Good Afternoon Traders,
I hope everyone is doing well and preparing for the week ahead. Finally, I am beginning to emerge from this cloud of turmoil and uncertainty and slowly return to trading.
Max’s health has somewhat stabilized. He has started eating consistently and has even gained a little weight. The past several weeks were extremely difficult because I thought I might be approaching the end of his life and facing a decision I never wanted to make. When the veterinarian called and said it might be time to consider euthanasia, I took the recommendation seriously. However, I also wanted to give Max an opportunity to fight.
That is what Max has always done. He has always fought to remain here.
I prayed and asked for more time with him. I wanted Max to experience the home I worked so hard to purchase, even if only briefly. I am grateful that he may now have that opportunity. I understand that he is sixteen years old and that his health can change quickly, but right now he is eating, moving around better, and still showing a desire to be here. For the moment, that is enough.
The woman who left still has not returned. Although the heartbreak remains, I am managing it better than I was before. I firmly believe she will eventually return, and when she does, I will be in a much stronger place internally.
The argument and the space that followed were necessary. Tension had been building for a long time as we moved closer to one another without ever defining what we were becoming. Some of what she said was true, while other things felt completely false to me. I also said things that were not flattering, and I needed time to examine my role without accepting responsibility for everything that happened.
I have not completely given up because I believe something real exists between us. However, believing that does not mean putting my life on hold indefinitely while waiting for it to appear. It means continuing to live, grow, and move forward with the understanding that if something is genuine, time and distance will not erase it. If it is not genuine, continuing my life will reveal that as well.
For the past month, it has been difficult to focus on either the markets or the economy. Between Max’s health, the move, the emotional situation, and changes at work, my attention was divided. Rather than force myself to trade while mentally scattered, I stepped away.
A few days ago, I returned to the charts and began reviewing the economic data released throughout the week. Although my time away means I have not made any money in the market, it has reinforced an important lesson: the market will always be there.
There is no reason to press after a losing trade or force another opportunity before I am ready. SPY will open again the following morning. Another economic report will be released, another technical level will form, and another setup will eventually present itself. The objective is not to participate in every move. It is to remain prepared for the moves that fit my process.
My new trading area is almost complete. Once the blinds are installed, I will be able to set up my dual monitors and begin working comfortably. My platform has already been reorganized following a session with an options specialist. The equipment, charts, and structure are ready. The only remaining step is to begin trading again—but to do so patiently.
The move into my new place continues to drag on, although most of my belongings have been transferred except for my bed and a few remaining items. Being out on my own still feels surreal. This is my first home purchase, and despite the pressure surrounding it, I remain confident that my life is continuing to elevate.
The U.S. Economy: Stronger Beneath the Surface
Mortgage rates were not especially favorable when I purchased my home, but they were still better than where borrowing costs have moved since then. Rates have crept higher because of persistent inflation, fiscal uncertainty, rising federal debt, and pressure on real yields. These forces matter beyond housing because higher long-term yields increase the discount rate applied to equities, particularly expensive growth stocks that carry significant weight in SPY.
Housing is clearly feeling the strain. July new-home sales fell 10.5%. Available inventory increased to 488,000 homes, representing 9.6 months of supply, while the median sales price declined to $393,800. Lower prices may sound encouraging for prospective buyers, but they have not been enough to restore affordability because mortgage payments remain elevated.
The larger economic picture is more complicated. Second-quarter GDP grew at an annualized rate of 1.5%, down from 2.1% during the first quarter. On the surface, that suggests the economy lost momentum. However, real final sales to private domestic purchasers—which isolates consumer spending and private fixed investment from the more volatile effects of inventories, trade, and government spending—rose 4.2%, revised higher from 3.9%. Corporate profits from current production also increased by approximately $401 billion.
That creates an important separation between headline growth and underlying private demand. The economy is not booming evenly, but the private sector is stronger than the 1.5% GDP number implies.
Inflation remains the central problem. The second-quarter PCE price index rose at a 5.3% over the past year, while core PCE increased 3.6%. Those figures do not mean year-over-year inflation suddenly returned to those levels, but they show that inflation pressure accelerated during the quarter.
Federal Reserve Chair Kevin Warsh reinforced that concern at Jackson Hole. He argued that inflation remains too high and that current financial conditions may not be sufficiently restrictive. Markets responded by raising the probability of another rate increase, pushing short-term yields and the dollar higher.
This places the market in a difficult position. Economic growth is resilient enough to keep the Fed focused on inflation, but consumers are becoming less confident and increasingly selective about spending. Consumers have not stopped spending altogether, but more of their budgets are being directed toward necessities. That is not a recession signal by itself, but it creates a growing divide between aggregate economic strength and the experience of individual households.
China: Growth Without Balance
China remains the clearest example of uneven global growth. Industrial profits increased 17.6% over the first seven months of the year, but July’s year-over-year growth slowed to 11.2% from 15.1% in June. The strength was heavily concentrated in technology and industries connected to global AI demand. Profits in computers, communications equipment, and electronics increased 110%.
The traditional economy told a very different story. Automobile-manufacturing profits declined 20.4%, nonmetallic mineral-product profits fell 48.2%, and ferrous-metal profits declined 51.2%. Finished-goods inventories increased 10.8%, while accounts receivable rose 8.5%. The average collection period also lengthened, suggesting that companies are waiting longer to be paid.
China is producing, but domestic demand is not absorbing that production evenly. The economy remains dependent on exports, technology investment, and policy support while property-linked and consumer-facing industries struggle. For U.S. markets, this can be disinflationary when excess Chinese goods reach global markets, but it can also pressure multinational earnings and commodity demand.
Japan: Normalization Remains in Motion
Japan’s labor market continues to hold together while domestic inflation remains elevated, keeping the Bank of Japan on a gradual path toward policy normalization. The important development is not simply headline inflation; it is whether price pressure continues spreading through services and wages.
Persistent service inflation would strengthen the BOJ’s confidence that inflation is becoming domestically generated rather than merely imported through energy prices and a weak yen. That matters globally because higher Japanese rates can strengthen the yen and encourage Japanese investors to bring capital home. A rapid reversal in the yen-funded carry trade would tighten global liquidity and create pressure on U.S. equities, particularly crowded technology positions.
Euro Area: Improving Demand, Tighter Credit
The euro area is also sending mixed signals. Demand for business loans increased slightly during the second quarter, supported by working-capital needs, inventories, fixed investment by larger companies, and debt refinancing. However, banks simultaneously tightened lending standards for businesses, mortgages, and consumer loans as risk perceptions increased and interest rates rose. Housing-loan demand declined sharply, while consumer-credit demand also softened.
The best description is not that Europe is strong, but that conditions are becoming less bad in parts of the economy. Business financing needs are improving, yet households remain cautious and banks are becoming more selective. The recovery remains uneven across countries and sectors.
The Week Ahead and SPY Options
The upcoming labor data will test the Fed’s newly hawkish posture. July job openings will be released Tuesday, followed by ISM manufacturing, ISM services, and Friday’s August employment report. Consensus expectations center on modest payroll growth of roughly 50,000–58,000 jobs with unemployment holding near 4.1%.
For SPY, the cleanest bullish outcome would be employment data that is soft enough to reduce pressure on yields without signaling a sharp deterioration in growth. Strong payrolls, firm wages, and resilient services activity would reinforce the possibility of another rate increase, potentially lifting the two-year yield and pressuring growth stocks. A materially weak report could initially lower yields, but equities may struggle if the weakness is severe enough to revive recession concerns.
Because I am rebuilding my market feel, I will favor defined-risk structures. Vertical spreads make sense when direction is clear but premium is expensive. Butterflies are more appropriate when SPY is moving toward a defined target but follow-through may be limited. Outright calls or puts should be reserved for the cleanest momentum conditions, especially after the market confirms its reaction to the data.
My objective this week is not to make up for lost time. It is to observe the market’s speed, watch how yields respond to the labor data, and see whether SPY accepts or rejects the important levels that form. Everything in my personal life is slowly beginning to stabilize. Now, my trading process must be allowed to stabilize with it.