SP500 LDN TRADING UPDATE 1/8/25
WEEKLY & DAILY LEVELS
***QUOTING ES1! CASH US500 EQUIVALENT LEVELS SUBTRACT ~25 POINTS***
WEEKLY BULL BEAR ZONE 6380/90
WEEKLY RANGE RES 6515 SUP 6335
DAILY BULL BEAR ZONE 6350/60
DAILY RANGE RES 6427 SUP 6310
2 SIGMA RES 6486 SUP 6251
GAP LEVELS 6147/6077/6018/5843/5741/5710
VIX DAILY BULL BEAR ZONE 17.25
DAILY MARKET CONDITION -TBD
TRADES & TARGETS
SHORT ON TEST/REJECT DAILY BULL BEAR ZONE TARGET 6251
LONG ON TEST/REJECT DAILY RANGE SUP TARGET DAILY BULL BEAR ZONE
(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE AT OR BELOW THESE LEVELS)
GOLDMAN SACHS TRADING DESK VIEWS
U.S. EQUITIES UPDATE: ROTATIONAL MOVEMENT
FICC and Equities | 31 July 2025 |
Market Performance:
- S&P 500: -37bps, closing at 6,339 with a $3.1b MOC to BUY.
- NASDAQ (NDX): -55bps at 23,218.
- Russell 2000 (R2K): -95bps at 2,220.
- Dow Jones: -74bps at 44,130.
Trading Volume:
19.9 billion shares traded across all U.S. equity exchanges, exceeding the YTD daily average of 16.8 billion shares.
Volatility and Other Metrics:
- VIX: +801bps at 16.72.
- Crude Oil: +106bps at $69.26.
- U.S. 10-Year Yield: Unchanged at 4.37%.
- Gold: -13bps at $3,348.
- DXY (Dollar Index): +22bps at 100.03.
- Bitcoin: Unchanged at $116,572.
Market Sentiment:
The tape remains soft, reflecting ongoing sector rotations and funding dynamics. A significant divergence persists between AI-related stocks and broader sectors. Notable lack of follow-through post META/MSFT earnings prints. Hedge funds drove most of the buying activity in these names, while long-only investors (L/Os) were net sellers across the megacap complex. NVDA saw a 3% reversal from early highs, weighing on broader Semi/AI sentiment. Month-end technical factors, such as pension supply, also influenced index-level price action.
Key Insights:
- Financials (FIG) surged +250%, providing a tailwind for a busy ECM calendar heading into late summer and post-Labor Day.
- AMZN fell 2% on the day despite a strong 3Q guide ($20.5bn on OI). AWS growth of +17.5% y/y with a 33% margin sparked debates over its competitiveness relative to Azure and GCP.
- AAPL rose 3% following a topline beat, with ~10% upside in iPhone revenues. Questions remain about sustainability and guidance for the September quarter (revenues & gross margins).
Trading Desk Activity:
Activity levels on the floor were rated 7/10 overall. The desk finished -12% for sale versus a 20-day average of +78bps. Long-only investors were net sellers, offloading $9b, with heavy supply concentrated in tech, financials, discretionary, and healthcare sectors. Hedge funds were slight net sellers, focusing on macro products and healthcare (short > long), while showing demand in tech.
Economic Outlook:
Ahead of tomorrow's Non-Farm Payrolls (NFP):
- Headline estimate: +100k for July (vs consensus +105k).
- Average Hourly Earnings (AHE): +0.25% MoM, reflecting negative calendar effects.
- Unemployment rate: Expected to rebound to 4.2%, signaling labor market slack as indicated by continuing jobless claims.
Derivatives Update:
Flows were mixed as the market oscillated following initial megacap tech earnings.
- Morning: Clients hedged with VIX upside and SPX downside protection near market highs.
- Afternoon: As markets sold off, clients re-engaged with upside trades via QQQ calls and call spreads.
Despite a near-100-point drop from the highs, stress in the volatility market remains limited to the front curve. August vol held firm and even went bid, while September and October gained modestly. The desk noted increased activity in light exotic options, particularly lookback puts, which offer attractive premiums compared to vanilla puts and reduce timing risk in a grinding market.
Focus now shifts to tomorrow’s NFP report. The Friday straddle closed at ~0.79%.
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!