S&P 500 Lingers Near All-Time Highs Ahead of Holiday
S&P 500 Lingers Near All-Time Highs Ahead of Holiday
Also 10-year T-note, silver, natural gas and British pound futures
S&P 500 E-mini futures (/ES): +0.02%
10-year T-note futures (/ZN): +0.16%
Silver futures (/SI): +3.94%
Natural gas futures (/NG): -0.41%
British pound` futures (/6B): +0.46%
U.S. stocks trimmed losses at the open this morning as traders digested the latest labor market data, which showed private payrolls grew by only 150,000 for June, missing estimates and falling from the prior month. Active investors saw that as a green light for a September interest rate cut from the Federal Reserve and pushed Treasury yields lower across the curve. The dollar was softer vs. its major peers, and oil prices rose ahead of a U.S. inventory report due out later today.
Symbol: Equities | Daily Change |
/ESU4 | +0.02% |
/NQU4 | -0.02% |
/RTYU4 | +0.24% |
/YMU4 | +0.06% |
S&P 500 contracts (/ESU4) trimmed losses at the New York open and moved higher after labor market data showed further signs of a cooling economy, boosting Fed rate cut bets. Volumes are expected to be light today with only a half day of trading. Markets close early at 1 p.m. EDT and will remain closed on Thursday for the Fourth of July holiday. Constellation Brands (STZ) rose 1% after reporting better-than-expected earnings.
Strategy: (44DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5325 p Short 5350 p Short 5775 c Long 5800 c | 62% | +285 | -962.50 |
Short Strangle | Short 5350 p Short 5775 c | 68% | +1787.50 | x |
Short Put Vertical | Long 5325 p Short 5350 p | 86% | +137.50 | -1112.50 |
Symbol: Bonds | Daily Change |
/ZTU4 | 0% |
/ZFU4 | +0.07% |
/ZNU4 | +0.16% |
/ZBU4 | +0.54% |
/UBU4 | +0.71% |
Treasury yields fell across the curve this morning after traders digested the latest jobs figures for the U.S., which showed weaker-than-expected private payroll growth. The 10-year T-note contract (/ZNU4) rose 0.17%. Prices have put in a series of higher lows and higher highs since the April swing low, and the uptrend could likely continue if economic data continues to support the case for Fed rate cuts. Friday’s non-farm payrolls report will be in focus when traders return to the market.
Strategy (51DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 107 p Short 107.5 p Short 112.5 c Long 113 c | 64% | +125 | -375 |
Short Strangle | Short 107.5 p Short 112.5 c | 70% | +500 | x |
Short Put Vertical | Long 107 p Short 107.5 p | 89% | +62.50 | -437.50 |
Symbol: Metals | Daily Change |
/GCQ4 | +1.13% |
/SIU4 | +3.94% |
/HGU4 | +2.31% |
Silver prices are sharply higher as Treasury yields and the dollar retreat. The metal is on track to break a descending trendline formed off a series of lower highs put in since the May swing high. That could shift the technical momentum to favor bulls. A weak jobs report on Friday could ignite more buying in the metal, but trading volume is likely to be on the light side until Friday, given the U.S. market holiday.
Strategy (55DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 30 p Short 30.25 p Short 31.75 c Long 32 c | 21% | +1,000 | -280 |
Short Strangle | Short 30.25 p Short 31.75 c | 56% | +9,835 | x |
Short Put Vertical | Long 30 p Short 30.25 p | 58% | +615 | -645 |
Symbol: Energy | Daily Change |
/CLQ4 | +0.04% |
/HOQ4 | -1.03% |
/NGQ4 | -0.41% |
/RBQ4 | -0.79% |
Milder weather and higher production figures have pushed natural gas futures (/NGQ4) to the lowest level since May 2, dropping 0.9% this morning. Meanwhile, prices in Europe are softer amid stable demand forecasts and strong wind production. The Energy Information Administration (EIA) will release inventory data for natural gas later this morning.
Strategy (55DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2.3 p Short 2.35 p Short 2.65 c Long 2.7 c | 24% | +370 | -130 |
Short Strangle | Short 2.35 p Short 2.65 c | 56% | +3,120 | x |
Short Put Vertical | Long 2.3 p Short 2.35 p | 55% | +220 | -280 |
Symbol: FX | Daily Change |
/6AU4 | +0.4% |
/6BU4 | +0.46% |
/6CU4 | +0.2% |
/6EU4 | +0.41% |
/6JU4 | -0.1% |
British Pound futures (/6BU4) rallied this morning as the dollar broadly declined. The U.K. general election is slated for tomorrow, and the Conservative party is set to cede power to the Labour party, the main opposition for Prime Minister Rishi Sunak’s government. Friday’s U.S. jobs report will also likely be a big mover for major currencies like the pound, and foreign exchange markets may also see light volume with the U.S. on holiday.
Strategy (37DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.265 p Short 1.27 p Short 1.285 c Long 1.29 c | 32% | +206.25 | -106.25 |
Short Strangle | Short 1.27 p Short 1.285 c | 55% | +762.50 | x |
Short Put Vertical | Long 1.265 p Short 1.27 p | 73% | +106.25 | -206.25 |
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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