A summer battle of the stock bulls and bears is brewing. Here’s how you play both sides of that.

But they urge investors to “embrace the uncertainty,” in our call of the day, and explain how to manage both sides of how stocks might proceed this summer.

“The breakout above 4,200 caused a flood of funds to move into stocks, simultaneous to huge covering of record S&P 500 short futures positions; all these ‘new longs’ will be ‘underwater’ at 4,200,” said Emanuel and the team, offering up the following chart:

“Conversely, the U-turn at 4,450 on exhausted exuberance reminds us that momentum market pullbacks [such as seen in 2021 and 1999] are common and volatile. Yet a move back to 4,450 will rekindle a ‘chase’ redolent of the 127% rise in NDX [the Nasdaq 100] following the 14.1% fall in 1999,” said the strategists.

In short, yet another battle of the bears and the bulls may be ready to play out this summer. Naturally, not all investors are ready to choose sides, so here’s the advice from Evercore, who offer one options strategy known as the strangle.

That option involves investors holding call and put options, with different strike prices but the same expiration dates and underlying assets. (More on strangles here).

As a reminder calls are options contracts, often used for bullish bets, that give the holder the right, but not the obligation, to buy the underlying security at a set price by a certain time. Puts work the opposite way, with the holder getting the option to sell. Emanuel and co. say investors who have a firm view could also bet one way or another.

“With optionality remaining near its cheapest levels (VIX 14!
VIX,
-3.51%
) since the pandemic, we recommend buying the SPX Aug 4,450C/4,200P “strangle” (Buy call and put; upside hedgers can buy the call alone; downside hedgers the put) to capitalize on the idea that uncertainty should be embraced this summer, because anything can happen,” said Emanuel and the team.

Also check out what Evercore had to say recently about potential triggers for a selloff.

Read: The stock market is headed for a big first-half gain. What history says that means for the rest of 2023.

The markets

Stocks
DJIA,
+0.27%

SPX,
+0.35%

COMP,
+0.40%
have opened higher after strong durable goods data, with bond yields
TMUBMUSD02Y,
4.749%

TMUBMUSD10Y,
3.767%
nudging higher after optimistic comments from China’s premier about the nation’s economy, and the dollar
DXY,
-0.12%
down 0.3%. Oil prices
CL.1,
-0.61%
pared an earlier stronger drop. The Hang Seng
HSI,
+1.88%
climbed 1.9% on a mixed day for Asia.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Durable goods orders rose the third-straight month and a stronger-than-expected, 1.7 for May, The S&P Case-Shiller home price index indicated rising home prices in April. Elsewhere, consumer confidence rose to the highest since Jan. 2022, while new home sales jumped to a level not seen since Feb. 2022.

Walgreens Boots Alliance
WBA,
-8.97%
stock is down 6% and headed towards an 11-year low after the drug store chain reported a profit miss and slashed its full-year outlook. General Mills GIS and Micron Technology MU due Wednesday and McCormick MKC and Nike NKE on Thursday (see preview).

Plus: Does Nike have too many sneakers? Thursday’s results could tell us whether shoes will get cheaper.

Snowflake shares 
SNOW,
+1.23%
are up nearly 3% after the software maker announced AI-related partnerships with Nvidia and Microsoft.

Another way to play AI stocks: These companies, including Nvidia, have been the most efficient chip makers

Lordstown Motors shares
RIDE,
-32.30%
dived as the electric vehicle maker filed for bankruptcy protection.

The International Monetary Fund says corporate profits, not labor costs, are driving inflation higher in the euro area.

Best of the web

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The chart

The below Jefferies chart, using a compilation of data, shows how those with student loans spend nearly one-third of their discretionary dollars at Amazon
AMZN,
+0.35%
and Walmart
WMT,
-0.21%.
“The impending resumption of student loan payments could be a headwind to consumer spending ahead,” said a team of analysts led by Corey Tarlowe.

Read: Student-loan payments are coming back — and these are the stocks most at risk

And: With debt-ceiling deal, student-loan borrowers will start resuming payments in 3 months — here’s how to prepare

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Random reads

While Barbie heads off to the real world, you can go stay in her DreamHouse.

Scooter has been crowned the world’s ugliest dog.

The new TikTok trend is pretending to pass out after drinking a purple McDonald’s shake.

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