on August 22, 2025

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Our View

Remember the old saying, “Thank God it’s Friday?” Well, before you start thanking, you may want to hear what Federal Reserve Chair Powell has to say at 10:00 a.m. EDT. It was only a few weeks ago that Powell said the “job market is solid” — a pushback to Trump’s demand that he lower rates. Just a few days later, the Labor Department reported much weaker job growth in July, along with some very big downward revisions and a jump in inflation.

Now Powell is at the most critical point in his tenure: the annual Jackson Hole, Wyoming economic forum — the speech that will be heard around the world.

Long before this speech, all the way back to October and November of 2024, I questioned lowering rates when inflation was rising, and I question it now. No matter what Powell says today, he will get another month of inflation data and the August jobs report before the September 1/4-point rate cut, which some think is a coin toss now.

The ES made a high of 6419.00 on Globex and 6412.25 after the 9:30 open. It then sold off down to 6370.25 before chopping its way back up to 6397.50 at 3:09 p.m., and pulled back to 6383.00 after the 3:50 imbalance showed $647 million to buy. It traded 6388.25 on the 4:00 cash close, down 0.40%, and settled at 6391.00, down 22.5 points or -0.36% on the 5:00 futures close.

The NQ settled at 23,217.5, down 107.25 points or 0.46% on the day.

In the end, it was another day of failed rallies. In terms of the ES’s and NQ’s overall tone, they were both down over .4% on the day.

In terms of the ES’s overall trade, volume was low at 981k contracts traded during the day session.

Bitcoin prices dropped to around $112,000. The PMI data also boosted the dollar. The greenback strengthened against the yen and the Swiss franc, and the yield on the 10-year note rose to 4.33%.

Is Powell going to be naughty or nice? That is the question!

Here’s what we know: Powell is feeling the political pinch of lower rates despite rising inflation and Treasury yields. I believe he is going to continue to push a September rate cut while saying future rate cuts will be data-dependent — exactly what the markets and Trump do not want to hear.

The ES and NQ have been selling off for a full week as the public lowers its rate-cut expectations during a seasonally weak period for stocks. Historical reactions to Powell’s Jackson Hole speeches indicate a jump in volatility, with markets often experiencing “bumpy rides” post-speech.

Our Lean

A fellow trader told me to look at next Monday’s CME S&P 6250 put — he paid $2.00 for it and went on to say there’s a very high level of open interest in the calls vs. downside puts, and that we could go back to the August 6240 low. That may not be a bad idea, but I think I’m going to wait until 10:00 to make a decision.

According to Grok, if Powell is dovish and signals openness to a September rate cut, the markets could rally, and a dovish tone could lead to a 2% to 3% move. If Powell is hawkish, starts talking inflation due to tariff risks, or maintains a cautious, data-dependent stance without committing to future rate cuts, the S&P could see a 3% to 5% drop.

I don’t know about that, but I do think there will be fireworks.

Here are some pages from the BofA on Jackson Hole

Jackson Hole BOA Comments Page 1

Guest Posts:

SpotGamma Founders Note:

Get instant access to our partners’ real-time market data and insights not available anywhere else. Here is last night’s Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. – MrTopStep

Founder’s Note:

Futures are +10 bps ahead of Jackson Hole at 10AM ET.

The levels for today seem quite clear, and are reinforced by a 0DTE Condor (interesting day to bet on a tight market range).

Positive Powell likely leads to a test of 6,425 – 6,450. In that zone is positive gamma, which should offer some resistance. Ultimately 6,500 is the major upside strike, which is the major level into Wed NVDA earnings. We like call spreads and/or call flies around the 6,450 – 6,500 area into Tuesday of next week as a short term play (pre NVDA ER). A close >6,400 shifts the scales to favor this move.

We also note that ~1-month single stock tech calls scan as cheap, such as SMH & XLK. These give you Powell + NVDA upside, and could pay off nicely if both events are positive. Both events being positive ultimately lead to the “zombie” market, in which I believe we just have a very grinding low vol market through Sep, anchored by the big JPM 6,505 strike.

Downside is simply this: SPX is quite vulnerable to downside if the SPX is <6,400. First support is 6,300, which is the bottom leg of the 0DTE Condor. If Powell really goes hard, we see negative gamma all the way down to 6,150 – a level which we would mark for more of a Monday possibility vs today. We yesterday saw put flies which pay nicely in these tail-ish downside moves for quite cheap.

The other thing to watch here is vol.

The market is pricing today as a binary event. You can see this by how backwardated the SPX term structure is, almost like an “L” shape. This gives us the idea that the market is hedged for disappointment today, but not really ready for an extended period of struggle. There is plenty of room for longer dated vols ( >1 week out) to ratchet up, which would add to the downside jump. On this point the CME FedWatch has odds of a Sep cut at 69% now, vs 90% last week. Polymarket is only 57%…

On this note, we will be watching vols closely post-Powell because there is this other scenario in which the initial reaction to Powell is a fake out in price, and the tell will be in these >2 week out IV’s. If we rally but vols are flat to higher, that is a signal that the initial move may be false.

Get instant access to our partners real-time market data and insights not available anywhere else. Here is last night Founder’s note getting you ready for today’s market and explaining the constraints in yesterday’s market. – MrTopStep

MiM and Daily Recap

The ES futures market traced a choppy but directional sequence across both the overnight Globex and regular sessions on Thursday.

Overnight trade opened at 6414.25 and initially pressed lower, carving out a swing low of 6401.00 at 21:10. Buyers stepped in for a brief recovery, lifting the contract to 6419.00 at 22:00, marking the high of the Globex session. The rebound faltered, and by 01:40 the market had slid back to 6406.50 before a secondary recovery attempt to 6412.75 at 04:10. The tone shifted decidedly weaker into the morning, with a drop to 6395.00 at 06:20 and then a decisive flush to the overnight low of 6383.75 at 09:03, just ahead of the New York open.

With a bounce from the 9:00 low, the regular session began at 6395.25, and was quickly under pressure as sellers pushed lower to 6375.50 at 09:45. This set the stage for a sharp rebound, which carried the market to 6412.25 by 10:25, the regular-session high and a 36.75-point surge from the morning low. A midday fade followed, with lows established at 6382.00 by 12:10 before another push to 6392.75 at 12:50. Momentum proved unsustainable, as another low was etched at 6370.25 by 13:25, nearly surpassing the earlier trough and setting the low of the day. Afternoon trade stabilized, with the ES making modest higher lows and marking a final bounce to 6397.50 at 15:05 before fading into the close at 6388.25.

From a broader perspective, the Globex session finished at 6395.25, down 19.00 points or 0.30%. The regular session extended the slide, ending at 6388.25, a 7.00-point loss on the day’s open. Compared with the previous cash close, ES settled 25.50 points lower, a 0.40% decline. Volume reached 981,858 contracts during the regular session, with 1,156,403 traded across the full day.

Market tone was defensive, with early selling pressure establishing control and limiting the upside despite multiple recovery attempts. The 6412.25 high was quickly rejected, underscoring seller dominance. The repeated tests near 6370 highlighted areas of buyer support, but the inability to sustain rallies above 6400 kept momentum capped.

The Market-on-Close imbalance data leaned modestly to the buy side, with $746M net to buy at the 3:50 PM mark and 54.4% of symbols skewed higher. However, this was well below the 66% threshold that signals a notable imbalance, and the effect on price action was limited, with ES unable to extend meaningfully into the close.

Overall, Thursday’s action reflected a cautious, bearish-leaning tone. Sellers maintained the upper hand, keeping ES below key resistance zones, while buyers were relegated to defending support levels. The final settlement at 6390.75 leaves the contract vulnerable to further downside if support at 6370 fails, while recovery attempts must clear 6415–6420 to shift sentiment in the bulls’ favor.

How to read the MIM

ES Levels

The bull/bear line for the ES is at 6390.75. This is the key level that will guide sentiment today. Trading above this level signals bullish momentum, while remaining below keeps the market under pressure.

Currently, ES is trading around 6403.75, just above the bull/bear line. Holding above 6390.75 could attract buyers, with immediate resistance at 6414.25 and 6419.00. A stronger move higher would target 6426.50, with the upper range target sitting at 6460.25.

On the downside, if ES slips back below 6390.75, the first level of support comes at 6388.25, followed by 6370.25. A break under this support could open the door to deeper downside toward 6355.00, the lower range target and then next down at 6321.25.

Overall, the market is trying to stabilize after recent weakness. The key battle today will be around the 6390.75 level. Sustained strength above favors a push back into resistance zones, while rejection below leaves the path open for another leg lower.

NQ Levels

The bull/bear line for the NQ is at 23,229.50. This is the key pivot that must be reclaimed and held for bullish momentum to develop. Trading above this level shifts sentiment to bullish, while remaining below keeps pressure on the downside.

Currently, NQ is trading around 23,266.50, slightly above the bull/bear line. If buyers can maintain this strength, the next upside targets are 23,369.25, followed by 23,446.25, the upper range target. A sustained push higher opens the door to the reach level of 23,650.50.

On the downside, support comes in first at 23,119. A break below here would put pressure on the lower range target at 23,012.75. If that level fails to hold, the next key support is down at 22,808.50.

Overall, the market is trying to stabilize just above the bull/bear line. Holding 23,229.50 is critical for the bulls to build a stronger recovery. A failure back below this level would reassert bearish control and point toward testing lower supports. Reminder, we are still in a long-term bullish trend.

Technical Edge

Fair Values for August 22, 2025

SP: 16.72
NQ: 71.13
Dow: 69.25

Daily Breadth Data 📊

For Thursday, August 21, 2025

• NYSE Breadth: 49% Upside Volume
• Nasdaq Breadth: 52% Upside Volume
• Total Breadth: 52% Upside Volume
• NYSE Advance/Decline: 43% Advance
• Nasdaq Advance/Decline: 46% Advance
• Total Advance/Decline: 45% Advance
• NYSE New Highs/New Lows: 47 / 24
• Nasdaq New Highs/New Lows: 84 / 117
• NYSE TRIN: 0.71
• Nasdaq TRIN: 0.76

Weekly Breadth Data 📈

Week Ending Friday, August 15, 2025

• NYSE Breadth: 55% Upside Volume
• Nasdaq Breadth: 63% Upside Volume
• Total Breadth: 60% Upside Volume
• NYSE Advance/Decline: 65% Advance
• Nasdaq Advance/Decline: 65% Advance
• Total Advance/Decline: 65% Advance
• NYSE New Highs/New Lows: 267 / 94
• Nasdaq New Highs/New Lows: 571 / 303
• NYSE TRIN: 1.44
• Nasdaq TRIN: 1.09

Calendars

Economic Calendar Today

This Week’s High Importance

Earnings:

Full Calendars

Trading Room News:

Polaris Trading Group Summary – Thursday, August 21, 2025

Thursday was a quiet, consolidation-heavy session ahead of Friday’s expected JPOW speech at Jackson Hole. Although the market lacked strong directional momentum, it provided a valuable environment for reinforcing structure, trade discipline, and mindset work. Traders stayed patient, respected the process, and used the day to refine their approach.

Pre-Market Plan and Structure

David outlined the key Line in the Sand at 6415
- Bullish scenario: hold above 6415 to target 6430–6435
- Bearish scenario: break below 6415 to target 6400–6395
Overnight low tested 6395, staying within the defined edge parameters
PTG Charts streaming by 7:26 AM
Manny highlighted –GEX positioning concentrated between SPX 6400 and ES 6420, offering potential bounce zones at 6385–6380

Morning Session Insights

Structural momentum continued to favor selling rallies until prior daily highs could be reclaimed
Ram inquired about entry timing; David confirmed trades can occur any time valid structure is present
Economic data (PMI) came in stronger than expected, adding to short-term volatility
Open remained within OR, reinforcing the benefit of staying out of early whipsaw action
Zero Gamma identified at 6377, with POLR confirmed as selling
David reinforced: “Market never sleeps,” but patience is key in low-conviction opens

Trader Mindset and Development

Manny and Roy emphasized managing impulse trades using structured frameworks like the OODA loop
“Trade what you know, verify what you see” became a theme in staying aligned with structure
David discussed the importance of respecting the 89 CCI as a filter; preference is to stay aligned rather than trade against it
Manny noted that vocalizing decision logic functions like reinforcement and affirmation
Traders identified the importance of rules to avoid habitual fading behavior

Trade Setup and Observations

Afternoon RSPR long noted by Roy off session lows, moved 15+ points quickly
Highlighted the importance of not dwelling on earlier trades and staying focused on the next valid setup
Roy reflected on adjusting risk rules around VA highs and lows
Emphasis on observing structure, waiting for clean signals, and not forcing trades

Key Lessons and Quotes

“Focus is always to be on the next valid trade” – PTGDavid
“POLR” (Path of Least Resistance) remains a guiding principle for trade direction
“Where is the puck going?” – Roy’s analogy earned the Kewpie Award from David, encouraging forward-looking trade logic
Recognition that many traders (especially INTJ types) operate best through logical, strategic processes rather than impulsive action

End of Day Notes

David announced lunch break at noon; afternoon remained in a holding pattern
MOC Buy Imbalance was $647M, indicating passive end-of-day activity
Market remained neutral throughout, lacking conviction ahead of JPOW’s Friday appearance

Summary Takeaways

Best trade setup: Afternoon RSPR long from new session low
Biggest win: Trader discipline and process reinforcement during a consolidation day
Core lesson: Respect alignment with structure and focus on forward setups, not past trades

A quieter trading day, but highly productive for mental and strategic refinement within the PTG room.

DTG Room Preview – Friday, August 22, 2025

Fed Focus:
- Markets await Powell’s 10:00am ET Jackson Hole speech, likely his last.
- Potential policy shift: dropping average inflation targeting (2%) in favor of a more flexible approach.
- Rate cut outlook mixed:
  - Fed Governors Bowman and Waller advocate for cuts.
  - Cleveland’s Hammack opposes, saying data doesn’t justify a cut “if the meeting was tomorrow.”
- Market expectations: 75% chance of 25bps cut in September (per FedWatch).
- Political pressure intensifying from President Trump and Treasury Sec. Bessent.
Fed Board Drama:
- DOJ urges Powell to fire Fed Governor Lisa Cook (under investigation for dual primary-residence mortgages).
- Her removal could open a seat for a Trump appointee.
Corporate News:
- Alphabet & Meta: $10B+ 6-year cloud deal; Meta to use Google Cloud for AI infra and offload $2B in data center assets.
- Nvidia (NVDA): Stock down 1.3% premarket; halted H20 chip production (sold to China) amid Chinese regulatory pushback and U.S. scrutiny.
- China: Promoting Huawei chips as an alternative.
- Earnings: BJ’s Wholesale (BJ) reports premarket.
Markets & Levels:
- Volatility steady; ES 5-day average range: 51.5 pts.
- No whale bias; light overnight large-trader volume.
- Technicals:
  - Support: 6398/03, 6307/12, 5801/06
  - Resistance: 6640/45, 6662/67
  - Overnight: ES bounced off 6398/6403 resistance.
  - Powell speech expected to override technical patterns.

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Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!!