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Update: potential large caps and cable trades

Dow Jones
Source: Bloomberg

On September 23 I looked at short Russell 2000, long Wall Street Cash (the Dow Jones Industrial Average) as a potential pair’s trade.

My rationale for the trade involved the heightened uncertainty in the markets and I therefore felt large caps would outperform small cap stocks. This seems to be playing out well and, although both indices have fallen, Wall Street Cash is outperforming on a relative basis.

With Wall Street Cash at 17015 and Russell 2000 1094.60 at the time of writing, I am effectively making $2271 on this trade. For the workings, feel free to reach out to me on Twitter (@ChrisWeston_IG).

I am now looking for a deeper move lower in the Russell 2000. The index looks fairly bearish and feel could fall through 1080 in the short term. I’ve added a seven-day moving average to highlight the short-term trend, although this can be seen in the oscillators.

Update to potential cable trade

I also looked at potential long GBP/USD trades on September 26, with spot at $1.6326 at the time of writing. Unfortunately, the trade has gone against expectations and has fallen through my suggested stop loss at $1.6250 for a loss 0.5%.

There seems to be some confusion creeping into the daily chart, but ultimately the trend is lower. With this trend in mind and conviction low, I kept position sizing low and this seems to have been prudent.  I have moved to the sidelines on this trade now and will look for a new set-up.

Russell 2000
Click to enlarge

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