S&P 500 Hits Another Record High After TSMC Earnings Calm Tech Fears
S&P 500 Hits Another Record High After TSMC Earnings Calm Tech Fears
Also, 10-year T-note, gold, crude oil and euro futures
- S&P 500 E-mini futures (/ES): +0.51%
- 10-year T-note futures (/ZN): -0.32%
- Gold futures (/GC): +0.15%
- Crude oil futures (/CL): +0.24%
- Euro futures (/6E): -0.13%
This week in stocks has largely been defined by rotation out of tech into small caps, thanks in part to continued strength in U.S. economic data but mainly after an alarming earnings report from ASML (ASML) and what it means for semiconductors. Those concerns have faded in the wake of the earnings report from Taiwan Semiconductor Manufacturing Company (TSMC), and now capital is rotating back into tech stocks: the Nasdaq 100 is the leader, while the S&P 500 is opening Thursday at new all-time highs. Elsewhere, the European Central Bank’s rate cut is helping the U.S. dollar extend its recent rally to the highest level since Aug. 2.
Symbol: Equities | Daily Change |
/ESZ4 | +0.51% |
/NQZ4 | +1.01% |
/RTYZ4 | +0.07% |
/YMZ4 | +0.18% |
S&P 500 futures (/ESZ4) pushed into fresh record high territory this morning after market sentiment brightened on upbeat economic data and earnings reports. Traders see a strong U.S. consumer going into the November elections, which poses one of the biggest current uncertainties for traders. Taiwan Semiconductor (TSM) rose 9% in pre-market trading after the chip maker reported a big gain in net profit for its fiscal third quarter. Traders await earnings from Netflix (NFLX) due after the bell.
Strategy: (35DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 5600 p Short 5650 p Short 6200 c Long 6250 c | 56% | +550 | -1950 |
Short Strangle | Short 5650 p Short 6200 c | 63% | +2775 | x |
Short Put Vertical | Long 5600 p Short 5650 p | 78% | +325 | -2175 |
Symbol: Bonds | Daily Change |
/ZTZ4 | -0.09% |
/ZFZ4 | -0.22% |
/ZNZ4 | -0.32% |
/ZBZ4 | -0.62% |
/UBZ4 | -0.8% |
Bond yields rose across the curve, with this morning’s retail sales data underpinning a strong economic outlook. That trimmed Federal Reserve interest rate cut bets slightly, which put pressure on Treasuries. A move by the European Central Bank (ECB) also pushed the euro lower, in turn strengthening the dollar. The Treasury will auction four- and eight-week bills today.
Strategy (36DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 110.5 p Short 111 p Short 113 c Long 113.5 c | 35% | +312.50 | -187.50 |
Short Strangle | Short 111 p Short 113 c | 56% | +1218.50 | x |
Short Put Vertical | Long 110.5 p Short 111 p | 74% | +140.63 | -359.38 |
Symbol: Metals | Daily Change |
/GCZ4 | +0.15% |
/SIZ4 | -0.33% |
/HGZ4 | -0.82% |
Gold futures (/GCZ4) moved higher this morning as we approach the U.S. November elections. Both candidates are projected to add to the deficit, which could put inflationary pressures on the economy. That, along with the uncertainty around the election itself, is helping bullion to move higher.
Strategy (39DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 2665 p Short 2670 p Short 2735 c Long 2740 c | 20% | +400 | -100 |
Short Strangle | Short 2670 p Short 2735 p | 57% | +8020 | x |
Short Put Vertical | Long 2665 p Short 2670 p | 61%` | +230 | -270 |
Symbol: Energy | Daily Change |
/CLZ4 | +0.24% |
/HOZ4 | +0.44% |
/NGZ4 | +1.27% |
/RBZ4 | +0.11% |
Crude oil futures (/CLZ4) were only marginally higher this morning despite the positive economic data out of the United States. Several forecasters have recently cut their demand growth outlooks for next year, while the calming of tensions in the Middle East has helped to temper geopolitical uncertainty. The Energy Information Administration (EIA) will report weekly crude oil data later today.
Strategy (29DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 67.5 p Short 68 p Short 72.5 c Long 73 c | 22% | +370 | -130 |
Short Strangle | Short 68 p Short 72.5 c | 53% | +4540 | x |
Short Put Vertical | Long 67.5 p Short 68 p | 57% | +210 | -290 |
Symbol: FX | Daily Change |
/6AZ4 | +0.39% |
/6BZ4 | +0.19% |
/6CZ4 | -0.16% |
/6EZ4 | -0.13% |
/6JZ4 | -0.07% |
Euro futures (/6EZ4) traded at a two-month low after the European Central Bank cut its interest rate by 25 basis points, as policymakers see inflation moving toward their target. A dovish outlook on interest rates in Europe is putting pressure on the currency. Meanwhile, the potential for former President Trump to win the election is bringing about talks of higher inflation because of tariffs, which would likely trim the Fed’s ability to cut rates further.
Strategy (50DTE, ATM) | Strikes | POP | Max Profit | Max Loss |
Iron Condor | Long 1.07 p Short 1.075 p Short 1.09 c Long 1.095 c | 28% | +462.50 | -162.50 |
Short Strangle | Short 1.075 p Short 1.09 c | 55% | +2050 | x |
Short Put Vertical | Long 1.07 p Short 1.075 p | 72% | +200 | -425 |
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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