Top Trade Ideas - August 7th
10 ideas to watch this week across equity, FX and commodity markets.
US equities were hit hard last week after Fitch downgraded the US credit rating to AAA. The sell-off was an overreaction to the news, or maybe markets need a reason to pullback after such a strong rally.
Either way, the euphoria that started last week has quickly vanished and selling momentum is strong. August looks to be setting up its commonly slow performance.
In FX, the Dollar Index finished broadly flat on the week, but this doesn’t tell the full story. Strong gains throughout the week were wiped out completely on Friday due to the NFP print and overall soft report. Up ahead this week, our eyes are on US CPI inflation on Thursday and UK GDP on Friday.
Equities
Our first equity idea is based on oil. After a few weeks of stronger performance, we think oil may see a pullback (more on that in our commodity section later).
XOM had a strong rejection off 109.30 which has been a pivot level for some time. With the potential sentiment shift in oil, we think this sets up a short trade.
TRADE IDEA - SHORT XOM
Entry: 107.40
Stop Loss: 109.40
Take Profit: 102.12
Our next idea is a popular name. C3.ai has been one of the go-to names for AI swing trades. So far this year, it is up 240%.
However, the current chart does not suggest a long from here. There are a few reasons to go short. Firstly, the price is teetering on this last support and looks likely to break. Current market sentiment quickly became risk-off last week. Highly speculative names will often be hit hardest in these changes.
Our short idea is based on the underlying asset, but you could also trade this via put options. Give yourself some time on the expirations. We would trade September $30 puts.
TRADE IDEA - SHORT THE AI HYPE
Entry: 37.50
Stop Loss: 40.00
Take Profit: 32.00/30.00
The rest of our trade ideas dig into some US30 names. There are some stocks that are setting up for long trades and some for some near-term downside. We then turn to some FX pairings and share our thoughts and ideas for DXY. Finally, we look at major indices and some commodities before the week starts.