S&P 500, Nasdaq 100 Technicals: Breakouts Stall as Traders Look Towards Powell Speech
S&P 500, Nasdaq 100 Technicals: Breakouts Stall as Traders Look Towards Powell Speech
Fig. 1: Year-to-date price percent change chart for /ES, /NQ, /RTY, and /YM
Article Key Takeaways:
Both the S&P 500 (/ESU5) and Nasdaq 100 (/NQU5) hit all-time highs last week as spot VIX dropped below 15.
The Russell 2000 (/RTYU5), like its major counterparts, is still holding in bullish breakout territory.
A contraction in Fed rate cut odds for September is an indication that traders are lowering their hopes for a dovish set of remarks from Fed Chair Jerome Powell on Friday.
Market Update: S&P 500 up +1.42% month-to-date
August is typically a weaker month for stocks, with the S&P 500 averaging a gain of just +0.07% over the past decade. Similarly, the past 10 years have seen August produce the most consistent rise in volatility, with the spot VIX moving up seven times during that span. August 2025 couldn’t be more different halfway through the month: the S&P 500 is up nearly +1.5%, while the spot VIX is off by more than -1.5 points (in dreaded percentage terms, that’s over -9%).
As stocks have churned up near the highs, it must be noted that a decline in Fed rate cut odds for September may be the culprit. Consider the fact that as the odds of a September cut peaked at 105.7% on Thursday last week, the U.S. 10-year yield hit a low of 4.204%. Since then, cut odds have declined to 83%, and the 10-year yield has increased to 4.343%. During this time, the S&P 500’s (/ESU5) 5-day correlation with the 10-year yield has moved from -0.1 to -0.71. Higher yields are proving an albatross for equity markets.
/ES S&P 500 Price Technical Analysis: Daily Chart (May to August 2025)
The S&P 500 (/ESU5) remains in the confines of the uptrend that has defined price action since mid-May. The recent breakout above the July high at 6468.50 is showing signs of deteriorating momentum, with /ESU5 dipping below the former high as well as the daily 5-EMA (one-week exponential moving average). MACD is on the verge of a bearish crossover while above its signal line, and Slow Stochastics may drop from overbought territory. A return to the daily 21-EMA (one-month exponential moving average) this week would be well-within the realm of expectations: /ESU5 is pricing +/-65-points by the Friday close.
| Strategy: (4DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 6370 p Short 6380 p Short 6550 c Long 6660 c | 62% | +125 | -375 |
| Short Strangle | Short 6380 p Short 6550 c | 68% | +700 | x |
| Short Put Vertical | Long 6370 p Short 6380 p | 81% | +72.50 | -427.50 |
/NQ Nasdaq 100 Price Technical Analysis: Daily Chart (May to August 2025)
Like /ESU5, the Nasdaq 100 (/NQU5) is finding trouble holding above the highs from July, not exactly how one envisions ‘resistance becoming support’ following a breakout. Similar to /ESU5, /NQU5 likewise has a deteriorating momentum profile (EMA cloud losing positive rate of change; MACD and Slow Stochastics turning lower) that suggests the path of least resistance may be lower before an ultimate turn to the upside. Broader picture: /NQU5 will be aiming for 22,800 or 25,000 over the coming weeks.
| Strategy: (4DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 23350 p Short 23375 p Short 24150 c Long 24175 c | 60% | +135 | -365 |
| Short Strangle | Short 23375 p Short 24150 c | 67% | +1300 | x |
| Short Put Vertical | Long 23350 p Short 23375 p | 81% | +68 | -432 |
/RTY Russell 2000 Price Technical Analysis: Daily Chart (May to August 2025)
The Russell 2000 (/RTYU5) offers a more compelling technical story for the bulls now, despite last week’s setback. Unlike its peers, /RTYU5 is holding former resistance (July swing highs) as support, and lower-term time frames (1-hour or 4-hour) show a potential bullish falling wedge forming. As it were, /RTYU5 outperformance relative to its peers may be a sign of healthy rotation that curbs bears’ opportunities in either /ESU5 or /NQU5. As long as /RTYU5 holds above 2300, bulls are in control.
| Strategy: (4DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 2230 p Short 2250 p Short 2350 c Long 2370 c | 65% | +275 | -725 |
| Short Strangle | Short 2250 p Short 2350 c | 70% | +565 | x |
| Short Put Vertical | Long 2230 p Short 2250 p | 83% | +127.50 | -872.50 |
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
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