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T3’s Market Wrap: 7,000 Reasons to Smile at the Nasdaq


The Nasdaq hit 7,000 as the bulls kept on buying on optimism towards the GOP tax bill.

On Friday, House and Senate Republicans reached an agreement on a joint tax plan, setting the stage for the plan to get passed this week.

Predictably, US Treasury yields and the dollar rallied, since presumably, the tax measures are viewed to be inflationary, and thus supportive of higher rates.

The small cap Russell 2000, which tends to rise when the dollar is strong, rose 1% vs. the S&P 500's 0.6% gain.

But the Nasdaq Composite was the real talk of the town since it crossed the 7,000 mark for the first time ever with a fresh record high at 7003.89.

Major tech names like Apple (AAPL), Nvidia (NVDA), and Alphabet (GOOGL) all posted solid gains, though Twitter (TWTR) was the real standout.

JP Morgan said Twitter is one of the banks' best ideas for 2018, saying “both the TWTR story and financial results will strengthen over the next year as the company continues to build on its differentiated value proposition for users & returns to revenue growth.”

Twitter rose 9.8% to $24.41, a level not seen since October 2016.

From a financial/fundamentals standpoint, Twitter has done poorly relative to the staggering amount of free publicity the company receives from the media every day. (how many news stories are based entirely on Tweets these days?)

We'll see if this situation turns around any time soon.

Other social names like Facebook (FB), and Snap (SNAP) are only up modestly today.The S&P set its own record high at 2694.97, but couldn't squeeze over the 2,700 mark, thanks to an upgrade from JP Morgan (JPM).

Bank stocks were also pretty decent today, though they finished well off the morning highs.

Sentiment remains very bullish, and that's no shocker given the market's momentum.

The most recent reading of the CBOE equity put-call ratio is 0.57, with a 10-day moving average of 0.586.

Both numbers are well below the 0.655 long-term average, and indicate strong demand for call options, which rise in value when the market is up.

Meanwhile, the VIX hit a low of 9.24 today. Plus, the VIX Futures Term structure is flattening out substantially, meaning that traders are pricing in very little volatility over the next few months.

See the chart below:

The Chicago Mercantile Exchange launched its bitcoin futures yesteday, a week after the CBOE's own Bitcoin futures launch.

Bitcoin surged in anticipation Satuday before seeing some profit-taking yesterday and today.

If you are interested in trading these bitcoins, you can read about the contract specifications here.

Each contract represents 5 bitcoins, as defined by the CME CF Bitcoin Reference Rate.

The CBOE's Bitcoin futures, for comparison, represent 1 bitcoin, based on the Gemini auction price for bitcoin.

The CME bitcoin futures symbols start with BTC.

For example, on Thinkorswim, they can be found under these symbols

/BTC: spot price
/BTCF8: January (which is the spot contract now)
/BTCG8: February
/BTCH8: March

For now, almost all of the volume is in the January contract, which is exactly what we saw with the CBOE futures.

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