Trade of the week: long S&P 500
After the swift drop at the end of the last week, the S&P 500 appears to have found support, so this week's trade is go long the S&P 500 with a stop at 6193.
This week's trading opportunity
Chris Beauchamp: Hello and welcome to "Trade the week" for the week beginning Monday 4th August. Let's look firstly at this week's "Trade of the week". We're going to go long the S&P 500.
Yes, it might seem foolhardy after those job numbers. It might seem like we're just continuing to ignore the bad news. But if you look at the chart, you've got a recovery over the past, well, a very strong recovery in early trading this morning and Sunday nights trading very good as well. So, we’ve found a low for the time being. That's the key thing here. We've been given a level against which we can trade.
And crucially, if you look back to early July, all the way back to a month ago, it was an interesting area because we saw around 6200, the buyers step in. Whenever we got close to this, as you can see on the 7th July, if you look to the 16th July, this is where the buying materialises. So, 6200, your line in the sand. As ever, we’ll give it just a bit more room to breathe. I know it's one of my cliches, but it's still true. You could even maybe, nicely got a 50-day moving average coming in here.
So we'll go for 6190 as our stop-loss on the basis that if it does reverse, and if it does continue to fall from here, hits that stop, our view that it will now bounce and move higher has been negated. So, that's how we're looking at this trade. We're not saying it will go for another six months, but if you're looking for a "Trade of the week", it might well be that some of the negativity around these numbers from Friday has been overdone, shall we say, and that we might see the market continue to recover.
There's still a lot going on this week. Plenty of earnings coming through, not quite the really heavyweight stuff we had last week, but enough to keep the market busy. But so the "Trade the week" for this week, long the S&P 500 with our stop at 6190.
Previous week's trading outcome
Now, to look back to last week's trade. Not a bad one to start off with. It was long US crude oil. That bounced nicely, particularly on Tuesday. Reports of Trump imposing fresh sanctions on Russian oil, on buyers of Russian oil in particular. But then, of course, you had the reversal on Friday with those poor job numbers.
The question, of course, is now if we're still higher than where we were a week ago, can it continue to move up from here? You've had OPEC reportedly increasing production as well. So we'll see whether that one does continue to move higher, so one to keep an eye on.
This week's trade in summary
Just to go back to this week's "Trade of the week": long the S&P 500, with our stop at 6190.
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