SP500 LDN TRADING UPDATE 23/7/25

WEEKLY & DAILY LEVELS

***QUOTING ES1! CASH US500 EQUIVALENT LEVELS SUBTRACT ~35 POINTS***

WEEKLY BULL BEAR ZONE 6300/6280

WEEKLY RANGE RES 6410 SUP 6260

DAILY BULL BEAR ZONE 6330/40

DAILY RANGE RES 6405 SUP 6288

2 SIGMA RES 6463 SUP 6233

GAP LEVELS 6147/6077/6018/5843/5741/5710 

VIX DAILY BULL BEAR ZONE 19

DAILY MARKET CONDITION - BALANCE 6302/6374

Balance: This refers to a market condition where prices move within a defined range, reflecting uncertainty as participants await further market-generated information. Our approach to balance includes favouring fade trades at the range extremes (highs/lows) while preparing for potential breakout scenarios if the balance shifts.

TRADES & TARGETS

SHORT ON TEST/REJECT DAILY RANGE RES TARGET DAILY BULL BEAR ZONE

LONG ON TEST/REJECT DAILY BULL BEAR ZONE TARGET DAILY RANGE RES

(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE AT OR BELOW THESE LEVELS)

GOLDMAN SACHS TRADING DESK VIEWS

U.S. EQUITIES UPDATE: UNWIND

FICC and Equities | 22 July 2025 | 9:00 PM UTC

Market Overview:

- S&P 500: +6bps, closing at 6,309, with MOC flow of -$300m to SELL.

- NASDAQ (NDX): +50bps, closing at 23,063.

- Russell 2000 (R2K): -91bps, closing at 2,262.

- Dow Jones: +40bps, closing at 44,502.

- Volume: 19.2 billion shares traded across U.S. equity exchanges vs YTD daily average of 16.8 billion shares.

- VIX: -90bps, closing at 16.50.

- Crude Oil: -147bps, closing at $66.21.

- US 10-Year Yield: -3bps, closing at 4.34%.

- Gold: +106bps, closing at $3,442.

- DXY (Dollar Index): -48bps, closing at 97.38.

- Bitcoin: +244bps, closing at $119,845.

Key Observations:

- Minimal index-level movement, but significant factor and single-stock volatility under the surface.

- GS Momentum Pair (GSPRHIMO): Traded -5%, driven by both legs.

Catalysts:

1. AI Sector Pressure: WSJ reported struggles in SoftBank and OpenAI's $500bn AI project.

2. Meme Stock Activity: KSS surged +100% in pre-market trading.

3. Earnings Reactions: Underwhelming post-earnings price action (e.g., NFLX).

4. Positioning Dynamics: Elevated gross exposures impacting broader sentiment.

Sector Highlights:

- Housing Stocks: Outperformed, led by DHI (+17%) and PHM (+12%) post-earnings.

- Auto & Parts: Weakened on GM (-8%) following tariff impact updates.

- Retail Sector: Outperformed (XRT +3%) due to lower gross exposure relative to other sectors, per GS PB updates.

- Regional Banks: SNV +7% on reports of Synovus exploring a possible merger, potentially the largest deal of this cycle.

Post-Bell Update:

- Biggest U.S. grid set capacity price at record $329.17 per MW-day, exceeding expectations for a floor price. IPPs expected to benefit alongside broader power sector gains.

Floor Activity:

- Activity levels rated a 5/10, with the floor finishing flat vs a 20-day average of +70bps.

- LOs: Slight net sellers, with supply distributed across all sectors except staples.

- HFs: Small net buyers, driven by covering demand in discretionary sectors.

Derivatives Market:

- Suppressed close-to-close movement, with implied move around ~32bps.

- Desk favors downside index hedges via put/put spread formats, given attractive vol entry points and elevated put skew.

- Outside the U.S., call spreads in China align with demand for upside in e-commerce names (e.g., JD, BABA) into September.

- Weekly straddle priced at 0.82%.

Hatzius Note Highlights:

- Core PCE inflation expected to rise above 3% in H2, assuming benign trends in rents, healthcare, and services.

- Weak consumption and housing pushed H1 real GDP growth estimate to 1.1%, below potential. Similar pace expected in H2.

- 12-month recession risk remains at 30%, double the historical average.

- Forecasts three consecutive 25bp rate cuts, bringing funds rate to 3½-3¾% by year-end 2025, followed by two more 25bp cuts in H1 2026.

- A 30% U.S. tariff on European imports could shave 0.5% off Euro area GDP by end-2026.

- Cyclical vs defensives basket implies 3.5% GDP growth vs Hatzius estimate of 1.6% and Atlanta Fed nowcast of 2.4%.