on August 15, 2025

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Our View

Well, well… the Fed got skunked yesterday when the Producer Price Index jumped higher than expected, as core inflation hit a three-year high, throwing cold water all over Wednesday’s rate cut talk. But the ES didn’t stay down for long.

The ES hit a high of 6496.00 and settled at 6489.75, just 12.25 points off its all-time high. Now, the probability of a 0.50% basis point rate cut has fallen to 40%, but there is still a 93% chance of a -0.25% rate cut. San Francisco Fed President Mary Daly said she does not support a -0.50% basis point cut at the September meeting, saying that it “would send off an urgency signal that I don’t feel about the strength of the labor market.” She said she still supports two rate cuts this year, but that three cuts could be warranted “if we saw more signs that the labor market was more precarious.”

Meanwhile, St. Louis Fed President Alberto Musalem said that a -50 bp rate cut at the September meeting would be “unsupported by the current state of the economy and the outlook for the economy.”

I don’t know what to say other than the Fed is on a slippery path. A mistake could really erode confidence in the U.S. and push the already weak bonds and dollar lower. This is something I’ve been talking about since last September, when the Fed lowered by -0.50% bp, followed by November’s -0.25% reduction and December’s -0.25% rate cut that never should have happened. If Trump had it his way, he would lower it to 1%.

In the end, every sell-off is the beginning of a larger sell-off, the highs are in, watch out below—NOT! In terms of the ES and NQ’s overall tone, we were looking for the PitBull’s Thursday low before the weirdly dated Friday options expiration—and that’s what we got.

In terms of the ES’s overall trade, volume was low at 1.14M contracts.

Our Lean

I know the stats aren’t great for today’s (monthly) options expiration, but if you look at yesterday’s ES chart, it did a lot of back-and-filling off the low and just traded up to ES 6500 on Globex, up 10.25 points.

I think the big show today is the Trump/Putin meeting.

Our lean: We can’t rule out selling a rip, but this is still a buy-the-dips/pullbacks market. If the ES can hold above 6504, I think it could see 6528 early. After that, I want to get a look at the price action, as there could be some late selling.

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 flat ahead into OPEX. Trump & Putin meet today.

Today’s OPEX is pretty average in size for a monthly expiration. There is clearly a lot more call value relative to puts expiring today, which is not surprising given equities are at all time highs. We generally look for mean reversion out of expiration, meaning we have a very low IV, call rich environment and so we default to looking for a brief correction into next week as the positions that support the low IV/ATH environment reset.

For today, support is at the 6,470 then 6,450 level. Resistance remains at 6,500. We think its reasonable to get a bit of price contraction post OPEX and into next Wednesdays VIX expiration, with 6,400 likely acting as strong support into Jackson Hole.

Its been a strange 24 hours after PPI comes in hot with the options market priced for perfection (see y’day note). The initial reaction to that PPI print was a bit violent, but ultimately led to an unchanged market – although we’d offer that some pretty large 0DTE flows were active including Captain Condor & the QYLD roll. Adding to that is todays OPEX, which can supply volatility reducing flows.

Hindsights aside, the vol signals are offering a bit of a murky picture.

Here is fixed strike vol vs Wednesday night, pre-PPI. You can clearly see upside strike IV has declined (pink box), suggesting traders have sold calls during yesterdays session. This syncs with the idea that 6,500 is likely going to put up a fight in terms of resistance, and that comes as vanna-flows have to be de minimus by definition: short dated vols cant really go any lower. Longer dated vols are unlikely to decline much more due to Jackson Hole and NVDA.

Meanwhile, the downside has a very light bid, suggesting traders did some put buying – or at least (very modestly) repriced downside.

To be very clear the downside IV’s for pre-Jackson Hole are still at ~11-12%, and they are 13-14% 1-month out – that is hardly concerned.

Are these very light equity vols right or wrong? Post-PPI rate cut expectations that are essentially unchanged (via CME FedWatch) and the MOVE bond vol index just cratering. So vol is dead across nearly all major asset classes.

Ultimately right or wrong is not the question. The question, as we discussed yesterday, is “what’s the risk reward of being short options/vol at these levels?” The answer to that is “terrible”. That doesn’t mean we are pitching going all in on put options, it just means that there is a fragility under this surface, and so you must be ready to adjust accordingly. We’d also add that any downside pre-JHOLE would likely just be a “spasm” a la 7/31 and not a bonafide selloff, because traders are treating the pre-JHOLE period as particularly risk-free (Powell can’t hurt us until then).

We also have to respect both sides of the situation. We had been pitching this idea of the Zombie market if inflation readings were benign, then Powell would get a softball cut and markets would grind into Sep FOMC. MOVE and rate expectations don’t care about that PPI – and who are we to argue. Plus, imagine if Trump gets some kind of a legitimate peace deal out of his meeting today…well then that is another excuse to squeeze vols to 10% and go “full Zombie”. The good news about this “best case” scenario is that you can but 1-month 25 delta SPX calls for 10% IV…so its easy to hedge that scenario.

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 overnight Globex session opened at 6485.00, was quiet through the night, trading at 6488.00 by 4:30 AM, gaining 3.00 points from the open. The market then retraced to 6483.50 at 5:00 AM before rallying to a new high of 6489.00 at 5:30 AM. This momentum faded as prices dipped to 6484.50 at 6:20 AM and slipped further to 6483.50 at 6:50 AM. A fresh push higher carried ES to 6491.75 at 8:00 AM, marking the session high, but a sharp selloff ensued after the PPI release, sending prices down to 6453.25 by 8:35 AM, a 38.5 point loss or almost 0.6%. Globex closed at 6467.50, down 17.50 points or 0.27% from the prior settlement.

The regular cash session opened at 6467.50 and extended the overnight drop to 6453.25 at 8:35 AM, the day’s low, before staging a strong recovery. By 10:45 AM, ES reached 6495.25, up 42.00 points from the morning low. Sellers reemerged, pulling prices back to 6465.50 at 12:10 PM. A midday rally lifted the contract to 6490.25 at 1:35 PM, followed by a pullback to 6478.50 at 2:15 PM. Another advance brought prices to 6495.00 at 3:55 PM before easing to 6481.50 at 4:10 PM. The session settled at 6488.75, up 21.25 points or 0.33% from the open and just 0.25 points below the prior day’s close.

The cleanup session saw limited movement, opening at 6488.75, dipping to 6481.50, and closing at 6489.75, up 1.00 point on the hour.

Full-session volume reached 1,142,241 contracts, with 909,581 traded during regular hours.

Market tone was mixed, with early volatility giving way to intraday rebounds that held much of the gains into the close. The sharp Globex drop before the open defined the session’s low, but steady buying in the cash session suggested underlying resilience. However, the Market-on-Close (MOC) imbalance showed a slight lean toward sellers, with -54.5% in dollar flow and -53.8% in symbol imbalance, totaling -$368M at 3:51 PM. This weak sell-side skew failed to trigger a major late-day selloff, as prices held near the highs into settlement.

Overall, ES closed flat to the prior day’s settlement, reflecting a tug-of-war between overnight weakness and daytime recovery. The ability to absorb early selling and rally back suggests buyers remain active, but the MOC imbalance indicates caution heading into the next session.

How to read the MIM

The bull/bear line for the ES is at 6484.25. This is the critical pivot level for determining the day’s directional bias. A sustained move above this level favors bullish momentum, while trading below suggests sellers remain in control.

Currently, ES is trading around 6498.25, placing it above the bull/bear line. If buyers can maintain control, the next upside objectives are 6519.50, our upper range target for today, and then 6552.50. A breakout beyond 6552.50 could open the door to testing the 6563.50 zone.

On the downside, initial support is at 6496.00, followed by 6484.25. A break below 6484.25 could invite selling pressure toward 6449.00, our lower range target. Failure to hold 6449.00 could extend losses toward 6415.75.

Overall, the short-term tone leans bullish above 6484.25, but intraday reversals are possible if sellers regain control below this pivot.

The bull/bear line for the NQ is at 23,918.50. This is the critical level to watch for determining market bias. Holding above this level favors bullish setups, while sustained trading below it suggests bearish momentum.

Currently, NQ is trading around 23,905.25, just under the bull/bear line, indicating slight weakness in the pre-market. If price stays below 23,918.50, the next downside target is 23,753.25. A break below this support could extend losses toward 23,598.

On the upside, resistance is at 24,007.75, followed by the upper range target of 24,083.75. Regaining and holding above 23,918.50 would open the door for a move into these resistance levels, with potential to reach 24,239 on stronger momentum.

Overall, short-term sentiment is cautious below 23,918.50, but reclaiming it could quickly shift the advantage to the bulls.

Technical Edge

Fair Values for August 15, 2025

SP: 20.84
NQ: 88.72
Dow: 81.26

Daily Breadth Data 📊

For Thursday, August 14, 2025

• NYSE Breadth: 28% Upside Volume
• Nasdaq Breadth: 53% Upside Volume
• Total Breadth: 42% Upside Volume
• NYSE Advance/Decline: 27% Advance
• Nasdaq Advance/Decline: 33% Advance
• Total Advance/Decline: 29% Advance
• NYSE New Highs/New Lows: 79 / 17
• Nasdaq New Highs/New Lows: 158 / 93
• NYSE TRIN: 0.92
• Nasdaq TRIN: 0.43

Weekly Breadth Data 📈

Week Ending Friday, August 8, 2025

• NYSE Breadth: 55% Upside Volume
• Nasdaq Breadth: 60% Upside Volume
• Total Breadth: 58% Upside Volume
• NYSE Advance/Decline: 67% Advance
• Nasdaq Advance/Decline: 58% Advance
• Total Advance/Decline: 66% Advance
• NYSE New Highs/New Lows: 233 / 130
• Nasdaq New Highs/New Lows: 385 / 324
• NYSE TRIN: 1.60
• Nasdaq TRIN: 0.92

Calendars

Economic Calendar Today

This Week’s High Importance

Earnings:

Full Calendars

Trading Room News:

Polaris Trading Group Summary – Thursday, August 14, 2025

The day opened with a hot Producer Price Index (PPI) report, surprising to the upside and triggering immediate market reaction.
- PPI MoM: 0.9% vs 0.2% expected
- Core PPI MoM: 0.9% vs 0.2% expected
- Traders quickly repriced expectations for a September rate cut, pulling back on dovish bets.
David noted early that the inflation pendulum was swinging back toward the hawkish side. This gave the session a bearish tone early on, with price hitting downside levels and bouncing off initial support.
A major gamma strike was identified at the session lows, suggesting the options market would have strong influence on directional movement. SpotGamma levels and put walls were discussed throughout the morning.
Key resistance was called out at 6470–75. Manny took profits just ahead of this zone, a solid tactical execution.
Price eventually moved through that resistance level, showing bullish strength even as internals stayed weak. David stayed flexible and reminded traders not to overcommit to one directional narrative.
Cycle Day 2 structure was confirmed late morning. David leaned toward a “sell-the-bounce” strategy, in line with typical CD2 behavior.
Crude oil trade was a highlight. David called a clean Open Range long in CL (@CL), hitting Target 2.
- He emphasized that CL setups mirror ES and use the same methodology (250 tick preferred).
- Traders discussed how CL remains technical but sometimes harder to read intraday.
Afternoon session was called out as low quality. David explicitly advised not to trade due to poor rhythm.
Into the close, the market rallied strongly, with bulls taking control. A minor MOC sell imbalance ($300M) did little to derail bullish momentum.
Closing at highs and bullish tone set up potential for continued movement into Friday’s OPEX session. David noted that OPEX could bring either range-bound or volatile movement—a “jump ball” scenario.

Key Lessons and Takeaways:

Macro surprises (like today’s PPI) demand rapid flexibility in trade bias.
Gamma strikes and options positioning remain highly relevant, especially with 0DTE influence.
Tactical exits near known resistance levels (like Manny’s) reflect solid discipline.
Crude oil can be traded with the same technical structure as ES for those looking to expand opportunity.
Stepping back during low-quality rhythms is just as important as knowing when to engage.

Looking Ahead:

Friday is OPEX. Be prepared for sharp moves or range compression early.
Watch for setups during the morning session; afternoon could become choppier.

DTG Room Preview – Friday, August 15, 2025

Markets Pause on Hot PPI: The S&P 500 notched a third straight all-time high close Thursday, though gains were capped by a hotter-than-expected PPI report. Monthly PPI rose 0.9% (vs. 0.2% expected), and annual PPI hit 3.3%—the highest since February. Core PPI saw its largest jump in 3 years.
Rate Cut Odds Hold Despite Inflation: Despite the inflation surprise, markets still see a 92% chance of a September rate cut, though a 50bps cut is now off the table. The data adds complexity to the Fed’s upcoming decision.
Intel Jumps on Gov’t Support Buzz: Intel (INTL) surged 7% after reports that the U.S. government may take a stake in the company and assist with its Ohio chip complex.
Hedge Funds Shift Back to Momentum: Big players like Bridgewater and Tiger Global are moving out of underperforming sectors (aerospace, consumer) and back into momentum and Big Tech, which now makes up nearly a third of the S&P 500’s market cap.
Economic Calendar Today: Key data includes Retail Sales and Empire State Manufacturing (8:30am ET), Industrial Production and Capacity Utilization (9:15am), and UoM Sentiment & Inflation Expectations (10:00am).
Volatility Low but Data-Driven: S&P 500 volatility remains compressed with the 5-day ADR at 53.25 points. Today’s data will dictate the tone.
Levels to Watch – ES Futures:
- Support: 6469/74, 6346/51, 6269/74, 5772/77
- Resistance: 6569/74 (likely out of play), 6591/86, 6624/29
- Bears clearing 6469/74 could spark a move below 6400.
No notable earnings or whale activity overnight.

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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!!