The S&P 500 is close to its all-time high, finishing the day at 6502. This is nearly the peak of 6207 reached on August 25. The market saw strong buying in the second half of the session, marking the third day in a row of solid activity. Here are the main index changes: – S&P 500: +0.8% – Nasdaq: +1.0% – Russell 2000: +1.3% – DJIA: +0.8% – Toronto TSX Composite: +0.5% Also, there are ongoing discussions about tariffs and trade agreements in the US.

Risks in Foreign Exchange Trading

Foreign exchange trading comes with risks, including the chance of losing more than your initial investment due to leverage. Those thinking about trading should consider their investment goals and risk tolerance, avoiding investments that exceed their financial capacity. investingLive is an online platform offering insights and analyses but does not act as an investment advisor. Clients should use this information as part of their own decision-making process. Advertisers may pay investingLive based on user interactions with their ads. With the S&P 500’s closing level at 6502, upward momentum remains strong. This buying trend over three days suggests it might be a good time to consider near-term call options. If the index breaks above its all-time daily high, it could lead to another upward movement. The biggest immediate risk is Friday’s non-farm payrolls report, which is often unpredictable. In the past, disappointing jobs reports have caused sharp market drops, like the downturn after the weak May 2025 report, where sentiment reversed quickly, leading to a 1.5% market swing in minutes. This makes strategies like buying straddles or strangles on major indices a good way to prepare for potential volatility spikes.

Renewed Threat of Tariffs

The market is facing the renewed possibility of 15-20% tariffs on European goods. Similar trade tensions in 2018-2019 caused sudden market downturns, sending the VIX volatility index above 30. With the VIX currently low at about 12, it is a good opportunity to buy longer-dated puts on the SPY or VIX calls as a hedge for your portfolio. The mixed economic data, including a strong ISM services report alongside a weak ADP employment figure, adds uncertainty for the Federal Reserve. Fed official Goolsbee is set to speak soon, and any shift in tone could affect rate expectations and increase bond market volatility, impacting equities as well. We should keep an eye on how rising yields could put pressure on the current high valuations in the tech-heavy Nasdaq. Overall, while the trend looks positive, there seems to be a sense of complacency. The CBOE equity put-call ratio recently dropped to 0.65, a level often seen near market tops. This indicates that investors aren’t seeking downside protection, which makes it inexpensive. It might be wise to either sell covered calls on existing long positions or buy puts on sectors that are most vulnerable to European trade, like industrials. Create your live VT Markets account and start trading now.

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