The NASDAQ index closed at a new all-time high and reached an intraday peak of 21,464.53, beating its previous record of 21,457.48 set on July 31. The S&P 500 also did well, ending just below its record at 6,389.45. Closing figures for major indices included: – The Dow Industrial Average rose by 206.97 points (0.47%) to 44,175.61. – The S&P increased by 49.45 points (0.78%) to reach 6,389.45. – The NASDAQ went up by 207.32 points (0.98%) to close at 21,450.02. – The Russell 2000 climbed by 3.70 points (0.17%) to finish at 2,218.41.

Weekly Performance of Major Indices

During the week, the Dow rose by 1.35%. The S&P jumped 2.43%, its biggest gain since June 23. The NASDAQ surged by 3.87%, also its largest increase since June 23. In individual stocks, Apple stood out with a weekly gain of 13.33%. Amazon increased by 3.7%, Meta by 2.57%, Nvidia by 5.17%, Alphabet by 6.50%, and Tesla by 8.93%. However, Microsoft dropped by 0.39%. With the NASDAQ passing 21,450, we see strong upward momentum led by a few big tech stocks. We might consider buying call options on tech indices to capture more gains while managing our risk. Yet, we should be cautious. The Russell 2000’s small gain this week indicates smaller companies are struggling, similar to what we saw in much of 2024 when only a few giants drove the S&P 500. This divergence could make the rally unstable. Volatility appears low, with the VIX likely trading around the 12-14 range experienced during record runs last year. This means options are relatively inexpensive, allowing us to buy protective put options to guard against any sudden downturns.

Strategic Market Positioning

Looking ahead, everyone will be focused on upcoming inflation reports and the Federal Reserve’s policy meeting in September. As we learned from the market uncertainty in late 2024, any unexpected inflation info could halt this rally. It’s important to position ourselves ahead of these crucial economic updates. A wise strategy in the coming weeks could involve using vertical credit spreads, like a bear call spread on the NASDAQ 100. This can let us earn premiums while benefiting if the index stays flat, declines, or rises slightly. It offers a safety net if the strong momentum begins to fade. We also need to keep in mind that late August and September are often weak or volatile for stocks. Given last week’s significant gain, a seasonal pullback wouldn’t be surprising. This historical trend suggests that adding some downside protection is a smart idea. Create your live VT Markets account and start trading now.

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