Nasdaq Falls from All-Time Highs Amid Light Trading
Nasdaq Falls from All-Time Highs Amid Light Trading
Also, 10-year T-note, copper, natural gas and British pound futures
- Nasdaq e-mini futures (/NQ): -0.02%
- 10-year T-note futures (/ZN): +0.22%
- Copper futures (/HG): +1.61%
- Natural gas futures (/CL): +4.05%
- British pound futures (/6B): +0.43%
U.S. stock indexes continue to float near all-time highs this week despite a lack of economic events and low seasonal trading volumes.
But some traders are asking how long it could last. For now, it looks like smooth sailing for stocks, aided by falling Treasury yields and a softer U.S. dollar. There are a couple regional Federal Reserve indexes due this morning and Treasury auctions for various notes will be held later today. Energy traders are watching out for a private inventory report for U.S. stockpiles.
Symbol: Equities | Daily Change |
/ESH4 | +0.06% |
/NQH4 | -0.02% |
/RTYH4 | +0.37% |
/YMH4 | +0.09% |
Nasdaq goes lower
After a 0.61% gain on Tuesday, the Nasdaq (/NQH4) traded slightly lower at the opening bell. The index remains near all-time highs but with no clear catalyst in the short term, these levels might be hard to support once traders return in the New Year. Next week will bring several potentially high-impact events that could put market sentiment to the test.
Strategy: (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 16,800 p Short 16,900 p Short 17,300 c Long 17,400 c | 23% | +1,460 | -540 |
Long Strangle | Long 16,800 p Long 17,400 c | 46% | x | -7,840 |
Short Put Vertical | Long 16,800 p Short 16,900 p | 63% | +640 | -1,360 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.02% |
/ZFH4 | +0.11% |
/ZNH4 | +0.22% |
/ZBH4 | +0.68% |
/UBH4 | +0.94% |
Treasury futures move up
10-year Treasury note futures (/ZNH4) rose 0.22% this morning, which pushed the note’s yield down. Today will see several auctions, with 17-week bills and a 5-year note auctions scheduled by the U.S. Treasury. Yesterday we saw higher demand across several auctions. Bond traders are looking to lock in higher yields before the Fed starts cutting rates, likely next year.
Strategy (58DTE, ATM) | Auctions | POP | Max Profit | Max Loss |
Iron Condor | Long 111.5 p Short 112 p Short 114 c Long 114.5 c | 28% | +343.50 | -156.25 |
Long Strangle | Long 111.5 p Long 114.5 c | 43% | x | -1,468.75 |
Short Put Vertical | Long 111.5 p Short 112 p | 72% | +187.50 | -312.50 |
Symbol: Metals | Daily Change |
/GCG4 | +0.57% |
/SIH4 | +0.02 |
/HGH4 | +1.61% |
Copper prices up
The softer dollar and falling Treasury yields are providing some room for copper prices to rise. Optimism out of China following a rate cut and a round of video game approvals that sparked buying in the country’s technology sector is bolstering broader sentiment for the region, which traditionally consumes a lot of copper. The metal is now at the highest level since August. If sentiment about China continues to improve, copper prices will likely continue to move higher.
Strategy (61DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 3.89 p Short 3.9 p Short 4.06 c Long 4.07 c | 21% | +200 | -50 |
Long Strangle | Long 3.89 p Long 4.07 c | 44% | x | -4,125 |
Short Put Vertical | Long 3.89 p Short 3.9 p | 61% | +100 | -150 |
Symbol: Energy | Daily Change |
/CLG4 | -0.90% |
/HOG4 | +0.21 |
/NGG4 | +4.09% |
/RBG4 | +0.75% |
Natural gas soars
Natural gas futures (/NGG4) rose over 4% this morning as weather models show some relief from above-average temperatures over the next two weeks and conflict grows over Russia’s arctic natural gas pipeline that the U.S. sanctioned earlier this year. Recently, shareholders have pulled support for the project, and Japan’s Mitsui just pulled its workers out of the project.
Strategy (61DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2 p Short 2.05 p Short 2.65 c Long 2.67 c | 65% | +220 | -280 |
Long Strangle | Long 2 p Long 2.67 c | 38% | x | -2,590 |
Short Put Vertical | Long 2 p Short 2.05 p | 64% | +170 | -330 |
Symbol: FX | Daily Change |
/6AH4 | +0.30% |
/6BH4 | +0.43% |
/6CH4 | +0.02% |
/6EH4 | +0.52% |
/6JH4 | +0.03% |
British pound on track for four-month highs
The British pound (/6BH4) is up 0.35% this morning and on track to close out the year at four-month highs and with the best performance among major currencies for 2023 at about +5%. Inflation continues to run hot in the United Kingdom, pushing investors to bet that the Bank of England (BoE) won’t be able to cut as fast as its counterparts. That should keep gilt yields higher and help the currency.
Strategy (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.265 p Short 1.27 p Short 1.29 c Long 1.295 c | 31% | +211.50 | -93.75 |
Long Strangle | Long 1.265 p Long 1.295 c | 41% | x | -843.75 |
Short Put Vertical | Long 1.265 p Short 1.27 p | 70% | +112.50 | -200 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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