Daily Brief - Tuesday, 8/5/25
Bulls Take Victory Lap as NQ Gaps Higher; PMI Data Could Fuel the Fire
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
Tuesday - 8/5/25
8:30am EST - US Trade Balance (Expected: -61.05B)
9:45am EST - US S&P Services PMI Final (Expected: 55.2)
10:00am EST - US ISM Services PMI (Expected: 51.5)
4:00pm EST - AMD Q2 2025 Earnings (Call @ 5:00pm EST)
Thursday - 8/7/25
8:30am EST - US Initial Jobless Claims (Expected: 222.5k)
Friday - 8/8/25
US’s Russia/Ukraine Deadline
Prior Session Analysis - Monday, 8/4/25
Session Stats
Open: 23,094.00
High: 23,338.50
Low: 23,088.75
Close: 23,296.75
Settlement: 23,296.50
Range: 249.75 points / 999 ticks
Volume: 473,453
Open Interest Change: +5,726 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,290.00
Point of Control (POC): 23,255.00
Value Area Low (VAL): 23,210.00
Prior Session Breakdown - Market Profile and NY Session
Monday delivered exactly what the bulls needed—a convincing breakout that put Friday's ugly selloff in the rearview mirror. The session opened just below Friday's high and immediately showed its intentions, with buyers taking control from the start and driving price strongly upward out of that July range to the 23,260 area.
The initial resistance at 23,260 was interesting to watch. Price didn't blast through it like some unstoppable force—instead, it fell back to VWAP, chopped around for about 50 minutes, and then buyers stepped back in with more conviction. This second attempt at 23,260 was successful, and once broken, that level flipped to support for the remainder of the session.
What followed was pretty typical post-breakout behavior: price settled into a relatively tight range between 23,285 and 23,260, which honestly didn't provide much in the way of trading opportunities unless you caught that initial drive off the open. But sometimes the best sessions are the boring ones that just grind higher without drama.
The late-session spike that pushed price to new session highs and had us closing near the top of the range was particularly encouraging. That's the kind of action that suggests buyers aren't done yet and we might see some continuation today.
The session developed into a normal variation day with a "P"-shaped profile and clear upside range extension. There was nice excess at the bottom in the form of a single-print buying tail from 23,180 down to just below 23,095—classic rejection of lower prices that suggests this area is off-limits for now.
The value area rotated higher, settling between 23,210 and 23,290 with the POC at 23,255. The relatively narrow 80-point value area tracks well with the decreased volume we saw, indicating less active trade facilitation once the initial breakout was accomplished.
The upward rotation in both VA and POC confirms that the market has accepted higher fair value and is building value in this new range above the July parameters.
Volume & Participation
Total Volume: 473,453 – lower than Friday's panic selling but appropriate for a consolidation day
Open Interest: +5,726 contracts (NQU5) – healthy recovery of new business after Friday's 7,000+ contract exodus
Price Range: 249.75 points / 999 ticks – typical range driven mostly by the morning breakout
The open interest recovery is fascinating—it's funny how quickly sentiment can change in this market with relatively little macro change to justify it. Friday everyone was running for the exits, and Monday they were piling back in. Classic market behavior.
Final Thoughts
Monday's big accomplishment was breaking back above 23,100 and accepting that level with conviction. This is a good sign that higher prices are here to stay, at least for now. The fact that we didn't fall back into July's range despite all the headwinds suggests there's still underlying demand at these levels.
The session showed that the market is hopefully ready to move past Friday's tariff deadline drama and focus on what's ahead.
Today’s Analysis – Tuesday, 8/5/25
Market Context
The bulls are feeling pretty good about themselves this morning, and honestly, they should be. The NQ is trading at 23,380, about 85 points above yesterday's settlement, which puts us in clear out-of-balance territory to the upside. We're sitting roughly 40 points above yesterday's high, which is a nice confirmation that the momentum from yesterday's late-day strength has carried through the overnight session.
The overnight range between 23,397.25 and 23,312.50 has been well-behaved, with the action staying controlled rather than getting all euphoric. The VIX has dropped substantially since Friday's panic, now sitting at 17.31 as I write this, which shows that fear is leaving the building.
We're still in that mixed gamma environment, so dealer behavior remains less predictable than it was during that zombie-market phase. But the overnight action suggests we might be transitioning back toward a more positive gamma regime if this momentum continues.
We do have some potential landmines this morning with PMI data at 9:45 AM and 10:00 AM, so keep an eye on the clock and don’t get caught in a position when those numbers hit. But assuming no negative surprises, we've got room to run here—we're still 400+ points from those all-time highs, so it's not like we're bumping up against major resistance yet.
Bias & Mindset
Longer Term Bias: Bullish
Today’s Bias: Bullish
I'm leaning bullish with low confidence, and here's why: yesterday's action of holding and accepting above 23,100 with conviction was genuinely encouraging. We didn't just break out and immediately fall back into that July range—we actually built some value up here, which suggests this move has some legs.
The pattern recognition game is pretty simple right now. NQ has been following two main scripts lately: either we get a selloff off the open followed by a V-shaped recovery, or we get a strong move off the open in either direction and then settle into a range for the rest of the session. I'll be watching for both scenarios today.
The key thing to remember is that sentiment can flip on a dime in this environment. Friday everyone was convinced the world was ending, and by Monday close people were getting bullish again. That's just how these markets work, and fighting that emotional whiplash is usually a losing proposition.
Key Levels I’m Watching Today
Upside:
23,608 — Pullback resistance from July 31st, next major level to watch
23,410 — High volume node and resistance area from July 31st
23,397 — Overnight high, has acted as resistance a couple times in the overnight session
Downside:
23,338 — Yesterday's session high, first support level
23,312 — Overnight low, key to hold for continued bullish momentum
23,290 — Yesterday's VAH, return below here would indicate we're back in yesterday's value
Final Thoughts on Today
I'm seeing a lot of traders right now who are struggling with the logic of the market making new highs given current economic conditions, so they keep trying to predict the top and fade the move. Here's some free advice: don't. It's the easiest way to blow your account.
Right now the market is going up on rate cut hopes and it has been a good earnings season (so far). The market is NOT the economy. They are two different things, and trying to trade based on what you think "should" happen rather than what's actually happening is a recipe for disaster. Go with the trend, regardless of what your logic is telling you. If the dissonance is too much and you can't bring yourself to participate, there is nothing wrong with sitting on the sidelines.
We're continuing to keep an eye on gamma positioning, which is pretty fluid right now. If price keeps moving higher, we may find ourselves back in a firmly positive gamma regime, which would bring back that dip-buying behavior we got used to in July.
Watch those PMI numbers this morning, stay flexible, and remember that in this environment, anything can happen. But right now, all signals are pointing higher.
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