Stocks Look to Close Eighth Straight Week of Gains
Stocks Look to Close Eighth Straight Week of Gains
Also 10-year T-note, gold, crude oil and euro futures
- Nasdaq 100 e-mini futures (/NQ): +0.25%
- 10-year T-note futures (/ZN): +0.17%
- Gold futures (/GC): +1.27%
- Crude oil futures (/CL): +1.11%
- Euro futures (/6E): +0.29%
The Santa Claus Rally window for stocks has opened (the last five trading days of the year and the first two of the new one).
Since 1950, the S&P 500 has rallied almost 80% of the time to an average gain of +1.4%. This year’s window is opening on bullish footing, as a decline in the Federal Reserve’s preferred gauge of inflation, the personal consumption expenditures (PCE) index, reaffirmed rate-cut bets in 2024. The drop in U.S. Treasury yields has filtered through into a weaker U.S. Dollar and stronger precious metals prices.
Symbol: Equities | Daily Change |
/ESH4 | +0.19% |
/NQH4 | +0.25% |
/RTYH4 | +0.41% |
/YMH4 | -0.16% |
Stocks move higher
Equity markets are slightly higher at the open in New York, encouraged by the latest inflation figures.
At the same time, earnings numbers from Nike (NKE) are casting some gloom over the market, with the stock down over 10% this morning following a weaker sales outlook update. The company’s outlook reflects broader economic concerns, but for now a soft landing looks like the most likely outcome for the economy.
Traders may not take on too much risk going into a long holiday weekend, which leaves prices susceptible to a pullback. Nasdaq 100 E-mini futures were up 0.23% at the open.
Strategy: (42DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 16500 p Short 16600 p Short 17400 c Long 17500 c | 34% | +1145 | -855 |
Long Strangle | Long 16500 p Long 17500 c | 43% | x | -6555 |
Short Put Vertical | Long 16500 p Short 16600 p | 68% | +525 | -1475 |
Symbol: Bonds | Daily Change |
/ZTH4 | +0.04% |
/ZFH4 | +0.09% |
/ZNH4 | +0.17% |
/ZBH4 | +0.50% |
/UBH4 | +0.59% |
10-year bond futures move up
10-year T-note futures (/ZNH4) caught a bid on Friday’s inflation report. The market is pricing in almost twice the number of rate cuts that the Federal Reserve forecasts. If data continues to support the more dovish outlook, that should help to drive yields lower.
For now, markets are looking at a potential period of little action until next year, given the U.S. holiday season and light economic calendar. Bond traders do have several auctions to watch next week, however, including auctions for two-year, five-year and seven-year notes.
Strategy (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 111 p Short 111.5 p Short 114.5 c Long 115 c | 47% | +234.38 | -265.63 |
Long Strangle | Long 111 p Long 115 c | 34% | x | -640.63 |
Short Put Vertical | Long 111 p Short 111.5 p | 78% | +125 | -375 |
Symbol: Metals | Daily Change |
/GCG4 | +1.27% |
/SIH4 | +0.79% |
/HGH4 | +0.10% |
Gold gains
Gold futures (/GCG4) also moved higher following this morning’s inflation report. The report showed prices fell in the United States for the first time since April 2020, according to the PCE index. That encouraged views that the Fed will start to cut early next year, which pushed Treasury yields lower to gold’s benefit.
However, that was the last big data print for the year out of the U.S. and markets are entering a period of reduced liquidity. But, for now, gold’s path of least resistance looks to be higher.
Strategy (34DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2050 p Short 2055 p Short 2105 c Long 2110 c | 26% | +380 | -120 |
Long Strangle | Long 2050 p Long 2110 c | 39% | x | -4290 |
Short Put Vertical | Long 2050 p Short 2055 p | 66% | +220 | -280 |
Symbol: Energy | Daily Change |
/CLF4 | +1.11% |
/HOH4 | +0.13% |
/NGF4 | -1.10% |
/RBH4 | +1.63% |
Oil prices rise as Red Sea uncertainty remains
Crude oil prices (/CLG4) moved higher Friday as shippers continued to avoid the Red Sea amid uncertainty over how exactly a U.S.-led coalition would protect the vital shipping lane after Houthi rebels said they would attack more ships despite the military presence.
Meanwhile, Angola’s recent departure from OPEC is fueling concerns that the cartel will have trouble controlling prices.
Strategy (26DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 72 p Short 72.5 p Short 76.5 c Long 77 c | 72% | +350 | -150 |
Long Strangle | Long 72 p Long 77 c | 2% | x | -2760 |
Short Put Vertical | Long 72 p Short 72.5 p | 89% | +170 | -330 |
Symbol: FX | Daily Change |
/6AH4 | +0.23% |
/6BH4 | +0.28% |
/6CH4 | +0.26% |
/6EH4 | +0.29% |
/6JH4 | +0.16% |
Euro futures move higher
Euro futures (/6EH4) are looking to clear a key level of resistance from November, which marks the highest level traded since August. Broader weakness in the dollar due to this morning’s inflation report is helping to boost the European currency. The calendar is also light for European economic data until next year, which may leave prevailing sentiment in control.
Strategy (49DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.08 p Short 1.085 p Short 1.125 c Long 1.13 c | 55% | +250 | -375 |
Long Strangle | Long 1.08 p Long 1.13 c | 30% | x | -662.50 |
Short Put Vertical | Long 1.08 p Short 1.085 p | 87% | +112.50 | -512.50 |
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
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.
Trade with a better broker,open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.
Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
tastylive content is created, produced, and provided solely by tastylive, Inc. (“tastylive”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, digital asset, other product, transaction, or investment strategy is suitable for any person. Trading securities, futures products, and digital assets involve risk and may result in a loss greater than the original amount invested. tastylive, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastylive is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparisons, statistics, or other technical data, if applicable, will be supplied upon request. tastylive is not a licensed financial adviser, registered investment adviser, or a registered broker-dealer. Options, futures, and futures options are not suitable for all investors. Prior to trading securities, options, futures, or futures options, please read the applicable risk disclosures, including, but not limited to, the Characteristics and Risks of Standardized Options Disclosure and the Futures and Exchange-Traded Options Risk Disclosure found on tastytrade.com/disclosures.
tastytrade, Inc. ("tastytrade”) is a registered broker-dealer and member of FINRA, NFA, and SIPC. tastytrade was previously known as tastyworks, Inc. (“tastyworks”). tastytrade offers self-directed brokerage accounts to its customers. tastytrade does not give financial or trading advice, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastytrade’s systems, services or products. tastytrade is a wholly-owned subsidiary of tastylive, Inc.
tastytrade has entered into a Marketing Agreement with tastylive (“Marketing Agent”) whereby tastytrade pays compensation to Marketing Agent to recommend tastytrade’s brokerage services. The existence of this Marketing Agreement should not be deemed as an endorsement or recommendation of Marketing Agent by tastytrade. tastytrade and Marketing Agent are separate entities with their own products and services. tastylive is the parent company of tastytrade.
tastycrypto is provided solely by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. Neither tastylive nor any of its affiliates are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors due to the number of risks involved. The value of any cryptocurrency, including digital assets pegged to fiat currency, commodities, or any other asset, may go to zero.
© copyright 2013 - 2024 tastylive, Inc. All Rights Reserved. Applicable portions of the Terms of Use on tastylive.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastylive’s podcasts as necessary to view for personal use. tastylive was previously known as tastytrade, Inc. tastylive is a trademark/servicemark owned by tastylive, Inc.