This Overlooked Trigger Could Send Stocks Even Higher

Since the start of the week, the headlines have been loud, but the charts even louder.

We're sitting at fresh all-time highs across the board, thanks to a powerful combination of global trade developments, strong earnings, and powerful seasonal patterns all converging to push stocks higher.

But let's start with what's setting the tone for the markets: President Trump's tariff deadline.

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August 1 is right around the corner, with growing concerns of tariffs spiking for certain countries, like Trump's threat of slapping 145% tariffs on China if no deals are made. But based on how history has played out so far, I wouldn't be surprised to see another delay, maybe a final 30-day extension into the fall. If that happens, it gives the market exactly what it wants: time, clarity, and a narrative to keep pushing risk assets higher.

That bullish momentum is already showing up in earnings. So far, financial stocks have come out swinging, reporting better-than-expected numbers. And with tech earnings on deck, expectations are solid, if not a touch conservative. If we get even modest upside surprises from the AI-heavy names, the market has plenty of room to keep climbing. In fact, it's largely those two sectors, financials and AI, that we can thank for these global highs.

But earnings aren't the only driver here.

This one overlooked trigger could shoot stocks even higher through the middle of August.

One of the biggest catalysts nobody's really talking about is interest rates. The European Central Bank is now expected to cut rates sooner than forecasted, which could put pressure on the Fed to follow suit. And if Fed Chair, Jerome Powell, holds steady, the perception alone that a rate cut is back on the table is enough to give equities a further boost.

And when you pair that with what the technicals are doing? Things get even more interesting.

Take a look at this chart on SPDR S&P 500 ETF (NYSE:SPY):

What you're seeing here is a clean V-shaped recovery, with SPY now holding firmly above $631. I'm targeting a move to 640 by the middle of August, and the Money Calendar is backing me up. In fact, I recently ran a scan on SPY and found a 90% historical win rate on patterns starting around July 10 and ending on August 21.

That's not a guess. It's backed by millions of data points and proven seasonal patterns over the last 10 years (and beyond). And everything about the current environment supports another leg up.

Another factor that makes this window through August so attractive? Volatility.

Just a few months ago, we were dealing with implied volatility (IV) in the 50s. But today, we're hovering between 10 and 15. That's a BIG drop (over two-thirds), and it's created an environment where option premiums are cheap, and directional setups have room to breathe. So, if you're bullish and the trend agrees with you, calls and call spreads are back in play. And if you're looking for something a little further out, it's also a good time to think about put spreads or protective hedges as we get deeper into August.

Gold is showing a similar rhythm, too. SPDR Gold Shares (NYSE:GLD) is inching back toward its June high of 316.29 – and as of this week, we got another pop in volatility. This is a signal that often precedes sharp price movement in metals, including GLD's last rally. In fact, I believe we're looking at a potential run to the $330s if momentum holds. And the Money Calendar agrees, showing an 80% probability of a further move to the upside between now and the end of August.

That said, things aren't rosy for everyone.

Oil, specifically United States Oil Fund (NYSE:USO), isn't showing signs of a strong seasonal edge. Price action has actually reverted to the middle of its Fibonacci range. So I'm taking more of a wait-and-see approach over a bullish or bearish one for now. If oil holds steady, that's still a net positive for stocks.

Bonds are a little more nuanced. The iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT), for example, isn't showing a seasonal pattern either. But the short-term trend has started to tilt upward, hinting at lower interest rates. If that continues, it could add more fuel to the fire of equities – something to watch toward the back half of this quarter.

So, where does that leave us?

• Stocks are strong.
• Seasonals are strong.
• Volatility is low.
• Gold is breaking out.
• Oil is calm.
• And so far, earnings are beating expectations.

Even bonds are tilting in the right direction. This is the kind of market where having a plan beats guessing every time.

And in the coming days, I'll be releasing my full August outlook – including the top exchange-traded funds (ETFs) to watch.

Until then, plan your trade – and trade your plan.

Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.

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