Trade of the week: long DAX 40
Since major global equity indices look to have ended their recent declines in October, we would like to go long DAX 40 index (front month futures contract).
(Video Transcript)
Natural gas futures trade didn’t pan out
Hello and welcome to this week's trade of the week on Monday 6 November 2023. In the middle of October, we went short US natural gas futures and initially we were right on this trade.
But in the end had you not cashed these in you would have been stopped out with this daily chart close last Tuesday which was made above the October high where we placed our stop loss on a daily chart closing basis so that would have led to a small loss with regard to that trade.
Small loss of EUR/GBP trade
Two weeks ago, my colleague Chris Beecham went long the euro against the British pound and initially that trade did make some money but, in the end, we also got stopped out below the stop loss level 86.80 so that again led to a small loss.
Last week, my colleague Sean Morrison went long the NASDAQ 100. This is really the perfect trade. He did so at 14,286 down here and had an upside target of about 14,565, which got triggered within a couple of days but since there's no technical reason to get out of that trade you could have made actually far more.
So, if you're still long, I would urge you to just let them run much further and perhaps move your take profit level to our target which was at 14,565 if you so wish because in that case you'd still make around 280 points profit on this trade.
Long the Dax 40 looks promising
Which brings me to this week's trade of the week and what I would like to do is to go long the DAX 40 contract and this is simply because the DAX 40 does obviously follow what the US markets do.
And last week we had one of the strongest weekly gains this year with regards to the DAX 40 and, at the moment, we're coming off slightly and I would like to buy into that minor retracement.
This is because I expect the October low to now be firmly in place and that we are unlikely to fall through that low again before the end of this year.
Therefore, it could be an interesting technical trade because if we were to manage to continue to rise, we should at least reach the 200-day simply moving average (MA) again and perhaps even the late August high over the coming weeks and months.
For that reason, I'd like to buy the DAX 40 contract on a minor retracement. So, today's trade of the week is to buy the DAX 40 on a minor retracement lower with a stop loss below the October low at 14,588 and an upside target of around 16,000.
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