Easing trade tensions between the U.S. and China are boosting global markets today, with the Dow up triple digits at last check. And with Morgan Stanley raising its base case for Chinese stocks after the "better-than-expected" outcome of the G-20 summit, e-commerce concerns Alibaba Group Holding Ltd (NYSE:BABA) and JD.com, Inc. (NASDAQ:JD) are soaring, with both stocks seeing accelerated options trading, as well.

However, this heavy options volume is more of the same for BABA and JD, which both popped up on Schaeffer's Senior Quantitative Analyst Rocky White's list of 20 stocks that have attracted the highest options volume during the past 10 trading days. (Names highlighted in yellow are new to the list.)

Bears Blast Alibaba Stock

Although calls were slightly more popular than puts on an absolute basis in Alibaba Group's options pits, put buyers were unusually active in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), BABA stock's 10-day put/call volume ratio of 0.85 ranks in the 98th annual percentile, meaning puts have been bought to open relative to calls at a quicker-than-usual clip.

Today, roughly 136,000 puts and 136,000 calls have changed hands -- nearly two times what's typically seen at this point. The weekly 12/28 149-strike put is popular, and it looks like new positions are being purchased for a volume-weighted average price (VWAP) of $1.62. If this is the case, breakeven for the put buyers at the close on Friday, Dec. 29, is $147.38 (strike less premium paid).

At last check, BABA stock is trading up 2.6% at $165.08, and has now gained nearly 27% since bottoming at a 16-month low of $130.06 on Oct. 30. However, the shares are running out of steam in the $168-$170 region, home to their 120-day moving average, and early September bear gap high.

JD.com Bulls Bet on Bigger Bounce

Options bulls have been more active than usual toward JD.com in recent weeks, per the stock's 10-day call/put volume ratio of 3.73 at the ISE, CBOE, and PHLX -- in the 71st percentile of its 12-month range. Echoing this is the equity's Schaeffer's put/call open interest ratio (SOIR) of 0.58, which registers in the 11th annual percentile. What this means is that short-term traders are more call-skewed than usual toward JD.

This trend is being continued today, with around 47,000 calls on the tape -- 1.2 times the expected intraday amount -- compared to roughly 17,000 puts. While the January 2019 25-strike cal is most active, nearer-term traders are targeting the December 22.50 call. Based on the option's VWAP of $0.93, those buying the call expect JD to break out above $23.43 (strike plus premium paid) in the next few weeks.

JD.com stock is up 3.4% this afternoon at $21.97. The shares have been making a beeline lower since their mid-June peak at $45.23, and hit a record low of $19.21 on Nov. 23 after the company's revenue miss. Earlier today, the stock topped out at $22.49, while just above here is familiar resistance at its 40-day moving average.

U.S. stocks are comfortably higher, as traders cheer a cease-fire on the U.S.-China trade war. Among the stocks reacting to the truce is farm equipment concern Deere & Company (NYSE:DE), which is higher on plans for China to buy U.S. agricultural products. Meanwhile, two weed stocks are making huge moves in opposite directions: Cronos Group Inc (NASDAQ:CRON) is higher on buyout buzz, while Aphria Inc (NYSE:APHA) shares sink on a negative report. Here's a closer look at what's moving the shares of DE, CRON, and APHA.

China Agriculture Deal Boosts Deere Stock

Deere shares are up 5% to trade at $162.63, set for their highest close since March, after the White House said "China will agree to purchase a not yet agreed upon, but very substantial, amount of agricultural, energy, industrial, and other production from the United States," with the Asian nation vowing to start buying from U.S. farmers "immediately." As such, DE stock is on pace for its best session since mid-May, and is set to take out resistance in the $160 region.

DE call options are flying off the shelves today. So far, roughly 20,000 calls have changed hands -- twice the average afternoon clip. That's compared to roughly 6,000 puts traded thus far. Weekly 12/7 calls are most popular, with possible spread or roll activity spotted at the 165- and 170-strike calls.

Altria Reportedly in Talks to Buy Cronos

Cronos Group stock was last seen 29% higher to trade at $11.83 -- and was temporarily halted -- after Reuters said cigarette maker Altria Group (MO) is in early talks to buy the cannabis concern. As such, CRON is pacing for its highest close since mid-October, just before Canada legalized recreational marijuana use. Prior to today, the shares had been struggling to break north of their 50-day moving average.

Several Cronos shorts could be feeling the heat today. Short interest grew 11.5% in the past two reporting periods, and now accounts for more than 17% of the security's total available float.

In the options pits, CRON has seen roughly 45,000 calls change hands already today -- six times the norm, and three times the number of puts traded. Call volume is pacing for the 99th percentile of its annual range, with speculators buying to open the now in-the-money December 10 calls.

Report Questions Aphria Acquisitions 'Scheme'

The shares of cannabis producer Aphria are reeling today, after a negative report from Hindenburg Research and Quintessential Capital Management. The report noted that Quintessential opened a short position on APHA, saying that while the company seems successful on the surface, it "hides instead a more sinister reality." Specifically, "Aphria is part of a scheme orchestrated by a network of insiders to divert funds away from shareholders into their own pockets," the report says, calling the company's Latin American acquisitions "virtually worthless," and saying the uncovering of the scheme "would have catastrophic consequences for its share price."

APHA shares were last seen 18.6% lower to trade at $6.43, and earlier touched a new all-time low of $5.60. The stock just began trading on the New York Stock Exchange (NYSE) on Nov. 2, and today is one of the worst on the Big Board. It has surrendered more than half its value since peaking at $13.45 on Nov. 7.

The stock is also on the short-sale restricted list today, though bears are quite active in the options arena. About 6,000 APHA put options have traded so far -- 54 times the norm, and more than 10 times the previous all-time high of 502 puts exchanged on Nov. 28. It appears some speculators are betting on more downside for the pot stock, buying to open December 7.50 puts.

The shares of Overstock.com Inc (NASDAQ:OSTK) rallied 23.3% on Nov. 23 -- their best day of 2018 -- amid reports the company plans to focus only on blockchain. The following session, however, the security suffered its worst day in three years, before going on a four-day winning streak. Now, the volatile shares of OSTK could be flashing a sell signal, if recent history is any indicator.

Specifically, the blockchain stock is within one standard deviation of its 40-day moving average, after a lengthy stretch below this trendline. Over the past three years, there have been nine similar run-ups to this moving average, after which OSTK went on to average a one-week loss of 4.79%, and was higher just 33% of the time, per data from Schaeffer's Senior Quantitative Analyst Rocky White. One month later, the equity was down a whopping 13.08%, on average, with a positive rate of just 25%.

Overstock shares have given up almost 70% in 2018, and in early September finally broke support in the $30 area. This culminated in a new annual low of $16.38 on Nov. 20. The stock was last seen 0.4% higher to trade at $19.63; another 13.08% drop in the next month would place OSTK around $17.10.

Amid the stock's slide -- which resembles that of bitcoin prices -- short sellers have piled on. Short interest grew 12.9% in the past two reporting periods, and now accounts for a whopping 48% of OSTK's total available float.

Meanwhile, just two analysts follow the equity, and both deem it worthy of a "strong buy" rating. In the same optimistic vein, the consensus 12-month price target stands at a lofty $93.50 -- representing a steep premium of about 375% from Overstock shares' current price. Should the equity once again back down from its 40-day moving average, downgrades, price-target cuts, or bearish analyst initiations could further weigh on the stock.

Options traders are making a beeline toward Global Blood Therapeutics Inc (NASDAQ:GBT), after the Food and Drug Administration (FDA) agreed to the company's proposal for an accelerated approval pathway for its sickle cell disease (SCD) treatment, voxelotor. The San Francisco-based firm said it would give more details for its plan to submit a New Drug Application (NDA) early next year.

With GBT stock shooting up 52.2% today to trade at $48, most of today's options activity has occurred on the call side. Specifically, 15,400 calls have changed hands so far, compared to fewer than 3,300 puts. This is more than eight times what's typically seen at this point in the day. And in the wake of today's news, short-term volatility expectations have imploded. The stock's 30-day implied volatility is down 50.2% from last Friday's close, to 75% -- in the low 32nd percentile of its annual range.

Analysts have been quick to chime in today, too, with H.C. Wainwright boosting its GBT price target to $150 from $125 -- a 213% premium to current trading levels. Plus, Cantor Fitzgerald reiterated its "overweight" rating and $96 price target, saying current clinical data for voxelotor "offers a compelling treatment option in SCD that lacks disease-modifying therapies." Already, 12 of 13 brokerages maintain a "strong buy" rating on Global Blood Therapeutics, while the average 12-month price target sits all the way up at $81.92.

Not all of the sentiment surrounding the drug stock is upbeat, though, with short sellers controlling roughly one-fifth of the available float. An unwinding of this pessimism could be helping the hot stock, considering it would take shorts nearly two weeks to cover all these bearish bets, at GBT's average daily pace of trading.

Looking at the charts, the stock wrapped up its third straight monthly loss late last week, and has shed 29.4% since its Feb. 21 record high of $68.05. The shares bottomed out at a 13-month low of $30.15 on Friday, and despite pacing for their best day ever today, they are running out of steam near familiar resistance in the round $50 region.

The shares of Roku Inc (NASDAQ:ROKU) are up 5.9% in electronic trading, after D.A. Davidson upgraded the streaming name to "buy" from "neutral." The analyst in coverage cited the recent U.S.-China trade truce, noting that it "alleviates (but does not eliminate) a significant near-term risk," considering Roku manufactures in China. In addition, the brokerage firm believes competitive risks from Amazon are already priced into ROKU stock.

The news could not have come at a better time for Roku stock. Since its Oct. 1 record high of $77.56, the shares have given back 47% as of Friday's close at $40.75, and turned in consecutive monthly losses of over 23%. However, it appears the shares have found support at the $39 level. Longer term, the equity is trading at almost three times its initial public offering (IPO) price of $14.

In the options pits, the rate of call buying relative to put buying has been quicker than usual in recent weeks. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows 26,038 calls were bought to open in the last 10 days, compared to just 4,795 puts. This resultant call/put volume ratio of 5.43 ranks in the 100th percentile of its annual range.

Given that the 10.45 million shares currently sold short represent nearly 14% of ROKU's total available float, it's possible that some of those calls may have been bought by shorts seeking an options hedge. Whatever the reason, it's a prime time to buy premium on the equity's near-term options. The security's Schaeffer's Volatility Index (SVI) of 63% ranks in the 19th annual percentile, meaning short-term options are relatively cheap, from a historical volatility perspective.

What's more, Roku stock has been a strong performer for premium buyers over the past year, based on its Schaeffer's Volatility Scorecard (SVS) of 98 out of 100. In other words, ROKU has shown a tendency to make bigger-than-expected moves during the past 12 months, relative to what its options have priced in.

The shares of Caterpillar Inc. (NYSE:CAT) have shot up 4.6% to trade at $141.95, after BofA-Merrill Lynch upgraded the construction stock to "buy" from "neutral," and raised its price target to $163 from $140 -- a 20% premium to last Friday's close at $135.67. The analyst in coverage pointed to Fed Chair Jerome Powell's relatively dovish tone on interest rates and upbeat developments in U.S.-China trade talks as potentially positive catalysts.

It's been a rough stretch for Caterpillar stock, which was down nearly 14% year-to-date heading into today's trading. However, today's pop has the shares clearing recent resistance in the $135.75 region -- a 50% Fibonacci retracement of CAT's plunge from its Oct. 3 peak at $159.37 to its Oct. 29 annual low of $112.08.

In spite of the stock's technical troubles, bullish betting has been gaining speed in recent weeks. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 10-day call/put volume ratio of 1.82 ranks in the 88th annual percentile, meaning calls have been bought to open over puts at a quicker-than-usual clip.

Outside of the options pits, though, short sellers have been ramping up their exposure to the Dow stock, with short interest jumping 77.2% in the two most recent reporting periods to 12.07 million shares. As such, it's possible some of the recent call buying came at the hands of shorts hedging their bearish bets against any upside risk.

Whatever the reason, short-term Caterpillar options are pricing in elevated volatility expectations at the moment. CAT's 30-day at-the-money implied volatility of 35.4% ranks in the 89th percentile of its 12-month range.

The temporary trade truce between the U.S. and China has lifted several stocks today, and garnered bullish analyst attention for the likes of Caterpillar (CAT), Roku (ROKU), and more. In fact, construction issue Masco Corp (NYSE:MAS) and semiconductor concern Micron Technology, Inc. (NASDAQ:MU) have received upbeat attention of their own this morning.

RBC upgraded MAS stock to "outperform" from "sector perform," and lifted its price target by $1 to $38. The analyst said the U.S.-China agreement to delay 25% tariffs "lifts one major near-term overhang on the stock, even if there remains some uncertainty around trade beyond the next 90 days."

As such, Masco shares were last seen 1.6% higher at $32.22, and set to end atop their 50-day moving average for the first time since mid-September. The equity has recovered roughly 21% since its Oct. 29 low of $27.15, and is on pace to take out subsequent resistance in the $32 area.

Most analysts were already bullish on MAS. The stock sports 10 "strong buy" endorsements, compared to six "holds" and not a single "sell" rating. The average 12-month price target of $38.94 represents expected upside of about 18% from the equity's current perch.

Chip stocks are higher after the trade truce, and Micron is no exception. In fact, Mizuho analysts said they are buyers of MU (subscription required) and several other semiconductor stocks after the U.S.-China cease-fire.

MU shares were last seen 3.9% higher to trade at $40.08, set to overtake their 40-day moving average for just the second time since June. The equity has struggled since its May 30 high of $64.66, but recent rebound attempts have stalled in the $40 area.

Options traders today have shown a strong appetite for Micron calls -- a change of pace for the chip stock. So far in the session, roughly 43,000 calls have changed hands -- a little less than two times the average intraday pace. For comparison, just about 23,000 MU puts have traded so far.

Prior to today, speculators were showing a greater-than-usual interest in bearish bets. The stock's 10-day put/call volume ratio on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits at 0.75, in the 95th percentile of its annual range. This indicates that while MU calls have still outnumbered puts on an absolute basis, traders have bought to open Micron puts at an accelerated clip in the past two weeks. 

Shares of Wynn Resorts, Limited (NASDAQ:WYNN) are up 9.3% this morning, to trade at $119.89, on news of the G-20 summit's temporary U.S.-China trade truce, as well as the recent spike in gambling revenue in the Chinese territory of Macau, where several of the company's operations are located.  Specifically, Macau revenue jumped 8.5% in November, marking the biggest increase since August.

WYNN stock had been on a steady decline since early June, when shares of the casino concern were near their January highs north of $200. However, the stock recently broke above its 40-day moving average, and has recovered almost 30% since its Oct. 29 low of $92.50.

Analysts have high hopes for WYNN, with eight of 14 issuing a "buy" or better rating. However, the stock is now within striking distance of the consensus 12-month price target of $126.24.

Options bulls have been flocking to the stock, too. WYNN sports a 10-day call/put volume ratio of 3.20 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), sitting in the 94th percentile of its annual range. This indicates that traders have had a bigger-than-usual appetite for bullish bets in the past two weeks. 

Today, WYNN options are trading at twice the average intraday pace, with roughly 26,000 calls and 9,200 puts exchanged. Most popular is the December 125 call, with possible buy-to-open activity spotted. If traders are purchasing the calls to open, they expect WYNN to surmount $125 by the close on Friday, Dec. 21, when the options expire.

"The SPX closed below its 80-week moving average on Friday, currently situated at 2,660... Unless the SPX immediately recovers from this technical breakdown before the end of the month, risks have grown substantially for weakness over the next few months, or even a transition into a bear-market environment... In June 2012 and June 2016, the SPX experienced weekly closes below its 80-week moving average but recovered quickly, generating only a single data point below this trendline. The SPX will have to do the same if there is any hope for this heightened pessimism to unwind on the heels of the Fed's decision to hold rates steady earlier this month."
-- Monday Morning Outlook, November 26, 2018

On the heels of Fed Chair Jerome Powell doing a "180" with respect to his early October remarks about interest rates being a "long way" from neutral, the S&P 500 Index (SPX - 2,760.16) rallied strongly last week. Whereas stocks failed to respond to the Federal Open Market Committee (FOMC) holding rates steady in early October and instead focused on the chairman's interest rate outlook on the way to a 10% correction, the equities market responded favorably to another -- and much different -- outlook from Powell, who said Wednesday the Fed's benchmark rate is "just below" neutral.

In response, the SPX swiftly advanced back above its 80-week moving average, potentially repeating the scenarios of June 2012 and June 2016 that I discussed last week -- in which the SPX rallied for weeks before another correction occurred, but the bottom was in on those short technical breakdowns.

"If last week's SPX dip below its 80-week moving average proves only temporary, a bounce from this longer-term trendline -- which is just above a half-century mark on the SPX -- must be confirmed by a move above the round 2,800 century mark and the Nov. 8 Federal Open Market Committee (FOMC) meeting day closing level of 2,806. If the SPX fails to take over these levels... rallies should be viewed as simply bounces in the context of longer-term weakness."
-- Monday Morning Outlook, November 26, 2018

Despite last week's rally, equities are still locked in an area that is pivotal for bulls and bears alike. In other words, the bulls are not out of the woods, but the bears have to be somewhat disappointed in last week's advance. For example, SPX resistance resided just overhead in Friday's trading, ahead of the G-20 meeting on Saturday evening between President Donald Trump and China's President Xi Jinping, where all eyes were on trade talks.

SPX resistance is in the form of a trendline drawn through the early October high -- one day prior to Powell's "long way" remarks on rates -- through the mid-November high. Additionally, just as the SPX rallied from the vicinity of the 2,650 half-century mark, it comes into this week around the 2,750 half-century mark -- which could act as resistance, just as 2,650 acted as support. These half-century levels tend to have significance as big options open interest tends to build at round-number strikes on SPX options and the related SPDR S&P 500 ETF Trust (SPY - 275.65) options (SPY 265 strike would be equivalent to the SPY 2,650 strike).

Whereas the SPY 265 strike is put-heavy and the SPY 275 strike is call-heavy, amid an environment over the past couple of weeks of negative and positive headlines with regard to the Fed and trade talks with China, it is not a huge surprise to see the put-heavy strike defended and the call-heavy strike posing as resistance.

Moreover, the SPX's 200-day moving average resides overhead around 2,760. After a significant breach of this trendline in October, rallies back above it have been sold quickly, following a historical script of choppy price action when this popular trendline is violated. Volatile, choppy action is what the market has given participants since the initial plunge that followed Powell's early October outlook on rates.

On the sentiment front, the plunge in technology stocks rattled investors. Whereas total short interest on SPX component stocks has showed little change since the beginning of the recent market correction, short interest on components of the Invesco QQQ Trust Series (QQQ - 169.37) surged, but declined slightly during the period from late-October to mid-November.

Buy (to open), all-equity put/call volume ratio now at highest level since 2016 elections $SPX pic.twitter.com/RoikH2wA23

— Todd Salamone (@toddsalamone) November 28, 2018

The plunge in high-profile tech stocks struck fear in equity option buyers, as the 10-day, equity-only, buy-to-open put/call volume ratio last week hit its highest level since the November 2016 elections. The bulls should find it encouraging that this ratio is rolling over from an extreme, although the risk is that the last roll-over proved only temporary. But if this fear continues to unwind, equities have the potential to take out the technical resistance mentioned above.

If you are a risk-taker, I think you bet on an imminent market rally, at least through the mid-December FOMC meeting, and maybe until the end of the year. This bet hinges on volatility moving lower in the coming weeks, as the historically wrong-way large speculators on Cboe Volatility Index (VIX - 18.07) futures remain in a rare net long position, per the latest Commitments of Traders (CoT) report that was released on Friday.

Another sentiment note that gives bulls hope comes from the American Association of Individual Investors (AAII) weekly survey. We smooth the weekly bullish and bearish percentage readings, since they can be volatile from one week to the next. Of note is that the 10-week moving average of bears outnumbered the 10-week moving average of bulls for the first time since early 2017, as you can see on the accompanying chart. When this occurs during the aftermath of a decline, it has generally been bullish for stocks, as "buy the dip" is a mentality this group has not adopted.

Great discussion on @CNBC on why options in this market environment... Guest makes perfect sense!!! $SPX Less $ at risk, leverage

— Todd Salamone (@toddsalamone) November 29, 2018

With the SPX at a pivotal juncture from a technical perspective, the VIX around 18.65 -- half its 2018 closing high, and an area from which it has found support the past two weeks -- another FOMC meeting scheduled for mid-December in which a rate hike is expected, and a sentiment backdrop that could lead to a powerful short-term rally, continue to be open to opportunities on both sides of the market. And as a guest said on CNBC last week, and with which I couldn't agree with more: Use options as a tool to play opportunities that you see, as they provide leverage and allow you to put limited dollars at risk during this continued period of heightened uncertainty.

Continue reading:

• Indicator of the Week: Best Time to Buy Stocks in December
  
• The Week Ahead: Fed Speakers, Jobs Data Kick Off December
  
  

Salesforce.com, Inc. (NYSE:CRM) shares are set to rise after earnings, trading up 8.5% in pre-market action. The enterprise software specialist reported third-quarter earnings that were well above estimates, driven by better-than-expected revenue for the period. Salesforce also raised its full-year outlook.

The robust report sparked a handful of bull notes from analysts, with the highest price target coming from RBC at $182, representing all-time-high territory for CRM stock. Most brokerage firms are already all in on the equity, considering there are 26 "strong buy" recommendations, versus just two "hold" ratings.

Options traders were taking a more cautious stance ahead of earnings, based on the Schaeffer's put/call open interest ratio (SOIR) of 1.16. This put-heavy reading ranks in the 93rd annual percentile, showing it's rare for put open interest to outweigh call open interest by such levels among contracts expiring within three months.

Much like the broader tech space, the security had been struggling in recent months, falling from its record peak near $160 back in early October to yesterday's closing price of $127.54. Still, CRM had a year-to-date lead of nearly 25% coming into today.

As for fellow cloud specialist Nutanix Inc (NASDAQ:NTNX), the shares are trading 7.5% higher before the open. The company's fiscal first-quarter per-share loss of 13 cents was less than expected thanks mostly to strong growth in subscription revenue.

Despite this, the resulting analyst attention has been downbeat, with at least four brokerage firms cutting their price targets on NTNX shares. Among the bear notes was Jefferies' price-target reduction to $48 from $60. More broadly speaking, 10 of 15 analysts recommend buying the security.

There has actually been a steady increase in short interest on Nutanix in recent months, including a 4.3% increase in the last two reporting periods. As it stands now, over 6% of the float is held by these bears.

NTNX has also been sliding on the charts, settling at $40.97 yesterday. The 50-day moving average has acted as notable resistance, though the shares are set to soar past this trendline today.

After a dismal Thanksgiving week, stocks bounced back with a vengeance, thanks to some dovish Fed chatter and cautious optimism ahead of the critical meeting between U.S. President Donald Trump and China President Xi Jinping at the G-20 summit this weekend. The Dow Jones Industrial Average (DJI) is pacing for its best week since November 2016, and the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) are eyeing their best weeks since February. Further, the Dow and S&P are set to end the month higher, following a brutal October, with the latter index on track to retake its crucial 80-week moving average -- a very encouraging sign for stock market bulls.

FAANG Stocks Rebound

Amazon (AMZN) helped Wall Street kick off the week on a high note, after the e-commerce giant enjoyed a record Cyber Monday. In fact, AMZN stock is pacing for its best week since April 2015. Meanwhile, Apple (AAPL) is on track to snap an eight-week losing streak, despite Trump's threats of a 10% tariff on iPhones and laptops imported from China. Fellow FAANG names Facebook (FB), Netflix (NFLX), and Google parent Alphabet (GOOGL) are also pacing for their best week in months, though only one emerged on our list of best stocks to own in December. 

Retail Stocks in the Spotlight

Retail stocks were also in focus, following the busiest shopping period of the year. One analyst said to buy the dip on TJX Incorporated (TJX) stock, and another upgraded American Eagle Outfitters (AEO) ahead of earnings next week. On the other hand, speculators may want to consider dumping this pair of video game stocks, as they tend to struggle in the final month of the year.

Solid Week for Airline Stocks

Oil prices dipped below $50 per barrel ahead of next week's Organization of the Petroleum Countries (OPEC) meeting. As such, several airline stocks benefited. In addition, upbeat guidance from Spirit Airlines (SAVE) and Alaska Air Group (ALK) didn't hurt, helping sector peers like United Continental (UAL) fly to new heights.

Best Stocks to Buy in Historically Bullish December

The outcome of Saturday's Trump-Xi dinner will likely impact stocks on Monday, with Wall Street hoping for progress on U.S.-China trade. In addition, Fed Chair Jerome Powell will speak again next week, and traders will digest November jobs data and a trickle of retail earnings reports. Looking ahead, these 25 stocks could rally in December, which tends to be a bullish month for stocks.

December has historically been a bullish month for Wall Street. In fact, we recently outlined the best stocks to own in December, as well as the stocks to avoid, if past is prologue. But what about specific sectors? Historical data indicates that one exchange-traded fund (ETF) in particular tends to shine in the final month of the year: the Invesco Dynamic Leisure and Entertainment ETF (PEJ).

Below are the 10 best ETFs to own in December, looking back 10 years, per Schaeffer's Senior Quantitative Analyst Rocky White. The list is sorted by percent positive, with PEJ the lone fund to boast a 90% monthly win rate. On average, PEJ has advanced 3.49% in the month of December -- the highest of all funds that we track.

PEJ is already set to wrap up November with its biggest monthly gain since May, up nearly 3% so far. Further, the ETF is set to topple its 10-week moving average for the first time since late September, before the shares pulled back to test the round-number $40 region, which acted as a floor in 2017. At last check PEJ was trading at $43.43. A similar December rally next month would put the fund just under $45 heading into 2019.

Among the Invesco Dynamic Leisure and Entertainment ETF's top holdings are airline stocks United Continental Holdings (NASDAQ:UAL) and Delta Air Lines, Inc. (NYSE:DAL). The airline sector has already enjoyed a banner November, thanks to lower oil prices and upwardly revised guidance. In fact, UAL stock today touched a record high of $96.25, and DAL shares hit an all-time best of $61.32.

Outside of airlines, blue chip Walt Disney Co (NYSE:DIS) is also a top PEJ holding. In fact, DIS stock itself tends to outperform in December, averaging a monthly gain of 2.55%, and ending the month higher nine of the past 10 years.