S&P 500 Dips to Start the Week as Nvidia Earnings Shift Into Focus
S&P 500 Dips to Start the Week as Nvidia Earnings Shift Into Focus
Also 10-year T-Note, Gold, Crude Oil, and Australian Dollar Futures
- S&P 500 E-mini futures: -0.21%
- 10-year T-Bond futures (/ZN): -0.22%
- Gold futures (/GC): +0.01%
- Crude Oil futures (/CL): +1.49%
- Australian Dollar futures (/6A): +0.24%
Despite a positive start to the trading week in Asia where stocks moved higher, optimism faded in early U.S. trading, with the S&P 500 dipping by 0.21% through the first hour of cash trading. Trump’s economic advisor Kevin Hassett said that the government could take more stakes in companies like it recently did with Intel (INCT). Rate traders are pricing in an 86% chance for a Fed rate cut at the September meeting, slightly higher than what the market was pricing on Friday. Several Fed members will speak this week, but traders are waiting on economic data to assess the Fed’s path.
| Symbol: Equities | Daily Change |
| /ESU5 | -0.21% |
| /NQU5 | -0.06% |
| /RTYU5 | -0.42% |
| /YMU5 | -0.50% |
The S&P 500 (/ESU5) made a record high close last week, gaining 0.27% for its third weekly gain. Traders stepped back to start trading on Monday, with prices dipping 0.21% in early trading. Intel (INTC) rose over 1% to remain near its highest level since February after the government announced it took a stake in the company. Nvidia (NVDA) earnings offer perhaps the biggest risk event for markets this week, which are due Wednesday after the market close. Communication stocks were the only sector in the green this morning while consumer staples and utilities were among the biggest losers.
| Strategy: (67DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 6425 p Short 6450 p Short 6625 c Long 6650 c | 17% | +912.50 | -337.50 |
| Short Strangle | Short 6450 p Short 6625 c | 45% | +10075 | x |
| Short Put Vertical | Long 6425 p Short 6450 p | 60% | +350 | -900 |
| Symbol: Bonds | Daily Change |
| /ZTU5 | -0.09% |
| /ZFU5 | -0.18% |
| /ZNU5 | -0.22% |
| /ZBU5 | -0.30% |
| /UBU5 | -0.35% |
10-year T-Note futures fell 0.22% to start the week as traders took some profits following a big gain on Friday that came after Fed Chair Jerome Powell signaled to markets that a September rate cut is a valid possibility. This week offers several notable auctions, including a 2-year floating rate note (FRN) and a 5-year note auction on Wednesday and a 7-year note auction on Thursday. The yield on 10-year notes traded at 4.293% to start the week.
| Strategy (60DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 110.5 p Short 111 p Short 112.5 c Long 113 c | 29% | +312.50 | -187.50 |
| Short Strangle | Short 111 p Short 112.5 c | 50% | +1187.50 | x |
| Short Put Vertical | Long 110.5 p Short 111 p | 75% | +156.25 | -343.75 |
| Symbol: Metals | Daily Change |
| /GCZ5 | +0.01% |
| /SIU5 | -0.51% |
| /HGU5 | +0.63% |
Gold futures (/GCZ5) were nearly unchanged this morning, although traders trimmed earlier losses. The pullback in equity markets that started early in U.S. trading likely caused some of the buying pressure. Last week, gold prices pierced above their 9- and 21-day exponential moving averages, improving its technical posture. Prices are now trading in the middle of its July range and remain directionally stagnant.
| Strategy (64DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 3370 p Short 3375 p Short 3475 c Long 3480 c | 19% | +390 | -110 |
| Short Strangle | Short 3375 p Short 3475 c | 54% | +11680 | x |
| Short Put Vertical | Long 3370 p Short 3375 p | 62% | +220 | -280 |
| Symbol: Energy | Daily Change |
| /CLV5 | +1.49% |
| /HOU5 | +1.49% |
| /NGU5 | +0.29% |
| /RBU5 | +0.47% |
Crude oil prices (/CLX5) moved higher Monday morning to add to last week’s gains as traders see the potential for U.S. sanctions on Russia increasing as negotiations for peace with Ukraine stall. Ukraine attacks a Russian fuel export terminal over the weekend, which increased tensions amid the ongoing talks. Oil prices got a boost last week after the Energy Information Administration (EIA) said that crude oil stocks fell more than expected for the prior week. Still, the prompt spread in oil weakened, reflecting the outlook for more supply in the market. For now, however, those supply concerns are being displaced by the potential for stricter trade actions on Russia.
| Strategy (52DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 62.5 p Short 63 p Short 66.5 c Long 67 c | 19% | +380 | -120 |
| Short Strangle | Short 63 p Short 66.5 c | 51% | +4260 | x |
| Short Put Vertical | Long 62.5 p Short 63 p | 56% | +210 | -290 |
| Symbol: FX | Daily Change |
| /6AU5 | +0.24% |
| /6BU5 | -0.17% |
| /6CU5 | +0.01% |
| /6EU5 | -0.23% |
| /6JU5 | -0.42% |
Australian Dollar futures (/6AU5) continued to show resilience from Friday when it put in the biggest daily percentage gain since May, rising 1% on Friday after Fed Chair Powell’s speech injected some weakness into the dollar. Meanwhile, rate cut bets for the Reserve Bank of Australia (RBA) remain on the weaker side. If Australia doesn’t cut rates and the United States does, it would benefit the yield premium between the two countries. Minutes of the August RBA policy board meeting are due out tonight, which could offer the Aussie Dollar its next directional cue.
| Strategy (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
| Iron Condor | Long 0.64 p Short 0.645 p Short 0.66 c Long 0.665 c | 40% | +280 | -220 |
| Short Strangle | Short 0.645 p Short 0.66 c | 57% | +810 | x |
| Short Put Vertical | Long 0.64 p Short 0.645 p | 71% | +150 | -350 |
Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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