Top Trade Ideas - July 8th

Inflation is key this week / Important announcement.

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The Nasdaq Composite and S&P 500 closed out the week at fresh highs after new data on the labour market shored up confidence that the Federal Reserve can cut rates soon.

Investors had been on edge about the labour market after surprisingly strong hiring in May dented hopes for interest-rate cuts this year. After Friday’s jobs data, traders in interest-rate futures were betting that there is a 78% chance that the Fed will cut rates at least once by its September meeting, compared with 74% on Wednesday, before the July 4 holiday.

In G10 FX, the US payrolls report saw the USD ultimately finish the day lower, with two rate cuts now priced in for 2024. Elsewhere, we saw little vol in GBP crosses following the election result, while JPY continued to sell off.

The Week Ahead

US inflation data will be one of the key highlights of the week as investors look to see whether prices are coming down sufficiently to prompt the Federal Reserve to start cutting interest rates, potentially as soon as September.

In Europe, investors will focus on the aftermath of elections in France (more on that later) and the UK at the start of the week before turning their attention to inflation figures from various eurozone countries, the UK and Scandinavia.

A trio of central bank decisions and Chinese economic activity data will be in the spotlight in Asia markets. Other releases on the radar include China inflation and trade data, an India inflation print and Taiwan exports — all for June — plus advance estimates for Singapore’s second-quarter economic growth.

Policymakers in New Zealand, South Korea and Malaysia are set to announce rate decisions as traders continue to watch for the long-awaited start of monetary easing.

Equities

Equal-weight NASDAQ is breaking higher. Maybe we see the heavyweights slow while smaller names in the index outperform.

One QQQ name we like is CrowdStrike. In our Friday “H2 Macro Playbook” article, we highlighted our bull case for cyber names in the coming months. CRWD has been in a tight range and looks set for continuation. PANW has also been consolidating. We may see the sector all move higher together from these breakouts.

TRADE IDEA - CRWD CONTINUATION

Entry: 385 (more adds on 380, bottom of trend support)

Stop Loss: 377

Take Profit: or 406.50

Commodities

Oil, after a swift 16% move higher, is at an inflection point. Declining US stockpiles and Hurricane Beryl have been the driving force for crude’s early-summer rally.

On a technical note, oil faces a downtrend resistance from the past nine months. However, price has also traded above a swing high from late April and has held.

The combination of a strong recent trend and price consolidating under a resistance (rather than a sharp decline lower) leans us towards an extension of this move. We’ll be looking to add longs on dips under 83 with a target of 86 (YTD high retest).

TRADE IDEA - OIL TREND FOLLOW

Entry: 82.80

Stop Loss: 82.20

Take Profit: 86.00

PMs have had a year. Silver is now the top-performing asset YTD after Bitcoin’s recent demise. However, PGMs have not experienced the same jubilance.