Nasdaq 100 Pointed Lower after Retail Sales Beat
Nasdaq 100 Pointed Lower after Retail Sales Beat
Also five-year T-note, gold, crude oil, and Japanese yen futures
- Nasdaq 100 E-mini futures (/NQ): -0.89%
- Five-year T-note futures (/ZF): -0.31%
- Gold futures (/GC): -0.23%
- Crude oil futures (/CL): -2.47%
- Japanese yen futures (/6J): -0.47%
It’s a “good news is bad news” kind of day for financial markets in the wake of the December U.S. retail sales report. Strong readings across the board, including the retail sales control group, which is used in the gross-domestic-product calculation due out next week, sent U.S. Treasury yields higher and dragged U.S. equity indexes lower. The U.S. dollar is continuing its recent reversal higher, proving burdensome for gold and silver. Dissipating concerns of a wider conflict in the Middle East are taking some pressure off of energy markets.
Symbol: Equities | Daily Change |
/ESH4 | -0.67% |
/NQH4 | -0.89% |
/RTYH4 | -1.66% |
/YMH4 | -0.55% |
U.S. equity indexes are set to open lower and technology stocks are taking it on the chin amid a risk-off mood, with Nasdaq-100 E-mini futures (/NQH4) down 0.8% ahead of the bell. Stronger-than-expected retail sales are causing more doubt over expected rate cuts, which were put in further doubt by comments from the Federal Reserve Gov. Christopher Waller earlier this week.
Strategy: (43DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 16300 p Short 16400 p Short 17300 c Long 17400 c | 36% | +1130 | -870 |
Long Strangle | Long 16300 p Long 17400 c | 41% | x | -6950 |
Short Put Vertical | Long 16300 p Short 16400 p | 69% | +525 | -1475 |
Symbol: Bonds | Daily Change |
/ZTH4 | -0.20% |
/ZFH4 | -0.31% |
/ZNH4 | -0.32% |
/ZBH4 | -0.23% |
/UBH4 | -0.25% |
Treasuries are under heavy selling pressure, especially along the short end of the curve following the latest economic data from the United States. The move is pushing five-year T-note futures 0.35% lower this morning to add to yesterday’s losses following comments from Federal Reserve members. The market appears to be undoing some of the overly optimistic pricing of the last several months.
Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 107 p Short 107.25 p Short 108.75 c Long 109 c | 36% | +148.44 | -109.38 |
Long Strangle | Long 107 p Long 109 c | 40% | x | -570.31 |
Short Put Vertical | Long 107 p Short 107.25 p | 78% | +78.13 | -171.88 |
Symbol: Metals | Daily Change |
/GCG4 | -0.23% |
/SIH4 | -1.01% |
/HGH4 | -0.54% |
Despite selling across equity index futures, gold futures (/GCG4) are down against a stronger dollar and higher Treasury yields after retail sales data for December impressed to the upside, complicating the Federal Reserve’s path to cut rates later this year. /GCG4 traded below the 50-day simple moving average this morning, threatening a deeper technical pullback.
Strategy (40DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2005 p Short 2015 p Short 2075 c Long 2085 c | 33% | +620 | -380 |
Long Strangle | Long 2005 p Long 2085 c | 42% | x | -3050 |
Short Put Vertical | Long 2005 p Short 2015 p | 69% | +350 | -650 |
Symbol: Energy | Daily Change |
/CLH4 | -2.47% |
/HOH4 | -1.76% |
/NGH4 | -3.76% |
/RBH4 | -2.08% |
U.S. crude oil futures (/CLH4) fell over 2% this morning after data from China disappointed expectations. China’s gross domestic product for the fourth quarter and retail sales data for December came in light, suggesting the world’s second-largest economy isn’t performing as well as expected. The selloff comes despite ongoing hostilities across the Middle East. Today, the American Petroleum Institute will report inventory data for the week ending Jan. 12.
Strategy (28DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 67.5 p Short 68 p Short 74 c Long 74.5 c | 33% | +320 | -180 |
Long Strangle | Long 67.5 p Long 74.5 c | 41% | x | -2920 |
Short Put Vertical | Long 67.5 p Short 68 p | 64% | +160 | -340 |
Symbol: FX | Daily Change |
/6AH4 | -0.66% |
/6BH4 | +0.14% |
/6CH4 | -0.26% |
/6EH4 | -0.10% |
/6JH4 | -0.47% |
A stronger dollar is punishing Japanese yen futures (/6JH4), down about 0.5% ahead of the New York opening bell. Recent commentary from Federal Reserve officials that pushed back against expected rate cuts is causing traders to second-guess market bets that see the Fed cutting as early as March. Strong U.S. retail sales numbers for December helped to keep the dollar lifted. The rate-sensitive yen is trading at a six-week low.
Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.00665 p Short 0.0067 p Short 0.0069 c Long 0.00695 c | 38% | +362.50 | -262.50 |
Long Strangle | Long 0.00665 p Long 0.00695 c | 39% | x | -975 |
Short Put Vertical | Long 0.00665 p Short 0.0067 p | 77% | +175 | -450 |
Christopher Vecchio, CFA, tastylive’s head of futures and forex, has been trading for nearly 20 years. He has consulted with multinational firms on FX hedging and lectured at Duke Law School on FX derivatives. Vecchio searches for high-convexity opportunities at the crossroads of macroeconomics and global politics. He hosts Futures Power Hour Monday-Friday and Let Me Explain on Tuesdays, and co-hosts Overtime, Monday-Thursday. @cvecchiofx
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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