To The Moon

Tech stocks have staged a stunning rebound, propelling the Nasdaq and S&P 500 higher as Fed Governor Waller reiterated calls for a September rate cut, hinting at multiple reductions over the next 3-6 months. Wall Street heavyweights like Morgan Stanley forecast a 25 bps cut this month, followed by similar moves every other meeting through 2026, potentially exceeding market expectations. With the S&P 500 at 6,448.26, Nasdaq at 21,648.23, and Bitcoin at $123,456, the VIX at 14.12 reflects calm amid tariffs (30-35% on Canada/EU/Mexico) and oil at $74.50/barrel. Has the pullback ended, or is this a head fake? Is the rebound a prime time for covered calls? Will Fed cuts surpass forecasts? This deep dive unpacks the rebound, Fed signals, and strategies to capitalize or hedge.

Rebound Unpacked: Pullback Over or Pause?

The market's snapback tells a story of resilience:

• Tech-Led Surge: Freed from structural risks, Alphabet and Apple lead with 6-8% gains, lifting the Nasdaq 0.9% to 21,648.23 and S&P 500 0.19% to 6,448.26, with AI-driven recovery.

• Historical Context: September averages -0.8% returns since 1950, but low VIX (14.12) and greed index at 75 suggest potential defiance, per Stock Trader's Almanac.

• Data Drivers: July jobs revisions (258,000 lower) and payroll slowdown (35,000 average) fueled Waller's dovish shift, with PCE data Friday key to sentiment.

• Risk Signals: Hedge funds' record VIX shorts (net short 200,000 contracts) could amplify a spike to 20 if tariffs hit, per CFTC data.

• Global Echo: Shanghai Composite up 0.8% on chipmakers and Nifty 50 at 25,000 show resilience, but U.S. tariff threats add pressure.

• Sentiment Check: Posts found on X buzz with "rebound rally" but warn of "institutional trap," reflecting mixed views.

The rebound could mark the end of the pullback if data supports cuts.

Covered Call Time: Leverage the Rebound

The rebound offers covered call setups:

• Strategy Basics: Sell calls on held stocks to collect premiums, ideal in low-volatility rebounds (VIX 14.12), but caps upside if stocks surge.

• Prime Candidates: For Alphabet at $230 (RSI 70), sell $240 calls (September expiry) for $5 premium, yielding 2.2% if flat, but limit gains above $245.

• Risk-Reward: In a 3-5% rally to 6,700 S&P, covered calls on Nvidia ($141, sell $150 calls for $6) yield 4.3%, but miss if it hits $150.

• Execution Tip: Diversify with 20-30 delta calls for 60-70% success rate, per options data, in this greed phase (index 75).

• Sentiment Check: X posts favor "covered call income" but caution "missed upside," showing a balanced debate.

Covered calls suit the rebound if you expect limited gains.

Fed Cuts: Exceed Expectations or Fall Short?

Waller's dovish pivot fuels speculation:

• Waller’s Call: Start cuts in September, with multiple over 3-6 months, per Reuters, shifting from inflation focus to labor weakness (July payrolls 35,000 average).

• Morgan Stanley Forecast: 25 bps cuts in September and December 2025, then quarterly in 2026 to 2.75-3.0%, per note, exceeding prior no-cut view but below market's 100 bps by year-end.

• Market Pricing: 81.9% odds for September cut, per CME FedWatch, with 100 bps priced by December, but Waller's flexibility suggests potential for more if data softens.

• Risks: Stubborn inflation (3% PCE) and tariffs (0.9% GDP drag) could limit cuts, per Morgan Stanley, with dissent possible.

• Sentiment Check: Posts found on X see "cut bonanza" but "inflation trap," reflecting uncertainty.

Cuts could exceed if labor weakens, but expectations are high.

Trading Strategies: Capitalize or Hedge?

Short-Term Plays

• Buy the Rebound: Buy S&P 500 at 6,448.26, target 6,500, stop at 6,400. A 0.8% gain if momentum holds.

• Covered Call Setup: Hold Alphabet at $230, sell $240 calls for $5 premium. Yield 2.2% if flat, cap gains at $245.

• Bearish Hedge: Buy puts at 6,400 S&P, target 6,200, stop at 6,450. A 3% win if pullback hits.

• Profit Lock: Sell at 6,500 S&P, target 6,450, stop at 6,550. A 0.8% buffer if overbought.

• Options Play: Buy $6,500 S&P calls or $6,400 puts (September expiry) for 150-200% gains on a 5% move.

Long-Term Investments

• Hold Tech: Buy Alphabet at $230, target $250, for 9% upside. Stop at $220.

• Diversify Value: Buy PepsiCo at $185, target $200, for 8% upside. Stop at $180.

• Growth Bet: Buy Nvidia at $141, target $150, for 6% upside. Stop at $135.

• Defensive Play: Buy Coca-Cola at $70, target $75, for 7% upside. Stop at $68.

Hedge Strategies

• VIXY ETF: Buy at $14, target $17, stop at $12, to hedge volatility.

• SPY Puts: Use puts at 6,400 for a 5-10% market drop.

• Gold (GLD): Buy at $200, target $210, stop at $195, as a buffer.

My Trading Plan: Leveraging the Rebound

I’m capitalizing on the rebound with a covered call twist. I’ll hold Alphabet at $230, selling $240 calls for $5 premium, targeting 2.2% yield if flat. I’ll buy S&P 500 at 6,448.26, targeting 6,500, with a 6,400 stop, riding rate cut hype. I’ll add Nvidia at $141, aiming for $150, with a $135 stop, and PepsiCo at $185, targeting $200, with a $180 stop. I’m hedging with VIXY at $14, targeting $17, and holding 20% cash for a dip to 6,400 or tariff news. I’ll monitor PCE data and adjust.

Key Metrics

The Bigger Picture

On September 5, 2025, the market rebound, with tech up 2.95% in August, aligns with a 6,448.26 S&P 500 and $123,456 Bitcoin. A 3-5% rise to 6,500-6,600 is possible by month-end if PCE cools to 0.2%, with a $6,900 target (7% upside) by year-end if cuts deliver. A 5-8% dip to 6,150-6,200 threatens if PCE surprises or tariffs escalate. The VIX at 14.12 signals calm—ride the rebound or hedge smartly. The Fed's cuts could shock if labor weakens further.

Has the pullback ended? Share below! 🎁

📢 Like, repost, and follow for daily updates on market trends and stock insights.

📝 Disclaimer: This post is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.

📌@Daily_Discussion @Tiger_comments @TigerStars @TigerEvents @TigerWire @CaptainTiger @MillionaireTiger