Daily Brief - Monday, 8/18/25
Friday's Choppy Exit Sets Up Cautious Monday; $8.5B NDX Tilt Raises Eyebrows
Disclaimer
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News Docket
Wednesday - 8/20/25
2:00pm EST - FOMC Meeting Minutes
Thursday - 8/21/25
8:00am EST - Jackson Hole Symposium (All-day)
8:30am EST - US Initial Jobless Claims (Expected: 225k)
9:45am EST - US S&P Services PMI Flash (Expected: —)
9:45am EST - US S&P Manufacturing PMI Flash (Expected: —)
10:00am EST - US Existing Home Sales (Expected: 3.9M)
Friday - 8/22/25
8:00am EST - Jackson Hole Symposium (All-day)
10:00am EST - Fed Chairman Powell Speech
Prior Session Analysis - Friday, 8/15/25
Session Stats
Open: 23,909.25
High: 23,911.00
Low: 23,734.50
Close: 23,806.00
Settlement: 23,804.00
Range: 176.50 points / 706 ticks
Volume: 442,870
Open Interest Change: -7,253 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,840.00
Point of Control (POC): 23,805.00
Value Area Low (VAL): 23,780.00
Prior Session Breakdown - Market Profile and NY Session
Friday delivered exactly the kind of session that makes you grateful for the sidelines. We saw a bit more continuation in the pullback, but it was controlled rather than panicky, and the range was smaller than what we'd been seeing lately. Volume continued its day-to-day decline, which isn't abnormal for a Friday session, but the action itself was just plain choppy and difficult to navigate.
The session kicked off with a 140-point selloff right from the open, followed by a 100-point recovery that probably got some traders excited about a reversal. But then we got another auction down that set the low of the day just below 23,740. After that little adventure, price recovered somewhat and then settled into a tight 60-point range between 23,830 and 23,770 for the remainder of the session.
It was honestly a tough session to trade—the kind where you're better off sitting it out rather than trying to force something that isn't there. The session developed into a normal day with a "D"-shaped profile, showing excess on both ends, which confirms the balanced but choppy nature of the price action.
The value area rotated lower, settling between 23,780 and 23,840 with the POC at 23,805. The narrower value area reflects the compressed trading and lower participation typical of Friday sessions. The downward rotation confirms that the market was working through some additional selling pressure following Thursday's consolidation.
The POC's centered position within the value area suggests that once the initial volatility settled, the market found reasonable balance in this lower range.
Volume & Participation
Total Volume: 442,870 – lower than recent sessions, typical for Friday but continuing a trend
Open Interest: -7,253 contracts (NQU5) – eyebrow-raising outflow that deserves attention
Price Range: 176.50 points / 706 ticks – compressed range despite the choppy action
The substantial open interest decrease of over 7,000 contracts is the most concerning aspect of Friday's session. This suggests that institutions were using the price weakness to reduce exposure rather than add to positions. When you see that kind of business leaving the market, it's worth paying attention.
Final Thoughts
Friday felt like one of those sessions where the market was just going through the motions ahead of a potentially important week. The combination of choppy price action, declining volume, and significant open interest outflows suggests participants were positioning more defensively heading into the weekend.
Sometimes Fridays are just messy, but the open interest decrease gives this particular session a bit more significance than your typical end-of-week noise.
Today’s Analysis – Monday, 8/18/25
Market Context
The weekend appears to have been uneventful, with the NQ currently trading at 23,764, about 40 points below Friday's settlement. The overnight range between 23,881.50 and 23,739.50 has been reasonably contained, and we're opening in balance, though notably near the bottom of Friday's range.
This is a relatively light data week, which means all eyes will be on FOMC minutes Wednesday and the Jackson Hole Symposium at the end of the week, culminating with Powell's speech at 10:00 AM on Friday. The market will likely spend early parts of this week positioning for potential volatility later on.
Here's something that caught my attention: NDX saw a huge amount of call volume last week and ended the week almost entirely tilted to the long side by about $8.5 billion. Experience has taught me that when a market gets too one-sided, it often mean reverts. However, that doesn't mean the market can't keep going for quite a bit before it does so—timing these things is notoriously difficult.
We're still operating in a low volatility, positive gamma environment, but I'm starting to watch for potential regime changes. When volatility gets compressed for too long at historic highs, it has a habit of snapping back like a rubber band—suddenly and quickly.
Bias & Mindset
Longer Term Bias: Bullish
Today’s Bias: Neutral
I'm staying neutral because honestly, I'm not sure which direction to lean this morning. The market positioning data from last week shows we're heavily skewed to the long side, which historically suggests some caution is warranted. But markets can stay irrational longer than you can stay solvent, as the saying goes.
The combination of Friday's open interest outflows, the extremely bullish positioning in NDX, and our proximity to historic highs while sitting in compressed volatility creates an interesting dynamic. It's the kind of setup where anything could happen, and I'd rather wait for clearer signals than make strong directional bets.
The key will be watching how the market responds to any early week positioning ahead of Wednesday's FOMC minutes and Friday's Powell speech.
Key Levels I’m Watching Today
Upside:
23,911 — Friday's high, meaningful resistance level
23,881.50 — Overnight high, immediate upside target
23,840 — Friday's VAH
Downside:
23,734 — Friday's low and near the overnight low area
23,640 — Bottom of the buying tail from August 12th
23,620 — Additional buying support from August 11th
Final Thoughts on Today
I'm keeping a close eye on volatility conditions this week. We're at such low volatility levels combined with historic highs that continued upward movement seems to be priced in by the market. When volatility gets too far to one side for too long, it has a habit of snapping back suddenly and catching traders off guard who don't anticipate the potential.
There's no way to know if or when this might happen, but I'm watching for it and always keeping stop losses in place. The positioning data from last week suggests we're getting fairly one-sided, and Friday's open interest outflows might be the first sign that some smart money is taking a more cautious approach.
Expect to see some positioning early this week as participants prepare for potential volatility later. FOMC minutes on Wednesday and Powell's Jackson Hole speech on Friday are the two big events that could provide catalysts for whatever direction the market chooses next.
The key is staying flexible and not getting too married to any particular scenario when positioning is this skewed and volatility is this compressed. Sometimes the best strategy is simply being prepared for multiple outcomes rather than betting heavily on one.
Remember that whenever participants are too heavily piled into one side of the market, all the risk is to the other side.
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