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Nasdaq100

Why it might make sense to craft a tail hedge now! Say you’re bearish but find yourself confused by the market. You want to partake in the action if things go south, but not 100% certain, what could you do? First, you could build some conviction by identifying potential reasons why you think the market could dip lower… Then, devise a ‘tail hedge’ to profit if things indeed go south. Let’s break down these two steps this week. In our past two articles, we've highlighted a couple of reasons why we lean bearish. You can find them here: S&P500 Vulnerabilities: from Money Supply to Sectoral Imbalanc & Why we’re watching the Bond/Equity Volatility . But as each week unfolds with more drama, let's revisit the market. The first idea we want to bring up is the rates-equity dislocation. On the equities front, we observe the following: The conventional wisdom has long held that low rates are good for stocks. However, with stocks rising while the Fed hikes rates, has this relationship been disrupted? From 2020 to the end of 2021, we clearly observed this classic dynamic. However, from September 2022 onwards, as stocks continued their ascent despite the Fed's rate hikes, a distinct shift became evident. Could this Equity-Rate dislocation be a by-product of the AI hype? Consider Nvidia’s stock price, which seemingly pinpointed the Nasdaq's low point. Question is… Is the AI hype a strong enough factor to permanently alter this relationship? In terms of overarching themes, there are generally defined up and down trends. AI ETFs seem to provide a rough gauge of the sector's peaks and troughs. With the previous peak in 2021 happening in the ETFs right before Nvdia peaks, again now we see a similar trend with the ETFs seemingly having peaked while Nvida trades slightly higher still, and we wonder for how long more? If this signals a pivot for Nvidia, then the Nasdaq, currently buoyed by AI hype, could falter. Now, turning to rates: What could drive rates higher? A string of robust US economic data regarding jobs and inflation has emerged. Recent figures for CPI, PPI, and NFP all exceeded consensus estimates, suggesting a robust US economy. Such data might embolden the Federal Reserve to maintain its tightening cycle. One way to interpret robust economic figures is through an economic surprise index, such as the Citi Economic Surprise Index. This metric quantifies the differences between actual economic outcomes and projections. A positive number indicates that the economy is outperforming expectations. When you overlay the Citi economic surprise index against the 13-week change in 10-year yields, a clear correlation emerges. When the economy outperforms predictions, yields tend to move in tandem. This increase in yield represents a significant deviation from its nearly 3-decade trend. Broadly speaking, the Nasdaq 100 Index hasn't experienced such a pronounced change in yield trends since its inception. On Volatility, Erik Norland from CME highlights an intriguing observation: the relationship between the yield curve slope and VIX when viewed from a 2-year average perspective. He suggests that equity volatility and the yield curve follow cyclical patterns, typified by specific periods: 1) Pre-Recession & Recession -Flat yield curve and high volatility 2) Early Recovery – Steep Yield Curve & High Volatility 3) Mid Expansion – Steep Yield Curve and Low Volatility 4) Late Expansion – Flat Yield Curve and Low Volatility Plotted, the cycle looks like this for the 1990s period; As well as the 2000s; Given our current position in the Equity Volatility-Yield Curve cycle, we might be bracing for higher volatility ahead as we're likely situated near the cycle's bottom left quadrant. If the trifecta of rising yields, waning AI hype, and a nascent high-volatility regime comes to fruition, then investing in tail hedges might be a savvy move. One potential structure for a tail hedge could be the 1X2 ratio put spread. This strategy could offer protection against adverse market movements, with the flexibility to structure it so that initial costs could be negligible or even result in a net credit. Additionally, the put ratio is typically a long vega strategy, which could be beneficial in a high-volatility environment. The 1X2 ratio put spread can be set up by taking 2 positions, 1) A short position on the Nasdaq 100 Index Futures with a strike price below the current level 2) A long position on 2 Nasdaq 100 Index Futures with a strike price further below the short option strike At the current index level for the Nasdaq 100 Futures March 2024 contract of 15,520, we could take a short position on the March 2024 put option with a strike price of 14,800 at 304.25 points credit and 2 long positions on the March 2024 put option with a strike price of 13,800 at 122.5 points debit. The setup cost of the put ratio is 304.25 – (2 * 122.5) = 59.25 points, resulting in a net credit. The maximum loss occurs when the underlying asset settles at 13,800 by option expiry, leading to a potential maximum loss calculated as follows: Long put options both expire worthless: -122.5 * 2 = -245 points Short put option: 13,800 – 14,800 = -1000 + 304.25 = -695.75 points Maximum loss = 940.75 points Considering the potential for loss and the associated risks, several profit scenarios emerge. If, as we discussed, the yield trend shifts and the AI hype subsides, the Nasdaq could potentially plummet. If the Nasdaq falls beyond the 13,104 level by option expiry, the strategy could be profitable. Conversely, if the Nasdaq remains range-bound at its current level or rises by expiry, we could also benefit from the initial credit received. Each 0.25 index point is equivalent to $5. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description. Reference: www.yardeni.com www.cmegroup.com www.cmegroup.com
NASDAQ:NDXShort
by inspirante
SQQQ's Steep Drop From Yellow Sell ZoneIn my previous update I emphasized that this yellow sell zone is a very strong resistance level for SQQQ. There was a lot of uncertainty surrounding the Friday jobs data, but the data came in very strong and almost double expectations. This led to a bullish rally for TVC:NDQ and SP:SPX that led to steep bleeding for SQQQ. I predicted that SQQQ will drop below the green support level over the next few months, these are my updated price targets on the way down.
NASDAQ:SQQQShort
by realchartchamp
"Cisco's Earnings Report: NASDAQ Watch"Cisco's NASDAQ Surge: A Bullish Day Cisco (CSCO) is witnessing a bullish trend today on the NASDAQ. The stock's robust performance is attributed to an impressive earnings report, which exceeded expectations. With a surge in demand for networking and cybersecurity solutions, Cisco's revenue and profitability have soared. Technical indicators, including the Relative Strength Index (RSI) and Simple Moving Averages (SMA), confirm the bullish sentiment, showing strong buying momentum and positive trends. As businesses increasingly rely on digital infrastructure, Cisco's position in the tech sector appears sturdy, making it a stock to watch for those seeking opportunities in today's market.
NASDAQ:CSCOLong
by DEXWireNews
"Microsoft's Quantum Leap: How Quantum tech can shape the futureMicrosoft's Quantum Leap: A Bullish Trend on NASDAQ Microsoft (MSFT) is experiencing a bullish surge on NASDAQ. The Relative Strength Index (RSI) for MSFT indicates strong buying momentum, with levels well above the 70 threshold, signaling an overbought condition and potential for further gains. The Simple Moving Averages (SMA) show a golden cross, with the 50-day SMA crossing above the 200-day SMA, a classic bullish signal. This suggests strong upward momentum and investor confidence in Microsoft's strategic investments in cloud computing, AI, and quantum computing. As technology continues to evolve, MSFT appears well-positioned for sustained growth.
NASDAQ:MSFTLong
by DEXWireNews
2
USNAS100 4H : Sensitive due NFP and Unemployment's rate USNAS100 New Forecast US stock index futures witnessed positive performance in trading before the opening of the last sessions of the week, today, Friday. This applies to all major US stock indices, awaiting the release of US data and it will decide where the direction will be goes. Technical abstradct : The price perfectly fulfills my last idea and price reached to our target +190 pip . Its clear price ended its clear bearish correction to offer a close below the support 14910, completing its formation for some time for a specific reason for its stability near 14822, declaring that we will stick to it with a simple bearish bias until this moment. Therefore the downward trend scenario will be remain valid and effective as long as price trade below the resistance zone and will help the price to reach 14663 and 14582 again ,Taking into account that breaching and stabilized above 14910 will postponed the decline . The expect range trading for today it will be between the resistance line 14910 and support line 14663 until stabilized . The market is expected to witness significant price fluctuations, so traders must manage risks carefully today and focus on the three reports (jobs, unemployment and wages). Additionally ,Today New York sessions will affect on the Indices . support line : 14663 , 14582 resistance line : 14822, 14910 Thank you for considering my analysis and perspective and If this post was useful to you , don't forget to subscribe and like ❤️
OANDA:NAS100USDShort
by Arazmajeed
2
NAS100 H4 | Tech under pressure?The Nasdaq 100 (NAS100) is rising towards a pullback resistance and could potentially reverse from here to drop lower towards our take profit target. Entry: 14877.90 Why we like it: There is a pullback resistance that aligns with the 38.2% Fibonacci retracement level Stop Loss: 15132.35 Why we like it: There is a pullback resistance that aligns above the 61.8% Fibonacci retracement level Take Profit: 14496.90 Why we like it: There is a swing-low support level Please be advised that the information presented on TradingView is provided to Vantage (‘Vantage Global Limited’, ‘we’) by a third-party provider (‘Everest Fortune Group’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by Everest Fortune Group.
VANTAGE:NAS100Short
by VantageMarkets
US100 Technical Analysis and Trade IdeaI'd like to share my insights on the US100. As the week is coming to a close, it's important to be mindful of potential stop runs by institutional traders, which can be quite aggressive on Fridays. Additionally, we have the Non-Farm Payrolls (NFP) report scheduled later today, so if you're considering trading, exercise extreme caution. These remarks are more in the context of a potential trading setup should we witness a retracement today, possibly setting the stage for Monday. It's crucial to remember that the information in this video is intended for educational purposes only and should not be considered as financial advice. Please ensure that you apply robust risk management techniques when engaging in trading. Wishing you a wonderful weekend ahead!
CAPITALCOM:US100
by fxtraderanthony
Trend reversal to the UPSIDE if Nq! Holds 100 EMA on DailyLooking at today's Bounce with high Volume, the Nasdaq futures have again reclaimed 100 EMA on the daily timeframe. There is a very high probability that Nasdaq Futures will go higher in coming days and test 50 day EMA. If it closes above 14,809 tomorrow, then this is the trend reversal and we are again in the bullish trend. Keep an eye on the 100 EMA, if it looses then there will be a lot of selling to the short side. As of now we are very bullish in coming days till Friday. And then we can analyze the closing of the week.
CME_MINI:NQ1!Long
by TradesByAdvait