Investor Alert

New York Markets After Hours

Oliver Pursche

Dec. 5, 2016, 11:16 a.m. EST

The market in a minute: How many dominoes does it take to make this market fall?

By Oliver Pursche

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On the heels of a strong November jobs report and the lowest unemployment rate in a decade, U.S. equity markets look to continue their rally this week. Markets are once again defying conventional wisdom and proving many “talking heads” wrong, as futures point to a higher open in spite of Sunday's referendum vote by Italians to stick with their current political structure.

President-elect Trump's spat with China over the weekend doesn't appear to unhinge investors either, as consensus that the Fed will raise rate next week is almost unanimous. The real question for market participants is, “How many dominos can fall before markets react negatively?”

The trade

Economic data and corporate earnings will be the ultimate drivers of market performance, and in the short term, these appear to be sufficiently healthy to support a continuation of the rally. However, February's German elections and the possibility of a cyclical slowdown in the first quarter will likely be a bit much for market participants. So, buying February or March Puts at or slightly below current levels is a cheap way to protect your portfolio — keep in mind that in spite of making "new highs," markets really haven't move all that much and remain in a tight trading range.

This week's market-moving events

Monday: Consumer spending, PMI services, ISM non-manufacturing, labor-market conditions

Tuesday: International trade, productivity and cost index, Redbook report, factory orders

Wednesday: Mortgage applications, JOLTS report

Thursday: Jobless claims, Chinese data

Friday: Consumer sentiment, wholesale trade

Link to MarketWatch's Slice.