-the-money put options with strike prices near or below this level could be a viable strategy to collect premium while the easing bias remains. If the market continues its rally towards the 23,650 resistance, we should be prepared to see some profit-taking.
We’ve seen the Nasdaq’s volatility index, the VXN, drop to just 14.5, which is low compared to the levels we saw earlier in 2025. This makes buying protective puts or even speculative call options relatively cheap right now. We remember how quickly sentiment shifted back in the spring of 2024, so maintaining some downside protection is wise even with the current bullish mood.
The Nvidia earnings report later today is a significant event risk for the entire tech sector. Implied volatility for Nvidia options expiring this week has surged past 90%, reflecting the market’s expectation of a large price swing. Traders should consider that a major surprise, either positive or negative, will not only move Nvidia but could easily gap the entire Nasdaq 100 index at the open tomorrow.
