SP500 LDN TRADING UPDATE 23/7/25
WEEKLY & DAILY LEVELS
***QUOTING ES1! CASH US500 EQUIVALENT LEVELS SUBTRACT ~35 POINTS***
WEEKLY BULL BEAR ZONE 6300/6280
WEEKLY RANGE RES 6410 SUP 6260
DAILY BULL BEAR ZONE 6330/40
DAILY RANGE RES 6405 SUP 6288
2 SIGMA RES 6463 SUP 6233
GAP LEVELS 6147/6077/6018/5843/5741/5710
VIX DAILY BULL BEAR ZONE 19
DAILY MARKET CONDITION - BALANCE 6302/6374
Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.
TRADES & TARGETS
SHORT ON TEST/REJECT DAILY RANGE RES TARGET DAILY BULL BEAR ZONE
LONG ON TEST/REJECT DAILY BULL BEAR ZONE TARGET DAILY RANGE RES
(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: UNWIND
FICC and Equities | 22 July 2025 | 9:00 PM UTC
Market Overview:
- S&P 500: +6bps, closing at 6,309, with MOC flow of -$300m to SELL.
- NASDAQ (NDX): +50bps, closing at 23,063.
- Russell 2000 (R2K): -91bps, closing at 2,262.
- Dow Jones: +40bps, closing at 44,502.
- Volume: 19.2 billion shares traded across U.S. equity exchanges vs YTD daily average of 16.8 billion shares.
- VIX: -90bps, closing at 16.50.
- Crude Oil: -147bps, closing at $66.21.
- US 10-Year Yield: -3bps, closing at 4.34%.
- Gold: +106bps, closing at $3,442.
- DXY (Dollar Index): -48bps, closing at 97.38.
- Bitcoin: +244bps, closing at $119,845.
Key Observations:
- Minimal index-level movement, but significant factor and single-stock volatility under the surface.
- GS Momentum Pair (GSPRHIMO): Traded -5%, driven by both legs.
Catalysts:
1. AI Sector Pressure: WSJ reported struggles in SoftBank and OpenAI's $500bn AI project.
2. Meme Stock Activity: KSS surged +100% in pre-market trading.
3. Earnings Reactions: Underwhelming post-earnings price action (e.g., NFLX).
4. Positioning Dynamics: Elevated gross exposures impacting broader sentiment.
Sector Highlights:
- Housing Stocks: Outperformed, led by DHI (+17%) and PHM (+12%) post-earnings.
- Auto & Parts: Weakened on GM (-8%) following tariff impact updates.
- Retail Sector: Outperformed (XRT +3%) due to lower gross exposure relative to other sectors, per GS PB updates.
- Regional Banks: SNV +7% on reports of Synovus exploring a possible merger, potentially the largest deal of this cycle.
Post-Bell Update:
- Biggest U.S. grid set capacity price at record $329.17 per MW-day, exceeding expectations for a floor price. IPPs expected to benefit alongside broader power sector gains.
Floor Activity:
- Activity levels rated a 5/10, with the floor finishing flat vs a 20-day average of +70bps.
- LOs: Slight net sellers, with supply distributed across all sectors except staples.
- HFs: Small net buyers, driven by covering demand in discretionary sectors.
Derivatives Market:
- Suppressed close-to-close movement, with implied move around ~32bps.
- Desk favors downside index hedges via put/put spread formats, given attractive vol entry points and elevated put skew.
- Outside the U.S., call spreads in China align with demand for upside in e-commerce names (e.g., JD, BABA) into September.
- Weekly straddle priced at 0.82%.
Hatzius Note Highlights:
- Core PCE inflation expected to rise above 3% in H2, assuming benign trends in rents, healthcare, and services.
- Weak consumption and housing pushed H1 real GDP growth estimate to 1.1%, below potential. Similar pace expected in H2.
- 12-month recession risk remains at 30%, double the historical average.
- Forecasts three consecutive 25bp rate cuts, bringing funds rate to 3½-3¾% by year-end 2025, followed by two more 25bp cuts in H1 2026.
- A 30% U.S. tariff on European imports could shave 0.5% off Euro area GDP by end-2026.
- Cyclical vs defensives basket implies 3.5% GDP growth vs Hatzius estimate of 1.6% and Atlanta Fed nowcast of 2.4%.
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!