In early trading, U.S. stock indices are showing mixed results. The Dow Jones Industrial Average is at 45,493.95, down 71.28 points, or 0.16%. The S&P 500 is at 6,476.84, down 4.56 points, or 0.07%. Meanwhile, the Nasdaq Composite is slightly up by 4.28 points, reaching 21,594.42. Nvidia’s shares have dipped a bit after its earnings report. The S&P 500 recently achieved its 19th record close of the year and is now targeting the 6500 mark. Although there’s a slight gain, the Nasdaq is still below its peak of 21,713.14 from August 13. Technically, the Nasdaq remains above its 100-hour moving average of 21,483.92. If it falls below this level, it could disrupt the current upward trend.

Recent Market Movements

Last week, the Nasdaq fell below its 100- and 200-hour moving averages, which raised some concerns. However, Fed Chair Powell’s speech on Friday boosted the market, pushing the Nasdaq above these averages. This recovery has shifted the short-term outlook upwards, making the 100-hour moving average a key indicator for future movement. The market is showing signs of consolidation after reaching another record high. With the S&P 500 near the 6500 mark and the VIX at a low 14.5, implied volatility is low. This suggests that selling out-of-the-money put spreads on the SPX could be a smart way to gather premium, provided the market stays within this tight range. We are watching the Nasdaq’s ability to maintain its 100-hour moving average around 21,480. A drop below this level could indicate a loss of momentum, especially since the market breadth is weakening, with only 52% of Nasdaq 100 components trading above their 50-day average. For traders expecting a potential pullback, buying weekly puts on the QQQ would allow for a defined-risk strategy to profit from a decline. The positive response to Fed Chair Powell’s Jackson Hole speech last week highlighted our sensitivity to monetary policy. However, with the July 2025 PCE inflation rate still at 2.8%, we shouldn’t be too complacent. This ongoing inflation makes upcoming economic data a likely trigger for significant market moves. Thus, long straddles on volatile tech stocks like Nvidia could be an appealing strategy around future data releases.

Market Strategies

This scenario of new highs with low volatility reminds us of the market conditions in late 2021, just before the aggressive rate hikes of 2022. Given this context, a calendar spread on the SPY—selling a front-week option while buying a longer-dated one—may position us well. This strategy would take advantage of the current market’s sideways movement while positioning for a potential rise in volatility as autumn approaches. Create your live VT Markets account and start trading now.

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