Daily Brief - Tuesday, 8/19/25
Volume Dies, VIX Dies, Excitement Dies; All Eyes on Fed's Next Move
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
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 - Monday, 8/18/25
Session Stats
Open: 23,768.25
High: 23,824.25
Low: 23,719.00
Close: 23,797.00
Settlement: 23,797.75
Range: 105.25 points / 421 ticks
Volume: 400,033
Open Interest Change: +2,361 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,790.00
Point of Control (POC): 23,765.00
Value Area Low (VAL): 23,740.00
Prior Session Breakdown - Market Profile and NY Session
Monday's session was basically a carbon copy of Friday's action, just with an even tighter range. Yesterday I mentioned expecting to see participants positioning at the beginning of this week for FOMC minutes on Wednesday and Jackson Hole later in the week, and that's exactly what we got—more cautious, range-bound behavior as everyone waits for the main events.
The session developed into a normal day with a "D"-shaped profile that stayed locked in a 100-point range between 23,820 and 23,720 for the entire session. There wasn't a lot of opportunity for good trades—it was honestly so devoid of decent setups that I ended up switching over to Gold (GC) just to find something worth trading.
The value area rotated slightly lower again but with significant overlap from Friday's session, and the POC sat right in the middle of the value area at 23,765, illustrating just how balanced things were. No excess on either side of the profile, which tells you that participants were very much in agreement on fair value for the entire session. There wasn't much price discovery needed—everyone seemed content with the current range.
The value area showed minimal movement, settling between 23,740 and 23,790 with the POC at 23,765. The slight downward rotation with substantial overlap from Friday confirms we're in a consolidation phase rather than any meaningful directional move.
The centered POC position reinforces the balanced nature of the session, with equal participation on both sides of the current fair value assessment.
Volume & Participation
Total Volume: 400,033 – lowest volume since July 25th, confirming the lack of engagement
Open Interest: +2,361 contracts (NQU5) – modest increase in new business, though the direction of this positioning is unclear
Price Range: 105.25 points / 421 ticks – compressed range reflecting the tight, balanced conditions. This is a market that is coiling, waiting for more information.
The combination of extremely low volume with a modest open interest increase suggests some institutional positioning is happening, but it's being done quietly and without urgency. The market is clearly in wait-and-see mode.
Final Thoughts
Monday delivered exactly what you'd expect when a market is positioning for bigger events later in the week. The session had all the excitement of watching paint dry, but sometimes that's just how markets behave when they're waiting for more information. The extremely low volume confirms that most participants are content to sit on their hands until we get some clarity from the Fed.
This type of action can be frustrating for active traders, but it's often a precursor to more volatile sessions once the catalysts arrive. Don’t waste your capital in these conditions. Keep your powder dry until the real catalyst emerges. Volatility = Opportunity.
Today’s Analysis – Tuesday, 8/19/25
Market Context
The overnight session has continued the theme of calm, controlled action, with the NQ currently trading at 23,760, about 38 points below yesterday's settlement. The overnight range between 23,838 and 23,730.75 has been well-contained, and we're opening in balance yet again.
The VIX dropped back below 15 overnight, confirming that there's no fear in this market at present. We remain in that positive gamma environment with dealers buying dips, though the headline sensitivity remains elevated as we approach this week's key events.
It's pretty quiet on the news front right now, with Ukraine/Russia peace negotiations dominating headlines but having very little market impact. The market seems laser-focused on Fed-related developments rather than geopolitical noise at the moment.
Bias & Mindset
Longer Term Bias: Bullish
Today’s Bias: Neutral
I'm staying neutral today because it's very likely we could see the same behavior as the last two sessions. The overnight has been calm, we're set to open in balance, and unless a catalyst emerges to knock the market out of this equilibrium, I expect more of the same choppy behavior in a tight range.
The positioning for FOMC minutes tomorrow and Jackson Hole at the end of the week is clearly the dominant theme right now, and markets don't typically make big moves when they're waiting for information from the Fed.
Key Levels I’m Watching Today
Upside:
23,838 — Overnight high
23,824.25 — Yesterday's high, key resistance
23,790 — Yesterday's VAH
Downside:
23,740 — Yesterday's VAL
23,730.75 — Overnight low
23,719 — Yesterday's low, key support
Final Thoughts on Today
My focus is really on Powell's speech on Friday at 10:00 AM, so let's talk about that. Right now, traders have factored in an 85% chance of a rate cut by the Fed in September. Historically, when that percentage is that high, the Fed does cut rates. When the market has such high expectations and it doesn't happen, it can shock the market and send it into a spiral—and the Fed really doesn't want that.
Part of Powell's job is to set future expectations so the market has time to digest potential changes. Giving the market time to process potentially disappointing news helps prevent highly volatile downward moves. So here's what I'm getting at: if the Fed doesn't think they'll cut rates in September, Powell's speech on Friday is really the last good opportunity he'll have to set that expectation.
Given last week's inflation data—benign CPI but hot PPI—and the belief that tariff inflation will trickle down to consumers sooner rather than later, I wouldn't be shocked to see Powell come out more hawkish on Friday. I'm not saying it's going to happen, just that it wouldn't surprise me. Right now I give it about 50% either direction, which puts me way out of step with the market's 85% rate cut expectations.
Powell has shown to be very cautious about future tariff inflation, and the majority of Fed governors have been as well. Tomorrow's FOMC minutes will give us more insight into where each stands.
Either way, be prepared for the market's reaction to Powell on Friday. If he comes out dovish and essentially confirms a rate cut, I expect the market to rally hard. If he comes out hawkish, expect a move further down. The positioning data we discussed yesterday suggests the market is heavily leaning one way, which could make any surprise particularly violent.
For today, don't force trades in this tight, range-bound environment. If you are going to trade, remember that you're better off fading price at the edges when we get tight, balanced days like yesterday and Friday. Don't "diddle in the middle"—look for cheap trades where you can know you're wrong quickly.
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