Moments ago we saw a trader buy 51,504 XLV Nov. 42 calls for $0.07 with XLV at 40.40. This is a bullish bet that XLV, the SPDR Health Care Select Sector ETF, will be above 42.07 in 14 days, or 4.1% higher. We think this is actually a bet on the outcome of the election. An Obama victory is likely to benefit healthcare stocks while a Romney victory is likely to benefit the energy sector. Various polls show a wide range of election outcomes, with most showing Obama holding a narrow lead. At the office we like to watch markets like inTrade to see where people are betting their real money. The inTrade market for Obama to win currently implies that he has a 66.3% chance of winning. This trade is risking $360,528 and could potentially make many multiples of that, and shows how some of the smart money is beginning to position themselves for an Obama victory.
Last week the Federal Open Market Committee surprised no one
when they raised rates 0.25 basis points to increase rates to between 1% and
1.25%. What did surprise the market, was the revelation that the FED is
committed to normalize rates, even if inflation does not meet their
target. This was reiterated this week in a speech by William Dudley,
President of the Federal Reserve Bank of New York, who stated he feels the FED
needs to raise rates, despite low inflation, to be ready to act if the economy
does slow down.
The market has been quick to respond, and nothing was hit harder by a reduction in inflation expectations than commodities. Gold, since the announcement, is lower by 2.39%, and oil is down -3.18%. Crude futures have broken their upward trend line and appear poised to test the previous low of $39.56.
While, oil has been under pressure all year, the S&P 500 does not seem to care, as it continues to make all-time highs. Oil is down 23% year to date, while the S&P…
The market has been quick to respond, and nothing was hit harder by a reduction in inflation expectations than commodities. Gold, since the announcement, is lower by 2.39%, and oil is down -3.18%. Crude futures have broken their upward trend line and appear poised to test the previous low of $39.56.
While, oil has been under pressure all year, the S&P 500 does not seem to care, as it continues to make all-time highs. Oil is down 23% year to date, while the S&P…
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