Insights 
VT 
The broader US stock indices experienced declines, with the NASDAQ falling in three of the last four days, and the S&P dropping for four consecutive days. Despite these trends, the NASDAQ index managed to close above its 200-hour moving average, while the S&P index closed above its 100-hour moving average.
During the session, the S&P index fell below both its 100-hour and 200-hour moving averages, reaching a low of 6382.43. However, a late rally allowed it to close at 6395.78. Similarly, the NASDAQ fell sharply, reaching a low of 20905.99 but closed at 21170.19 after recovering above its 200-hour moving average.
Closing Levels Of Major Indices
The closing levels of the major indices were as follows: Dow industrial average increased by 16.04 points (0.04%) to 44938.13, S&P index decreased by 15.59 points (-0.24%) to 6395.78, and NASDAQ index decreased by 142.10 points (-0.67%) to 21172.86.
Despite the day’s negative performance, the indices managed to avoid a deeper technical setback. While sellers had an opportunity to push prices lower, momentum failed to do so, leaving potential for a corrective upside open for the next trading session.
Based on the market’s failure to break down, we see the current price action as a pivot point. Sellers had the opportunity to push indices below key technical levels but failed, suggesting a lack of conviction. The S&P 500 holding above its 100-hour moving average at 6382 and the NASDAQ above its 200-hour at 21140 are the immediate battle lines.
This hesitation makes sense given the broader economic data we’ve received this month. The July 2025 CPI report came in at a sticky 3.1%, slightly above expectations, while the last jobs report showed a cooling but still solid addition of 195,000 jobs. This leaves the Federal Reserve in a data-dependent holding pattern ahead of their September meeting, creating uncertainty for the market’s next major move.
Strategies For Derivative Traders
For derivative traders, this suggests caution against overly aggressive directional bets in the coming days. The indecisive close means that implied volatility may not favor outright option buying yet. We see this reflected in the CBOE Volatility Index (VIX), which has been hovering around 16, indicating concern but not panic.
We saw similar indecisive price action during the volatile summer of 2024, where key moving averages acted as battlegrounds for several weeks before a trend was established. Therefore, using strategies like vertical spreads to define risk on any directional trades would be prudent. This allows for participation in a potential move while capping potential losses if this sideways chop continues.
If the S&P 500 decisively breaks and holds below 6382, we would consider buying puts or initiating put debit spreads, targeting the next support level. Conversely, a strong bounce from these levels could warrant short-term call options, but we would remain nimble. The key is to wait for confirmation rather than trying to predict the break.
