Trade of the Week: long FANG index
Since the FANG futures contract has bounced off a support zone for the third time this year, we would like to go long on a minor retracement lower with a stop-loss at 7,160 and an upside target around the 8,000 mark.
(Video Transcript)
Short the dax was a perfect trade
Hello and welcome to this week's Trade of the Week on 2 October 2023. In the middle of the month of September, we went short the DAX, and we did sell it around 15,820. It was the perfect trade really, because it started to go down straightaway.
And since then, in about two weeks we had a drop of about 600 points on the DAX of 40 contract. So I gather that those who traded the short position probably got out of this trade. Now, I certainly would have done so, at least on the reversal here, when we had a reversal to the upside.
So anyway, this trade probably made you several hundred points of profit on average, perhaps 500 points or so. So that one's done and it was a profitable trade.
Short NY cotton trade continues
And last week, we went short New York Cotton. Now what is interesting is that we had a high, if I go back on this chart, to the high seen back in mid-November of last year at 9,002 and I wanted to go short last Monday here and I had a stop loss just above at 9,002, but on a daily chart closing basis.
And what happened is that on Thursday, intraday, we went above our stop, but we didn't close on this daily candle above 9,002 so we wouldn't have stopped out. And since then the price of cotton has declined again.
So we are still short cotton. We still have our stop loss in place on the daily chart closing basis at 9,002, and we still have our downside target here around the 8,000 mark.
Fang futures holds promise
And for this week's trade of the week, what I would like to do is to actually go long on a minor retracement lower the FANG futures contract. So these are the ex-Facebook (Meta), Amazon, Apple, Netflix stocks.
And basically what we can see here is that this index, every time it goes down towards, sort of just below the 7,200 mark, it bounces off that area did so at the beginning of June.
It did so again in August. And last week, in September, we went slightly below the previous low, but then we reversed to the upside after this Doji formation. So I expect maybe we'll see a minor retracement lower.
So maybe we can get in around the 7,300 mark or so, but with an upside target back above the 8,000 mark and a small stop loss here in relation to the potential profit of just below 7,164.
So this week's Trade of the Week is to go long the FANG index and do so at around 7,300 with a stop loss at 7,160 and an upside target above the 8,000 mark.
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