Thursday morning brought a few more bits of positive data for the U.S. economy. Jobless Claims came in down 2,000 from the week prior at 291,000. For ten straight weeks, Jobless Claims have been under 300,000, a sign that the labor market is continuing to improve. The better number may be 73,000. That is the amount that continuing claims dropped, to 2.33 million the lowest level since late 2000.
Its déjà vu all over again, as Yogi Berra once said. Investors and traders will be looking at how the Fed will interpret the latest data. We have known for a long time now that the Fed will be looking at the labor market as a key factor for any rate decisions. Wednesday’s FOMC minutes gave a hint that maybe the pending rate hike may be later rather than sooner.
Lately, the equity markets have shown they can bounce back any time they have been sidetracked. The current economic data, along with an optimistic look by many retailers, has me feeling bullish, as we head into the holiday season.
The Trade
- I like buying the January E-Mini S&P 500 2100-2150 call spread at 7 points ($350.00) or better.
- We are long premium on this trade, so risk is limited to the cost of entry plus fees and commissions.
- The January options do not expire until after the New Year, so we have some time for this trade to develop.
- I am setting an early target exit at 25 points.
- If you are able to trade multiple contracts, I would look to scale out at 5 point intervals.
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RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.
