The S&P 500 has hit new record highs, thanks to a lack of negative factors. This upward trend continued after lower-than-expected inflation data and strong economic activity in the US. The August 1 tariff deadline might have a defensive impact on the markets, but historical trends show potential positive outcomes. However, there are risks, like worries about tariffs affecting growth or a shift in interest rate expectations. Even with these risks, the Federal Reserve might keep rates steady or reduce them, which could help maintain a positive market trend.

Technical Chart Analysis

On the 4-hour chart, the S&P 500 has broken through resistance, which has turned into support, and is now gaining momentum. Buyers might enter near the current support level to aim for new highs, while sellers could push for a drop to the 6,246 level if this support fails. On the 1-hour chart, the 6,323 to 6,333 range could act as support for dip-buyers. Sellers will be watching to see if this level breaks, which could challenge the bullish outlook and lead to lower prices. Fed Chair Powell will speak today, but he won’t talk about monetary policy. Jobless Claims and Flash PMIs data are coming Thursday, which could affect the market.

Investment Strategies

With the S&P 500 rising about 15% this year, we believe the current momentum supports bullish strategies. Derivative traders might want to buy call options for potential gains while managing risk. This fits with the expectation that buyers will enter at technical support to push for new all-time highs. The CBOE Volatility Index (VIX) is at multi-year lows, recently below 13. This low implied volatility means that option premiums are cheaper, making it a good time for both bullish and bearish options. We see this as a chance to buy options at a lower cost. To prepare for risks like the August 1 tariff deadline, buying put options is a smart hedging strategy. Historically, markets can get unpredictable before such events, and owning puts offers a safety net. If prices drop below the support levels noted earlier, these protective positions can help limit losses in a long portfolio. Given the Federal Reserve’s supportive stance and May’s lower-than-expected 3.3% CPI inflation, we could also look at selling out-of-the-money put spreads. This strategy generates income while anticipating that any dips will be minor and short-lived. Important jobless claims data and speeches from the chairman will be crucial in gauging market strength. Create your live VT Markets account and start trading now.

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