Daily Brief - Wednesday, 8/6/25
ISM Data Delivers Reality Check; Market Appears To Be Waiting For More Info
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
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 - Tuesday, 8/5/25
Session Stats
Open: 23,348.25
High: 23,397.25
Low: 23,113.50
Close: 23,133.50
Settlement: 23,132.00
Range: 283.75 points / 1,135 ticks
Volume: 543,488
Open Interest Change: -299 (NQU5)
Value Area (Market Profile)
Value Area High (VAH): 23,230.00
Point of Control (POC): 23,175.00
Value Area Low (VAL): 23,120.00
Prior Session Breakdown - Market Profile and NY Session
Well, there I go again—continuing my impressive streak of having my bias be the exact opposite of what the market actually does. Tuesday started exactly like I thought it would, with bulls looking confident and price moving higher off the open. Then 10:00 AM rolled around, and the ISM Services PMI data basically said "the hell you will" and sent the whole thing into a nosedive.
For those not up to speed on what ISM Services PMI tracks, it's basically a measure of demand from the service sector—restaurants, hotels, healthcare, finance, all the stuff that makes up most of our economy. And this indicator has now shown contraction in 4 out of the last 5 months, with yesterday's reading being one of the lowest since the pandemic. Yikes.
The market's reaction was immediate and brutal. Price rejected right at that overnight high of 23,397.25—to the exact tick, mind you—and then auctioned straight down to the 23,120 area. We saw a brief recovery attempt between 11:50 AM and 1:50 PM, but sellers stepped right back in and drove price down to retest those same lows. The session ended with yet another retest of 23,120, and while support held, the fact that we closed near the lows was definitely not what the bulls wanted to see.
The session developed into a normal variation day with a "b"-shaped profile and downside range extension, which is classic distribution behavior. The profile showed value area and POC rotating lower as the market repriced to reflect the weaker data.
The value area shifted lower, settling between 23,120 and 23,230 with the POC at 23,175. The slight expansion of the value area aligned with the increased volume as participants worked through this repricing event. What's encouraging is that the VAL held right at 23,120, which kept us from falling back into that earlier July range.
The lower rotation confirms that the market is building value at these reduced levels, which suggests this isn't just panic selling but actual price discovery in response to fundamental concerns.
Volume & Participation
Total Volume: 543,488 – higher than Monday's levels, reflecting increased engagement during the data-driven selloff
Open Interest: -299 contracts (NQU5) – pretty flat change, some business was lost but nothing too concerning
Price Range: 283.75 points / 1,135 ticks – a fairly good range driven by the ISM data reaction
The relatively stable open interest is actually encouraging—it suggests this was more of a repricing event than a major liquidation. If institutions were really panicking, I would expect to see much bigger outflows.
Final Thoughts
Tuesday was a good reminder that in this business, timing is everything. The market has been rising despite plenty of concerns—jobs revisions, tariff uncertainty, questions about data reliability, potential Fed cuts—so why does it suddenly care now? That's the eternal challenge with markets: the same news that gets ignored one day can crater prices the next. The market handles news, bad or good fairly well as long as it can see it coming. What it hates more than anything is uncertainty and that’s what we are seeing now.
The key technical point is that despite all the selling, we held support at 23,120 and avoided falling back into that July range. Sometimes that's all you can ask for during a data-driven selloff.
Today’s Analysis – Wednesday, 8/6/25
Market Context
The overnight action has been relatively constructive, with the NQ trading at 23,180, about 48 points above yesterday's settlement. The overnight range between 23,227 and 23,045.50 has been contained, and we're sitting right in balance as we head into the open.
The VIX did tick up slightly yesterday but is still under 18, nowhere near the levels we saw last week. We're maintaining that mixed gamma environment, which means dealer behavior remains unpredictable and we could see sharp moves in either direction.
Looking at the bigger picture, I want to draw your attention to what's happening on the daily chart (above). We put in a lower high yesterday, and the last three days' structure is looking eerily similar to what we saw on June 13th, 16th, and 17th. Back then, we put in a few more lows before bouncing much higher. The higher timeframe charts in NQ tend to be very technical and structural, which makes them easier to read than the intraday noise. I encourage you always start with them first when doing your own chart analysis.
Here's what's standing out to me: that 23,400 area was previously resistance, then became support, and now it looks like it might be resistance again. Meanwhile, 22,800 remains strong support going back to early July. The 23,100 level that was so important in July hasn't really played a role in the past three sessions, so I'm giving it less credit until I see price actually respond to it.
Bias & Mindset
Longer Term Bias: Bullish
Today’s Bias: Neutral
I'm staying neutral with low confidence, and honestly, given my recent track record of being completely wrong about daily direction, NQ will probably prove me wrong again and rally today. Take my opinion with a grain of salt.
The big question right now is whether NQ is just consolidating while it waits for more clarity on the economic and rate cut picture, or if we're eventually going to break out to new highs like we did back in June. If we're consolidating, the range looks like it runs from about 23,400 down to 22,800.
My gut tells me this looks like a market that's waiting for more information before deciding which direction it wants to go. The economic picture doesn't really support a drastic pullback from here, and I'm not seeing the underlying structural outflows that characterized the major selloffs earlier in the year. But that can change quickly in this environment.
Key Levels I’m Watching Today
Upside:
23,400 — Top of the potential range and area where we put in yesterday's lower high
23,300 — Pivot area from yesterday's high before the ISM data triggered the selloff
23,150 — High volume node from yesterday's session
Downside:
23,120 — Yesterday's VAL and session low, break below puts us back toward that July range
23,045 — Overnight low, break below could put the 23,000 level in jeopardy
22,800 — Bottom of the current range, major support going back to July
Final Thoughts on Today
We have initial jobless claims at 8:30 AM this morning, which could move the market if it comes in soft. Beyond that, headline risk remains elevated—there's always plenty of drama with this administration to keep traders on edge.
Right now, you just have to "trade it as it lies," as the saying goes. Be reactive, not predictive. The gamma regime remains mixed, and I'll be keeping a close eye on the put walls for SPX and NDX. If those get breached, things could get volatile pretty quickly.
The market has been trending more positive until yesterday brought us back to a more mixed state. We're likely to see this Jekyll and Hyde behavior until these uncertainties either get resolved or become irrelevant. My experience tells me this is a market waiting for more information, but how long that lasts is anyone's guess.
Stay flexible, keep an eye out for breaking news, and remember that in this environment, assumptions about direction can be expensive mistakes.
Enjoying The Shmuts? Help Me Spread the Word
If you’ve been finding value in the Daily Brief or other posts, I’d be incredibly grateful if you shared The Shmuts with other traders—whether that’s in a Discord group, on social media, or just with a trading buddy. It only takes a few seconds, but it helps more than you know.
Thanks so much for your support!