PickAlpha Evening Insights | 2025-12-18 - Three Trades For Tomorrow
• Stocks mixed, Treasury yields steady, CPI print dominated the tape. • After hours: Nike, KB Home and FedEx reported results and guidance updates. • Three Trade Ideas.
Market Wrap
Market Recap — US data set the tone today as November CPI showed headline and core y/y inflation near 2.6–2.7%, while initial jobless claims fell to 224k and continuing claims rose to 1.897m; the Philly Fed index ticked up and a 5-year TIPS auction cleared at a 1.433% high yield. Energy data showed a 167 Bcf weekly draw in natural gas inventories. Markets digested both growth and inflation signals into the close before corporate earnings landed in after-hours trading.
Intraday — From the open through the close, the BLS CPI release (Sep→Nov 2‑month SA +0.20% headline and core) and Labor Department claims (initial 224k, continuing 1.897m) were the primary macro drivers, with the Philly Fed’s headline diffusion index rising to 13.0; the EIA reported a 167 Bcf gas draw leaving storage 131 Bcf above last year, and the Treasury sold 5-year TIPS at a 1.433% high yield with a 2.62 bid-to-cover.
After Hours — Corporate updates after 4:00 p.m. ET included Nike’s fiscal Q2 (revenue $12.40bn, EPS $0.53, gross margin down 300 bp), KB Home’s Q4 (revenues $1.69bn, homes delivered down 9%, ASP down 7%), and FedEx’s Q2 update lowering FedEx Freight outlook with Freight revenue down 1.7% and a targeted Freight spin-off date of June 1.
Three Trades For Tomorrow
1/3 Long $SPY — If at 2025-12-19 10:00 ET the University of Michigan final December Consumer Expectations index prints at 57.0 or higher (vs 55.0 forecast), enter a long in SPY at market within the first 5 minutes after the release, with a stop 1% below entry and a profit target…
The University of Michigan Consumer Expectations index proxies households’ outlook on jobs, income and spending. A final December reading meaningfully above the 55.0 forecast, such as 57 or higher, would signal improving sentiment into year-end, supportive of risk appetite. Buying SPY on that upside surprise seeks to capture a short, sentiment-driven equity bid.
Trade credibility: actionability 8.0 | timeliness 9.0 | clarity 8.0
2/3 Short $NKE — On 2025-12-19, if NKE opens at least 2% above its 2025-12-18 regular-session close, enter a short between 09:35–10:00 ET with a stop 3% above entry and a profit target 3–4% below entry, closing any remaining position by the 12/19 market close.
Nike’s fiscal Q2 showed only 1% y/y revenue growth, 300 bp gross margin compression to 40.6%, and an unfavorable mix shift with NIKE Direct revenue down 8% while wholesale rose 8%. If the stock gaps higher, that likely overstates the quality of these results, creating a short-term opportunity to fade post-earnings optimism.
Trade credibility: actionability 8.0 | timeliness 8.0 | clarity 8.0
3/3 Short $KBH — On 2025-12-19, if KBH trades at least 1.5% above its 2025-12-18 close at any time before 11:00 ET, enter a short with a stop 3% above entry and a profit target 3–4% below entry, closing any remaining position by the 12/19 close.
KB Home’s Q4 revenue fell to $1.69bn from $2.00bn, with homes delivered down 9% and average selling price down 7% to $465,600, signaling moderating housing demand and pricing power. A relief bounce after the release would be vulnerable, offering a tactical entry to short into deteriorating fundamentals in a housing-sensitive name.
Trade credibility: actionability 8.0 | timeliness 8.0 | clarity 8.0