US markets are on the rise, with the Nasdaq, S&P 500, and Dow Jones all gaining ground since last week. A significant trade deal between the US and Japan was announced, in which Japan will invest $550 billion in the US and enforce a 15% reciprocal tariff. This agreement has boosted market confidence, and further deals with the EU could happen before the tariff deadline on August 1st. Meanwhile, the EU is readying potential tariffs on US goods if no agreement is reached. Microsoft has found a “zero-day” vulnerability in its self-hosted SharePoint servers. This attack, believed to be by Chinese state-sponsored groups, has impacted around 100 organizations and some government entities. The full extent of the breach is still unclear, and it could hurt Microsoft’s stock if more weaknesses are discovered and not quickly resolved.

Technical Analysis And Market Strategy

Next week will bring important earnings reports, including those from Verizon and Tesla. Technical analysis of the S&P 500 shows a positive trend, with the index approaching the 6425 resistance line. However, a drop below the 6135 support level could signal a downward trend. The agreement with Japan is a major factor driving the current rise in the Nasdaq and other key indices. The CBOE Volatility Index, a primary measure of market anxiety, is recently trading at a two-month low of 12.5. This presents a chance to buy affordable downside protection. We recommend purchasing put options on broad market ETFs that expire after the August 1st tariff deadline with the EU to guard against a negative outcome. The recent discovery of a security vulnerability on Microsoft’s servers brings a specific risk that hasn’t been fully measured. Major cyberattacks can lead to serious financial losses; for example, a 2023 IBM report found that the global average cost of a data breach reached a record high of $4.45 million. Therefore, we are looking at buying out-of-the-money puts on Microsoft’s stock as a low-cost way to benefit from any potential negative fallout.

Trading Opportunities And Technical Signals

Important earnings reports from companies like Verizon (a telecommunications firm) and Tesla (an electric vehicle maker) present unique trading opportunities. The options market is currently anticipating an 8.5% post-earnings move for Tesla’s stock, leading to higher premiums. We believe that selling an iron condor on this stock could be a profitable move if the actual price change is less than the market expects. From a technical viewpoint, the S&P 500’s ascent towards the 6425 resistance line supports a bullish outlook for now. The 6135 support level is crucial to observe, as it aligns closely with the 50-day moving average, a significant trend indicator for institutional investors. A decisive break below this support will signal us to initiate new short positions using index futures to take advantage of any momentum shift. Create your live VT Markets account and start trading now.

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