To The Moon

Market Recap & Key Themes

Big Rebound Unlocked:

Fed Chair Jerome Powell’s Jackson Hole address on August 22, 2025 delivered a surprise dovish tilt markets interpreted his tone as paving the way for a possible September rate cut, igniting a strong rally.

Key Remarks & Signals:

• Powell emphasized rising downside risks to employment, noting job growth had slowed to around 35,000/month versus 168,000 in 2024.

• He described inflation impacts from tariffs as likely a “one‑time shift”, not a persistent threat.

• His message was unequivocally more dovish than expected, suggesting the Fed is considering easing if jobs weaken further.

• Market pricing for a September cut jumped 89% probability, up from ~70% earlier in the day.

Market Reaction:

• Equities surged: S&P 500 popped ~1.6%, Russell 2000 small‑caps soared ~3.6%, and homebuilders led with a 4–4.5% jump.

• Treasury yields dropped, and the U.S. dollar weakened, signaling easing potential.

Trading Levels & Setups

$SPDR S&P 500 ETF Trust(SPY)$ (S&P 500) Levels:

• Support: Near record zone; dips into the 635–640 range could offer low‑risk long entries.

• Resistance: Current levels near all‑time highs (~645–650); a sustained break would favor continuation.

Strategy Watchlist:

• Long SPY near support with tight stops; target upside toward 650+ if rally holds.

• Long small‑cap ETFs or homebuilder plays they’ve responded most to dovish surprises.

• Monitor upcoming employment & inflation data: weak jobs could cement a cut, strong numbers may spark pullback.

Options Strategy Ideas

1. Bullish Call Spread on SPY: Cheap, limited-risk way to ride potential upside from here.

2. Long Straddle on RUT (Russell 2000) or Homebuilder Index: If volatility remains elevated and market momentum persists.

3. Sell Covered Calls near 650: If you're holding SPY, locking in gains while capping upside risk.

Longer-Term Thesis

• Powell signaled framework flexibility, moving away from the rigid setup of prior years

• If inflation remains tame and employment falters, the Fed may deliver the first cut of this cycle in September.

• However, sustainability depends on data. Markets may remain fragile if growth stalls further this rebound could be real, but warrants vigilance.

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Disclaimer: This article is provided for informational purposes only and does not constitute financial, investment, legal, or tax advice, nor the solicitation of any offer to buy or sell securities. The views expressed are those of the author and do not account for individual financial circumstances. Investing involves risk, including the potential loss of principal. Past performance is not indicative of future results. You alone are responsible for any investment decisions; consider seeking advice from a qualified financial advisor before acting.