Cherry picks

Cherry Picks: Navigating 2024's Most Volatile Sectors and Futures Markets

By:Michael "Dr. Data" Rechenthin

Opportunity follows volatility. Here is whats in store for sectors in 2024.

  • Junior gold mining has the highest expected volatility.
  • The consumer staples sector has the lowest expected volatility.
  • Guess the 2024 closing prices for SPX each quarter and win cash.

Below we have a list of various sector exchange-traded funds (ETFs), sorted by their implied volatility (IV) values. Implied volatility is a metric used in the options market to gauge the market's expectation of the volatility of a security's price.

Generally, a higher IV indicates that the market expects larger price swings, either up or down, while a lower IV suggests expectations of less dramatic price movements.

Sorted by Implied Volatility

In the list, the junior gold mining sector (GDXJ) has the highest implied volatility at 0.44, indicating that traders expect significant price movement in this sector. "Junior" gold mining companies are those that generally have market capitalizations under $500 million.

Junior gold mining is followed by the retail sector (XRT) with an IV of 0.41 and the gold mining sector (GDX) with an IV of 0.36. We expect both sectors to experience relatively high price volatility.

The slowest expected movers are sectors like consumer staples (XLP), health care (XLV) and the Dow Jones Industrial Average (DIA). Those three sectors share the lowest implied volatilities at 0.13. This suggests that market participants expect these sectors to be more stable compared to those with higher IVs.

Sector returns

Semiconductors (SMH) killed it in 2023. Rounding out the top three were homebuilders (XHB) and technology (XLK). Who would have thought homebuilders (XHB) would have performed so well?

Sorted by Returns

Average movement per day in the futures

The Russell 2000 had its biggest swings in December. As an example, the Russell futures (/RTY) moved an average of $1,108 per day in December. This is the largest move it has seen in more than six months.

Average amount of futures tend to move per day

Next week we will provide a cheat sheet of all the futures.

Guess the S&P 500 for 2024 and win some cash!

Last year, our customers tested their market intuition by guessing the quarterly closing prices of the S&P 500. Below we show how they stacked against reality. This rally in equities surprised many of us!

results from 2023

Guess the 2024 closing prices for SPX each quarter and win some cash. Get your guesses in before the window closes on Jan. 5, 2024!

Participate in the contest here.

Michael Rechenthin, Ph.D., (aka “Dr. Data”), managing director of research and development, has 25 years of trading and markets experience. He is best known for his weekly Cherry Picks newsletter. On Thursdays, he appears on Trades from the Research Team LIVE.

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

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