A Breather Before The Next Leg Up? 💪
An amazing 200% gain from swinging SPY overnight on Tuesday and taking IWM call at open on Wednesday! ⚠️ Trading tips: Looking at SPY calls above 456 and possibly leap calls or swing trades from the dip between 453-454 after PCE data report at 8:30 am on Thursday.
Stocks are pulling back after much rapid rally at premarket on Wednesday. The much needed pause dampens a November rally that has sent the S&P 500 toward its best month since July 2022.
Will only take puts <450 in this bull run
Investors have been reassured in recent weeks by inflation and economic data suggesting the Federal Reserve can pull off a soft landing, or a cooling of the economy that doesn't tip it into a recession. Another morsel of good economic news arrived Wednesday, when data showed the economy grew at a 5.2% annual rate last quarter, the fastest pace since late 2021.
Still, economists expect growth to slow in the fourth quarter as consumers pull back on spending. Some investors said that stocks were due for a breather after a blockbuster stretch. The S&P 500 is up around 8% this month.
"It would actually be healthy to get a little bit of a pause," said Larry Adam, chief investment officer at Raymond James.
Hopes that the Fed will slash interest rates next year -- in part because of easing inflation and a slowing economy -- have rippled through markets, driving rallies in stocks, bonds and gold while hurting the U.S. dollar. The stock- market rally has petered out in recent days.
Free fall Treasury yields
The yield on the 10-year Treasury note fell for the third consecutive day and closed at 4.27%, its lowest level since September. It is a rapid plunge from just around a month ago, when government bond yields touched 5% for the first time in 16 years.
Cleveland Fed President Loretta Mester said Wednesday that interest-rate policy is in a "good place" right now and can move in either direction based on how the economy evolves. On Thursday, investors will get more clues on the path of the U.S. economy with new data on spending and inflation.
Still, market volatility has been falling, and some investors appear to be positioning for bigger stock gains ahead after a blockbuster stretch.
"All things point to maybe the bulls getting the upper hand here," said Jeff Buchbinder, chief equity strategist at LPL Financial. "We think we just drift higher over the next month or so."
Swing call
Buy call
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Yeah think need a pullback now