The NASDAQ index is leading the major US stock indices with a gain of 1.06%. It is currently up 224 points or 1.07%, trading at 21,140.07.
Friday saw a sharp decline with the price falling below its 200-hour moving average, the first occurrence since April 24. The drop took the price under the 38.2% retracement level of the rally from the June 23 low to the July 31 high at 20,650.10.
Market Opens Higher
On Monday, the market opened higher; today, it extended above the 100-hour moving average at 21,020.24 and the 50-hour moving average at 21,043.28. Staying above these most recent levels supports a technically positive outlook.
The 200-hour moving average serves as a bearish signal when breached. The 38.2% retracement level at 20,650.10 acts as support. The 100-hour and 50-hour moving averages provide support and resistance at 21,020.24 and 21,043.28, respectively.
In other news, the US Treasury is set to auction $42 billion of 10-year notes at a high yield of 4.255%. Globally, European indices closed higher, with Spain’s Ibex indexes leading gains.
Given the NASDAQ’s current strength, we see a clear short-term bullish signal for the coming weeks. The index has reclaimed its 50-hour and 100-hour moving averages after a brief dip late last week. This recovery suggests that the upward trend that started back in late June remains intact for now.
Opportunities for Traders
For derivative traders, this means opportunities in call options on the NASDAQ 100 (NDX) or related ETFs look attractive. We should use the 100-hour moving average, around 21,020, as a key level to watch. As long as the price holds above this mark, the bullish bias is confirmed, making it a logical area to place stops for long positions.
This positive sentiment is supported by fundamentals, as the most recent Consumer Price Index (CPI) report for July 2025 showed inflation cooling to 2.9%, beating expectations. This easing of price pressure gives the Federal Reserve more flexibility, which is typically good for growth-oriented tech stocks. We also saw continued economic strength in the July 2025 jobs report, which added a solid 215,000 non-farm payrolls.
However, we must also consider the risks on the horizon. Geopolitical tensions are rising, with renewed talk of a potential 15-20% tariff on all EU goods and instability in the Middle East. These factors could quickly sour market sentiment and trigger a flight to safety, making it wise to monitor them closely.
The high yield on the recent 10-year Treasury note auction, at 4.255%, also presents a headwind. Such attractive yields on safer government debt can pull money away from equities, especially the high-valuation tech sector. The CBOE Volatility Index (VIX), while still low around 14, has ticked up from its summer lows, suggesting some traders are buying protection against a potential downturn.
Considering these cross-currents, a prudent strategy could involve pairing long call positions with cheaper, out-of-the-money put options as a hedge. If the NASDAQ fails to hold above its moving averages, especially the 21,020 level, it would signal that the recent strength is fading. This would be our cue to reduce bullish exposure and prepare for a potential move back toward the 20,650 support level.
