Nasdaq Rebounds Amid Shifting Political Winds
Nasdaq Rebounds Amid Shifting Political Winds
Also, 10-year T-note, gold, crude oil and Japanese yen futures
Nasdaq 100 E-mini futures (/NQ): +1.04%
10-year T-note futures (/ZN): +0.04%
Gold futures (/GC): -0.21%
Crude oil futures (/CL): -1.34%
Japanese yen futures (/6J): +0.38%
Markets were broadly risk-on this morning as traders digest a quickly evolving U.S. political landscape after President Joe Biden dropped his re-election campaign.
Meanwhile, investors have a full slate of earnings to digest over the next several weeks, which will likely prove to overshadow political concerns for now. China’s central bank cut its seven-day reverse repo rate overnight, as the government steps up support for the economy. Outside of earnings, U.S. gross domestic product (GDP) will be in focus later this week.
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Symbol: Equities | Daily Change |
/ESU4 | +0.73% |
/NQU4 | +1.06% |
/RTYU4 | +0.81% |
/YMU4 | +0.37% |
Technology stocks led equity markets higher this morning after Reuters reported Nvidia (NVDA) was designing a chip for the Chinese market. Alphabet (GOOG) and Tesla (TSLA) will report earnings tomorrow, kicking off the magnificent seven’s earnings season. Chinese stocks fell overnight despite the move from the central bank. Investors have expected more support from Chinese policymakers amid broad economic headwinds.
Strategy: (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 19600 p Short 19700 p Short 20250 c Long 20300 c | 60% | +1160 | -840 |
Short Strangle | Short 19700 p Short 20250 c | 53% | +14850 | X |
Short Put Vertical | Long 19600 p Short 19700 p | 60% | +705 | -1295 |
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Symbol: Bonds | Daily Change |
/ZTU4 | -0.05% |
/ZFU4 | -0.03% |
/ZNU4 | +0.04% |
/ZBU4 | +0.26% |
/UBU4 | +0.45% |
Treasuries are mixed along the curve today as the long-end moves higher and the short-end and middle of the curve remain little changed. Investors are attempting to take the pulse of how a Trump presidency would impact inflation and the dollar, but Joe Biden’s withdrawal from the race over the weekend complicates the outlook for bonds and might bring more volatility over the coming weeks, depending on polling.
Strategy (32DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 109.5 p Short 110 p Short 111.5 c Long 112 c | 38% | +296.88 | -203.13 |
Short Strangle | Short 110 p Short 111.5 c | 57% | +921.88 | X |
Short Put Vertical | Long 109.5 p Short 110 p | 78% | +140.63 | -359.38 |
Symbol: Metals | Daily Change |
/GCQ4 | -0.21% |
/SIN4 | -0.71% |
/HGN4 | -1.71% |
Gold futures (/GCQ4) moved lower to start the week, extending Friday’s 2.33% decline, which was the largest daily percentage drop since June 7. The volatility in the U.S. political climate is clouding the outlook for bonds and the dollar, making it difficult to gauge gold’s direction. Some investors see a stronger dollar under a Trump administration, as a tougher stance on China and tariffs on goods could ignite some inflation. There is a volley of Fed speakers due this week, making it a potentially volatile time for gold.
Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2375 p Short 2380 p Short 2410 c Long 2415 c | 13% | +430 | -70 |
Short Strangle | Short 2380 p Short 2410 c | 54% | +7500 | X |
Short Put Vertical | Long 2375 p Short 2380 p | 67% | +190 | -310 |
Symbol: Energy | Daily Change |
/CLQ4 | -1.34% |
/HOQ4 | -0.88% |
/NGQ4 | +4.89% |
/RBQ4 | -1.27% |
Crude oil prices continued to fall today, dipping by more than 1% to bring prices to the lowest level since June 17. Demand concerns out of China remain after the country’s central bank failed to impress investors with its rate cut. Evidence points to refiners cutting runs amid a slowing economy. A U.S. inventory report from the American Petroleum Institute (API) is due tomorrow and may offer some support to prices if it shows another drop in crude oil stocks.
Strategy (57DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 76.5 p Short 77 p Short 78.5 c Long 79 c | 12% | +450 | -50 |
Short Strangle | Short 77 p Short 78.5 c | 55% | +5190 | X |
Short Put Vertical | Long 76.5 p Short 77 p | 56% | +240 | -260 |
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Symbol: FX | Daily Change |
/6AU4 | -0.70% |
/6BU4 | +0.08% |
/6CU4 | -0.27% |
/6EU4 | +0.01% |
/6JU4 | +0.38% |
The Japanese yen (/6JU4) started the week higher to put the currency on track for a third weekly gain following a suspected intervention earlier this month that appears to have put shorts on notice. The currency is up 2.5% from its yearly low traded earlier this month. Markets continue to see a Federal Reserve interest rate cut in September, which is helping to shrink the yield premium in Treasuries vs. their Japanese counterparts. It could be a volatile week for the yen with U.S. earnings and some high-impact data prints on tap.
Strategy (46DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 0.0063 p Short 0.00635 p Short 0.0065 c Long 0.00655 c | 34% | +375 | -250 |
Short Strangle | Short 0.00635 p Short 0.00655 c | 55% | +1325 | X |
Short Put Vertical | Long 0.0063 p Short 0.00635 p | 72% | +212.50 | -412.50 |
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Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. @fxwestwater
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