Daily Brief - Tuesday, 7/22/25
NQ's Strong Breakout Runs Into Political Headlines. Which Way Do We Go From Here?
Disclaimer
This publication and its authors are not licensed investment professionals. Nothing posted on The Shmuts blog should be construed as investment advice. Do your own research.
News Docket
A fairly quiet and calm week ahead on the data release front as the market preps for FOMC next week on 7/30. Two of the Mag7 announce earnings this week with Google and Tesla on tap which will require watching as they can move the NQ.
Wednesday - 7/23/25
10:00am EST - Us Existing Home Sales (Expected: 4M)
4:00pm EST - Google Q2 2025 Earnings (Call @ 4:30pm EST)
4:05pm EST - Tesla Q2 2025 Earnings (Call @ 5:30pm EST)
4:10pm EST - IBM Q2 2025 Earnings (Call @ 5:00pm EST)
Thursday - 7/24/25
9:45am EST - US S&P Services PMI Flash (Expected: 52.9)
9:45am EST - US S&P Manufacturing PMI Flash (Expected: 52.4)
9:45am EST - US S&P Composite PMI Flash (Expected: —)
10:00am EST - US New Homes Sales (Expected: 0.65M)
4:00pm EST - Intel Q2 2025 Earnings (Call @ 5:00pm EST)
Friday - 7/25/25
8:30am EST - US Durable Goods (Expected: -10%)
Prior Session Analysis - Monday, 7/21/25
Session Stats
Open: 23,256.25
High: 23,424.75
Low: 23,255.25
Close: 23,344.75
Settlement: 23,342.00
Range: 169.50 points / 678 ticks
Volume: 399,265
Open Interest Change: +3,998 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,420.00
Point of Control (POC): 23,385.00
Value Area Low (VAL): 23,360.00
Prior Session Breakdown - Market Profile and NY Session
Monday's session provided compelling validation of the bullish thesis developed over the weekend, as the market opened with a complete absence of sellers and immediately launched into a sustained auction higher. The session developed into a normal day with an exceptionally wide initial balance of 160 points, creating a "P"-shaped profile with clear upside range extension. Most tellingly, the market formed a prominent single-print buying tail from the open up to the 23,320 area—a clear rejection of lower prices that suggests this zone is now off-limits for current market conditions.
The opening auction was particularly telling. Sellers were simply not present on the tape as buyers drove price from the 23,256.25 open to just above 23,420 within the first hour, reaching the session high of 23,424.75. This type of one-sided action typically indicates strong institutional commitment, confirmed by the healthy open interest increase of nearly 4,000 contracts after Friday's substantial liquidation.
However, the session's character shifted notably after the initial surge. Price spent the remainder of the session unable to break meaningfully above the 23,420 level despite a retest around 1:30 PM. The failure to extend beyond this level wasn't due to aggressive selling but rather a disappearance of buying interest—a subtle but important distinction that suggests 23,420 represents a pause point rather than a hard ceiling.
NQ’s value area moved significantly higher yesterday, with the VAH reaching 23,420.00, POC at 23,385.00, and VAL at 23,360.00. This represents a substantial shift upward from Friday's parameters and confirms the market's acceptance of higher fair value. The POC's position in the upper-middle portion of the value area indicates that most serious business was conducted during the upward auction rather than in any consolidation phase.
The tight value area range between 23,360 and 23,420 suggests participants are comfortable with this elevated pricing, though the concentration of activity in this narrow band may indicate we're approaching a level where more substantial two-way trade could emerge.
Volume & Participation
Total Volume: 399,265 – lowest since July 3rd, indicating reduced participation despite the price advance
Open Interest: +3,998 contracts (NQU5) – healthy increase suggesting new long positioning on the upward move
Price Range: 169.50 points / 678 ticks – substantial range driven by the opening hour surge
The combination of low volume with a meaningful open interest increase presents an interesting dynamic. While fewer participants were active, those who did engage were making longer-term commitments rather than day-trading the move. This type of institutional accumulation on low volume often precedes more sustained directional moves.
Final Thoughts
Monday's session confirmed the weekend's bullish assessment, with the market's immediate rejection of Friday's lows and strong acceptance of higher prices validating the structural shift from Thursday's breakout. The formation of a buying tail below 23,320 and the sustained hold above Friday's range suggest institutional participants view any weakness as an opportunity.
The late-session sentiment shift around 1:30 PM, coinciding with reports that Fed Chairman Powell had been referred to the DOJ for criminal charges by House GOP, introduced a note of caution that carried into the close. While the market held most of its gains, this development bears close monitoring given the market's demonstrated sensitivity to Powell-related headlines.
Today’s Analysis – Tuesday, 7/22/25
Market Context
NQ is positioned for a more cautious opening this morning, currently trading at 23,320.00, approximately 21 points below yesterday's settlement. The overnight range between 23,367.00 and 23,267.50 has kept price well below yesterday's value area, approaching the area of yesterday's session low. This positioning suggests the potential for an out-of-balance opening to the downside, representing a marked shift from yesterday's bullish opening dynamics.
The overnight weakness appears directly tied to the afternoon development regarding Powell's referral to the DOJ for criminal charges. This headline sensitivity aligns with the market's consistent pattern of negative reactions to any uncertainty surrounding the Fed Chairman's position. The VIX has responded accordingly, rising 4% from yesterday afternoon as market participants reassess risk.
We're operating in an environment where the post-OPEX gamma positioning is still forming, making it difficult to predict how dealers will respond to any meaningful moves. The volatility environment has normalized from the previous low readings, and headline sensitivity remains elevated as multiple catalysts converge.
Bias & Mindset
Bias: Cautious
I'm adopting a cautious bias today following yesterday's sentiment shift around 1:30 PM. The strong drive upward from the opening, which validated the bullish thesis, was subsequently undermined by the Powell-related headlines that emerged during the afternoon session. This development has particular significance given the market's demonstrated sensitivity to any news regarding Fed leadership changes.
The overnight action, which has brought price back toward yesterday's lows and below the established value area, suggests participants are taking a more defensive stance. While the higher timeframe structure remains supportive of long positions, the immediate reaction to political headlines indicates that fundamental concerns may temporarily override technical considerations.
The key will be monitoring how the market responds to any further developments on the Powell situation while assessing whether yesterday's buying tail below 23,320 can provide meaningful support.
Key Levels I’m Watching Today
Upside:
23,420.00 — Yesterday's high and VAH, break above would indicate continued search for higher fair value
23,367.00-23,360.00 — Overnight high and yesterday's VAL, recovery above could signal fair value at yesterday's levels
Downside:
23,267.50 — Overnight low, key support level for current positioning
23,255.25 — Yesterday's low, also aligns with high volume node from 7/17 and resistance area from 7/18
23,211.00 — Middle of wide high volume node from 7/18, potential support if price revisits this value area
Final Thoughts on Today
Today's session will likely be defined by the market's response to the Powell headline developments and how they interact with the technical levels established during yesterday's session. The first major earnings from the Mag 7 complex—Google and Tesla reporting tomorrow—may also influence positioning as participants prepare for potentially market-moving results.
The current environment requires heightened attention to headline developments while respecting the technical levels that have been established. The Powell situation bears particularly close monitoring given the market's historical sensitivity to Fed leadership uncertainty. While large participants are likely already positioned for tomorrow's earnings, smaller participants may still be adjusting positions today.
It's still too early to definitively determine the post-OPEX gamma environment, though that picture should become clearer as the week progresses. Until proven otherwise, maintaining the assumption that dips will continue to be bought remains prudent, but the Powell headlines introduce a wildcard that could temporarily override this dynamic. The key is trading what we observe rather than what we expect and maintaining patience in an environment where political developments can quickly alter market behavior.
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