The S&P 500 dipped a bit after Fed Chair Jerome Powell’s tough remarks but is expected to bounce back, with a predicted 0.9% rise thanks to strong earnings from Meta and Microsoft. The Nasdaq 100 is also on the rise and may reach a new high, with an expected increase of 1.3%. A recent survey shows that 40.3% of investors are optimistic, while 33.0% are pessimistic. However, there are signs of a potential peak in the S&P 500, suggesting caution for the future. The VIX has been fluctuating, indicating possible market volatility, but its recent drop suggests less fear in the market.

Volatility Breakout System Performance

The Volatility Breakout System has been successful since June 2025 and continues to spot key market trends, even during short-term pullbacks. Seasonal signals point to a possible end to the market’s short-term strength. S&P Futures are close to a record 6,469, supported by tech earnings. Crude oil prices closed higher amid positive sentiment but are under pressure from OPEC+ production changes. Predictions indicate crude prices may drop over time, influenced by market uncertainties and increased output. In this environment, careful management is essential due to low volatility and high valuations. With the S&P 500 near a record high of 6,469, we see a mix of strong tech earnings battling against tough Fed signals. This suggests we should consider strategies that benefit from continued growth while managing our risk. For instance, bull call spreads on the Nasdaq 100 ETF (QQQ) can help us stay engaged in the market while capping our maximum loss. The VIX is currently low, around 13.5, making options cheaper than usual. This calm period might be a chance to buy protection before any sudden shifts occur. We should consider buying some out-of-the-money put options on the SPY as a budget-friendly hedge against a potential drop.

August And September Market Trends

As we head into August, historical data shows that this month, along with September, can be tough for the market. This seasonal weakness, combined with inflation hovering around 3.5%, supports the Fed’s cautious stance. Selling covered calls against existing stock positions could be a smart way to earn income during a potentially stagnant or declining period. The recent market rise was driven by a few key companies, like Microsoft, which reported fantastic results fueled by AI-driven cloud growth. We can use this insight to sell cash-secured puts on these high-quality stocks to earn premiums now, with the chance of acquiring strong stocks at a discount if the market pulls back. In the energy sector, crude oil is under pressure as OPEC+ plans to increase production next month. With oil trading around $82 a barrel, forecasts for a price decline seem likely as supply increases. We might consider buying puts on oil-related ETFs to speculate on this anticipated price drop. Create your live VT Markets account and start trading now.

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