The US stock market saw declines, with the NASDAQ dropping in three of the last four days and the S&P falling for four straight days. However, the NASDAQ finished above its 200-hour moving average, and the S&P closed above its 100-hour moving average. During trading, the S&P dipped below both its 100-hour and 200-hour moving averages, hitting a low of 6382.43. A late rally helped it close at 6395.78. The NASDAQ also fell sharply, reaching a low of 20905.99 but closed at 21170.19 after bouncing back above its 200-hour moving average.

Closing Levels of Major Indices

Here are the closing levels of the major indices: – Dow industrial average increased by 16.04 points (0.04%) to 44938.13 – S&P index decreased by 15.59 points (-0.24%) to 6395.78 – NASDAQ index decreased by 142.10 points (-0.67%) to 21172.86 Despite the day’s losses, the indices avoided a more serious decline. Sellers had a chance to push prices down further but didn’t succeed, leaving room for a potential upswing in the next trading session. Since the market didn’t break down, we view the current price movements as a turning point. Sellers had the chance to push indices below crucial technical levels but failed, showing a lack of strong conviction. The S&P 500 is hovering above its 100-hour moving average at 6382, and the NASDAQ is above its 200-hour at 21140. This indecision is understandable given the recent economic data. The July 2025 CPI report showed a steady 3.1%, slightly above expectations, and the latest jobs report indicated a cooling job growth of 195,000 jobs. This situation leaves the Federal Reserve in a data-driven wait-and-see mode before their September meeting, which adds uncertainty to the market’s next significant move.

Strategies for Derivative Traders

For those trading derivatives, it’s wise to be cautious and avoid overly aggressive bets in the coming days. The uncertain close suggests that implied volatility may not favor outright option buying yet. This is reflected in the CBOE Volatility Index (VIX), which hovers around 16, signaling concern but not panic. We noticed similar indecisiveness during the volatile summer of 2024 when key moving averages served as battlegrounds for several weeks before a clear trend formed. Thus, using strategies like vertical spreads to manage risk on directional trades would be smart. This allows traders to capture potential moves while limiting losses if the market remains sideways. If the S&P 500 breaks and stays below 6382, we would consider buying puts or launching put debit spreads, aiming for the next support level. On the other hand, a strong rebound from these levels could justify short-term call options, but we’d stay alert. The key is to wait for confirmation rather than guessing the direction of the break. Create your live VT Markets account and start trading now.

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