Fed Signals Possible Rate Cut
For the week, the Nasdaq was down 0.6% while the S&P was up 0.3%. The Dow rallied 1.5% and the Russell soared 3%. Year-to-date, the Nasdaq has surged 11.3% and the S&P has jumped 10%. The Dow is higher by 7.3% and the Russell has now gained 6%, for 2025.
The Dow and the Russell’s relative strength index (RSI) levels closed at 67 on Friday with 70 being overbought territory. We often talk about extended periods of overbought conditions with this summer being no exception. The Nasdaq’s RSI is at 59 and the S&P’s closed at 62 on Friday.
While volatility and RSI levels are relatively tame again, it is important to remember September and October are typically volatile months. If inflation does move higher in the coming months and economic data starts to weaken, the bears will be looking for an opportunity to strike.
The stock market rallied sharply on Friday after Fed Chairman Powell signaled at a possible rate cut next month. He said the Fed remains on alert for higher inflation trends in the months ahead, but also recognizes that the labor market has the potential to deteriorate quickly given recent signs of softening.
The Nasdaq traded up to 21,545 while ending at 21,496 (+1.9%). Key resistance at 21,500 held. Support is at 21,000.
The S&P 500 settled at 6,466 (+1.5%) with the intraday peak at 6,478. Undefined resistance at 6,500 held. Support is at 6,400.
The Dow tagged a record high of 45,747 before closing at 45,631 (+1.9%). Undefined resistance at 45,500 was cleared and held. New support is at 45,000.
Earnings and Economic News
Before the open: Pinduoduo (PDD), StealthGas (GASS)
After the close: Semtech (SMTC)
Economic News
New Home Sales – 10:00am
Technical Outlook and Market Thoughts
For the week, the Nasdaq was down 0.6% while the S&P was up 0.3%. The Dow rallied 1.5% and the Russell soared 3%. Year-to-date, the Nasdaq has surged 11.3% and the S&P has jumped 10%. The Dow is higher by 7.3% and the Russell has now gained 6%, for 2025.
We expected some volatility last week and we specifically have been talking about the small-caps and the blue-chips outperforming the S&P and the Nasdaq if higher highs came back into play. With the VIX holding key resistance ahead of the Fed news, we focused on the action in the Russell and the Dow on Friday and they didn’t disappoint.
The Russell 2000 held its uptrend line off the August 1st low with strength into Thursday’s close that cleared 2,275. This was a slight clue Friday could be bullish with the close at 2,361 giving the index a gain of 3.9%. The high hit 2,366 with key resistance at 2,375 holding. Continued closes above this level should get all-time highs from last November north of 2,400-2,450 in focus. Our 2025 target for the index from February is at 2,500.
Fresh support is at 2,300-2,275. There is wiggle room down to 2,250 on a drop below the latter. A move below 2,225, the 50-day moving average, and out of the current uptrend channel would suggest a near-term top. The index had been rangebound between 2,175-2,275 since late June until mid-August.
The Dow minted a new record high of 45,747 and we mentioned the possibility of a triple-top breakout, or breakdown, last week. Undefined and lower resistance at 45,750-46,000 held. There is strength up to 47,500-50,000 by yearend with the latter representing our February 23rd price target we predicted for the index.
New support is at 45,000 followed by 44,750-44,500. A drop back below 44,000 and the 50-day moving average would imply a near-term peak. The index had been rangebound between 43,250-45,000 since late June efore Friday’s renewed breakout.
The Nasdaq reached a high of 21,545 on Friday with key resistance at 21,500 holding. Continued closes back above this level gets our January 22nd, 2025 price target at 22,000 in focus. We recently upped this target to 23,000-23,250 if 22,000 is cleared and held.
Key support is at 21,000 with last Wednesday’s low at 20,905. Backup help is at 20,750 and the 50-day moving average. A move below 20,500 would be a slightly bearish development.
The S&P 500 came within three points of a new record high after trading up to 6,478. Our late February upper end price target at 6,500 for the index remains in play. We said earlier this month that closes above this level would be bullish for ongoing upside to 6,700-6,750.
Key support is at 6,350 with a drop below this level getting 6,300-6,250 back in the mix. The index has been rangebound between 6,200-6,500 since July 1st with closes above the latter, or below the former, being a good signal for the next major trend.
The Volatility Index (VIX) held 17.50 on Wednesday and Thursday with the 50-day moving average getting stretched. We predicted the index could test this level ahead of the Fed news but Friday’s lower high on the open was a good indication the Fed’s comments would be positive. Going forward, closes above 17.50 and then 20 on the VIX would be warning signs to lighten up on bullish positions.
Friday’s close back below 15 was a renewed bullish signal for the market with the low at 14.21. After predicting weakness down to 15-14.50 during earnings season we said there is still a chance 13.50-12.75 comes into play on closes below 14.50-14. Friday’s close was at 14.21.
The Dow and the Russell’s relative strength index (RSI) levels closed at 67 on Friday with 70 being overbought territory. We often talk about extended periods of overbought conditions with this summer being no exception. The Nasdaq’s RSI is at 59 and the S&P’s closed at 62 on Friday.
While volatility and RSI levels are relatively tame again, it is important to remember September and October are typically volatile months. If inflation does move higher in the coming months and economic data starts to weaken, the bears will be looking for an opportunity to strike. In the meantime, we will continue to stay bullish until key support levels start to crack.
Momentum Options Alerts Update for 8/21/2025
Closed Momentum Options Trades for 2025: 37-12 (76%, 14 triple-digit winners) / 2024: 77-17 (82%, 38 triple-digit winners). Please remember, all “Exit Targets” and “Stop Targets” are targets. You should not have any “Stops” entered to close any alerts or “Limit Orders” in your brokerage account unless we list one. We will send out an “Alert” or “New Alert” if we want you to close a position or if a new position comes out. Otherwise, follow instructions at all times in the updates on Monday’s and Thursday’s along with Text Alerts and videos throughout the week.
CleanSpark (CLSK, $9.82, up $0.49)
Option: CLSK October 12 calls
Expiration Date: October 17th
Entry Option Price: $0.42 (8/22/2025)
Current Option Price: $0.42
Exit Target: $0.85
Return: 0%
Stop Target: None
Action: Friday’s high tapped $9.93 with prior and lower resistance at $9.75-$10 getting recovered. A close above $10.25 and the 200-day moving average would be a renewed bullish signal. Support is at $9-$8.75.
Pfizer (PFE, $25.88, up $0.14)
Option: PFE October 27 calls
Expiration Date: October 17th
Entry Option Price: $0.28 (8/15/2025)
Current Option Price: $0.40
Exit Target: $0.60
Return: 43%
Stop Target: 30 cents (Stop Limit)
Action: Set an initial Stop Limit at 30 cents.
Shares tagged a high of $26.11 with key resistance at $26 getting topped but holding. Rising support is at $25.75-$25.50.
The 50-day moving average also remains on track to form a golden cross and typically suggests higher highs. We think shares can trade up to $27.50-$28 by mid-October. The latter gets the calls to $1 in-the-money. The current dividend yield is at 6.8% and could attract value investors in an ongoing volatile market.
Ford Motor (F, $11.74, up $0.41)
Option: F October 12 calls
Expiration Date: October 17th
Entry Option Price: $0.30 (8/13/2025)
Current Option Price: $0.38
Exit Target: $0.60
Return: 27%
Stop Target: None
Action: Shares tagged a fresh monthly peak of $11.77 with lower resistance at $11.75-$12 getting cleared but holding by a penny. A move above the latter could lead to a breakout towards $13-$13.25. Support is at $11.25-$11.
We wanted to go longer out with this Alert as we feel a run to at least $12-$12.50 could be in store for the stock. If F is at $12.60, technically, by October 17th, these calls will be 60 cents in-the-money. If shares are at $13, these calls will be $1 in-the-money, for a 233% gain.
Cleveland-Cliffs (CLF, $10.44, up $0.37)
Option: CLF September 11 calls
Expiration Date: September 19th
Entry Option Price: $0.50 (8/13/2025)
Current Option Price: $0.50
Exit Target: $1.00
Return: 0%
Stop Target: None
Action: Lower resistance at $10.50-$10.75 was topped but held on the pop to $10.53. A move above $11 could lead to a quick trip to $12. Support is at $10-$9.75.
The 50-day moving average remains on track to clear the 200-day moving average to form a golden cross. We have a mid-September target of $12-$12.25 for the stock. This would get the calls to $1 or better, if reached.
Bank of America (BAC, $49.48, up $1.22)
Option: BAC September 49 calls
Expiration Date: September 19th
Entry Option Price: $0.37 (8/11/2025)
Current Option Price: $1.40
Exit Target: $1.25, raise to $2 (closed half at $0.75 on 8/18)
Return: 191%
Stop Target: 75 cents, raise to $1.05 (Stop Limit)
Action: Raise the Exit Target from $1.25 to $2. Raise the Stop Limit to $1.05 on the other half.
Lower resistance from January 2022 at $49.50-$50 was cleared but held with the fresh 52-week high hitting $49.66. Support is at $49-$48.50.
Our 2025 Price Target for the stock is at $55. We are still looking at possibly adding a “piggy-back” Alert so stay locked-and-loaded.
ProShares Bitcoin ETF (BITO, $21.10, up $0.81)
Option: BITO September 25 calls
Expiration Date: September 19th
Entry Option Price: $0.37 (7/17/2025)
Current Option Price: $0.06
Exit Target: $0.75
Return: -84%
Stop Target: None
Action: Resistance at $20.50-$20.75 was cleared and held with the high reaching $20.71. Support at $20.25-$20.