Top Trade Ideas - February 5th

Seasonally weak February gets underway as equity markets continue to make new highs. What else is in store for global markets?

As the S&P 500 Index enjoys its best run in almost 40 years, investors brace for a challenging road ahead as February approaches - a historically tumultuous time of year for US stocks.

However, in the week through Jan. 30, a ratio of bulls to bears identified in an Investors Intelligence survey of newsletter writers hit its highest since around mid-2021.

So, the most bullish sentiment in two and a half years, mixed with the pessimism of a seasonally bad month. February will be a ride.

Last week in G10 FX, tame Fed and Bank of England meetings passed us by without any real drama, but the large NFP print on Friday sent the dollar soaring higher.

With a reasonably quiet calendar for the week ahead (just a 10-year note and 30-year bond auction, Wednesday and Thursday), the team has followed the usual weekend habits and drafted our market thoughts and ideas. Currencies, commodities, indices… but we start with the equity markets.

A usual friendly reminder to try the free trial of our premium content. There’s a lot of value below, which you won’t know until you try.

Equities

LVMH, the second-largest European company by market cap and the leading name in luxury goods, released earnings at the end of January. The company expressed tempered optimism for 2024 despite falling short of EPS estimates.

The stock is consolidating at the 200-day moving average. We’re keeping an eye on the previous swing high for an entry long. Although H2 of 2023 pared gains made earlier in the year, we believe the luxury bellwether will have a strong start to 2024.

TRADE IDEA - WAIT FOR THE LVMH LONG

Entry: 755.00

Stop Loss: 715.00

Take Profit: 820.00

Kyndryl spun off from IBM and had a fairly torrid IPO release just before stocks made their turn towards a bear market. But the company has recovered its share price (well, some of it) and is making constructive moves higher.

The company is expanding from their IBM clients, bringing more into their books, as well as going on a hiring spree (something a lot of other companies are doing the opposite of).

With a small market cap of just under $5B, Kyndryl has a lot of room for growth in the cloud space.

TRADE IDEA - KYNDRYL EXPANSION

Entry: 21.00

Stop Loss: 17.50

Take Profit: 30.00