Top Trade Ideas - September 23rd

Risk on again.

In G10 FX, the U.S. Dollar took a knock post-FOMC, but the DXY saw decent buying interest to ensure it easily closed the week above 100.

Equities globally saw a strong move higher, with the S&P and Dow Jones indices clocking new highs, along with Germany’s Dax.

Through all that optimism, the FTSE did close the week lower following a BoE hold on monetary policy. The bank revised down year end inflation and output growth projections yet are pushing a “we’re not in a hurry to cut rates.” That could prove to be a policy mistake and they probably should be acting more like the Fed in not wanting to get behind on the easing cycle.

The agenda for the next few days?

The Week Ahead

After the U.S. Federal Reserve’s large 50 basis-point interest-rate cut, attention switches back to economic data—particularly PCE inflation figures—for indications of how fast rates will fall from here.

In Europe, provisional purchasing managers’ data for the eurozone and the U.K. will attract attention, alongside a rate decision in Switzerland.

In Asia, the spotlight is on the Reserve Bank of Australia as it meets ahead of key inflation data. Other events include an inflation print in Japan and industrial profit data for China.

Let’s quickly move on to the specifics for the week ahead. Now that the Fed has taken its first step, our equity ideas will increase.

Equities

Biotechs have been steadily trading higher, with the XBI ETF near two-and-a-half-year highs.

Boundless Bio (NASDAQ: BOLD) has been in a stage 1 base for several months. Some increased buying volume has taken price to the upper bounds (no pun intended) of this base.

Industry insiders hope the Fed’s decision to cut rates for the first time in years will open up what has been a restrictive funding environment for early-stage drugmakers. Positive for the industry. Positive for BOLD.

We look for a long entry around Friday’s end-of-day price action.

TRADE IDEA - BOLD BIOTECH

Entry: 4.30

Stop Loss: 3.85

Take Profit: 5.85

Noble Corp (NYSE: NE) is an offshore drilling contractor for the oil and gas industry, a beaten-down name that may just see a trend reversal. After oil notched record short positions, it’s seen a 10% rally. Funny that. Often extreme positioning is more of a contrarian indicator than a trend to get involved in. But we digress.

Maybe energy names are due their own recovery. If ever there was a level to test a long, this is it for NE.

TRADE IDEA - NOBLE CORP FLIP

Entry: 35.50

Stop Loss: 32.50

Take Profit: 42.00

Continued roadmap for the week highlights two more equity allocations before moving to currency and commodities plans.