The S&P 500 tested its closing values from Friday and managed to surpass the initial resistance at 6,665, advancing into the 6,720s during premarket trading. However, resistance in the mid-6,720s led to a decline by the end of the day due to new tensions related to China. Meanwhile, the Nasdaq is falling behind both the S&P 500 and the Russell 2000. People are looking forward to the upcoming Trump-Xi meeting, but uncertainties remain. The writer of this newsletter, Monica Kingsley, has years of experience as a trader and financial analyst.

Recent Economic News

Recent reports indicate that Australia’s unemployment rate might increase, while New Zealand is experiencing economic losses due to trade tensions. Gold prices surged past $4,200 amid global economic worries. Similarly, silver benefited from increased demand for safe-haven assets, linked to US-China relations. The information provided about the markets and related investments is for informational purposes only. It emphasizes the importance of independent research before making investment decisions. The author has no ties to the stocks or companies mentioned and does not give direct investment advice or guarantee accuracy. Investors are responsible for any potential losses. The S&P 500 is now facing significant resistance in the 6,720s, a level that halted its progress just a day earlier. The CBOE Volatility Index (VIX) has remained above 20 for two weeks, indicating that the market expects larger price swings ahead. This moment is crucial, and how the index responds here could influence the remainder of the quarter.

Market Strategies And Analysis

If the S&P 500 breaks through this resistance, we could see a strong rally, especially if positive news emerges from the US-China trade discussions. We are considering buying call options or creating bull call spreads to take advantage of this potential rise while managing risk. The strength in the Russell 2000 suggests that smaller companies are leading the way, which is a good sign for the overall economy. However, the Nasdaq’s underperformance is concerning, as it indicates that big tech is not participating in this momentum. If resistance holds, putting on protective puts or bear call spreads on the SPY and QQQ may be a wise strategy to prepare for a possible pullback to the 6,600 level. This situation feels reminiscent of the market fluctuations we experienced in the fall of 2024 before a clearer trend emerged at year-end. Given this crucial point in the market, volatility itself is the key focus. For those unsure of the market’s direction, using options straddles on the SPY could be profitable if there is a sharp move up or down in the coming weeks. The higher VIX makes these strategies pricier but also reinforces the market’s tense atmosphere. Additionally, the uncertainty is driving investments toward safe-haven assets. Gold’s rise above $4,200 an ounce—its highest since the political unrest of early 2025—signals this shift to safety. This makes derivatives on gold miners (GDX) or silver (SLV) a key hedge against potential weaknesses in the equity market. Create your live VT Markets account and start trading now.

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