The Nasdaq Composite is on the rise, showing little sign of bearish trends and enjoying positive growth. Recent lower-than-expected inflation numbers and strong economic activity in the U.S. support this trend, easing concerns about inflation. A tariff deadline on August 1 might cause some cautiousness in the market, but past experiences suggest the results could be favorable. Potential risks include growth worries from tariffs or shifts in interest rate expectations. However, if the Federal Reserve decides to hold off or reduce rates, the market may continue climbing.

Nasdaq’s Daily Chart Analysis

The daily chart illustrates the Nasdaq Composite consistently hitting all-time highs, thanks to a lack of bearish pressures. Buyers find good risk-to-reward opportunities near past highs around 20,202, supported by a trendline. Sellers would look for a price drop below this level to consider increasing bearish investments towards 19,200. On the 4-hour chart, prices are moving within a rising channel. Buyers use the lower side of the channel to reach new highs, while sellers target the upper side for possible downward breaks at 20,202. The 1-hour chart shows that buyers will likely continue taking advantage of the lower bound to achieve new highs, while sellers look for breaks for pullbacks. Upcoming data on US Jobless Claims and Flash US PMIs will offer additional economic insights. With the current upward trend, we see potential in strategies that benefit from rising prices, such as buying call options or selling put spreads. The Nasdaq 100 has gained over 20% year-to-date, boosted by factors like the recent core PCE inflation rate holding steady at 2.6%, easing fears of aggressive rate hikes. This environment makes a calculated bullish risk appealing.

Economic Signals and Strategy

Strong economic indicators, such as the recent S&P Global Flash US Composite PMI reaching a 26-month high of 54.6, support this positive momentum. Any pullback towards the 20,202 support level should be viewed as an opportunity to start or build bullish positions. Selling cash-secured puts at or below this level could be an effective way to earn premiums while establishing a favorable entry point. The main risk ahead is the tariff deadline on August 1, which could bring volatility, especially due to unpredictable policy changes from Mr. Trump. To protect against a possible growth scare from this event, traders might consider buying short-dated put options as insurance. This approach offers downside protection without having to sell core bullish positions. In the broader context, the Federal Reserve’s accommodating stance acts as a strong support for the market. Historically, periods following a Fed shift to more supportive policies, similar to 2019, have been very beneficial for growth-oriented assets. This suggests that even if rate-hike fears or tariff-related shocks cause temporary dips, they might serve as buying opportunities. The index is currently positioned within a clear rising channel, offering defined boundaries for traders. We can utilize this pattern to structure trades like bull call spreads, buying calls near the channel’s lower bound looking for a bounce. Conversely, as the price approaches the upper bound, it may be wise to take profits or hedge, as sellers tend to become more active at that level. Create your live VT Markets account and start trading now.

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