Major stock indices are nearing a record close, with the S&P index previously hitting 6408.05 on July 31. It currently trades at 6422.93, up 49.47 points (0.78%). The NASDAQ index, which peaked at 21523.43 on August 11, is now at 21553.10. This surpasses an earlier intraday high of 21549.73 recorded yesterday.
Airlines See Gains
Airlines are experiencing a positive day following Delta’s strong earnings report. Delta’s earnings per share reached $2.10, surpassing the forecast of $2.06. Revenue rose slightly to $15.5 billion, exceeding expectations of $15.46 billion. Delta’s shares climbed 9.09% to $58.35, facing previous highs around $58.33. The swing range between $56.52 and $58.33 is a key area, where a breakthrough may strengthen the upward trend.
Other airlines reported gains as well, with American Airlines rising 9.72%, United Airlines up 8.87%, and Southwest Airlines increasing by 4.3%.
Apple’s shares rose after a previous dip. Trading at $230, the shares increased by $2.75, or 1.2%, reaching a high of $230.59 today. Since hitting a low and exceeding earnings forecasts earlier this month, Apple’s price surged 14.10%. Currently down -8.35% for the year, it closed 2024 at $250.42, nearing its all-time high of $260.10.
We see the S&P 500 and NASDAQ pushing to record highs, which supports a bullish outlook for the next few weeks. This suggests considering call options or bull call spreads on broad market ETFs to ride the momentum. The market has come a long way since the rate-hike-induced volatility of 2023, indicating strong investor confidence.
Delta’s Positive Impact
Delta’s earnings beat is a clear positive signal for the entire airline industry, making call options on DAL, AAL, and UAL attractive. We are watching Delta closely at the $58.33 resistance level, as a breakout could spark a significant new leg up. This current strength builds on the foundation of the post-pandemic recovery, where global air traffic, according to IATA reports from 2024, had already surpassed 2019 levels by a notable margin.
For Apple, the strong rebound this month shows renewed interest after it lagged during the great AI-driven rally of late 2023 and early 2024. We see an opportunity to use call options to play this catch-up rally, targeting the highs from late 2024 around the $250 mark. However, we must watch for signs of resistance as the price approaches that key psychological level.
Even with this bullishness, it is wise to protect our gains, especially with indices at all-time highs. Buying some out-of-the-money put options on the SPX or call options on the VIX could serve as cheap insurance against a sudden reversal. After all, the market has not seen a major correction of more than 10% since the brief dip in the spring of 2024, so some caution is warranted.
