Trade of the day: Long signal in IBEX 35

With European Central Bank President Draghi's renewed promise of unlimited bond purchases in the secondary European sovereign bond market now being within its mandate, the markets took off yesterday in a sign of faith. Although this faith may be only short-lived it nevertheless triggered several signals in many of our trading models. One of those signals was long in IBEX 35 (based on our Turtle Model) as IBEX 35 has seen a breakout defined by the 55-day Donchian Channel. Given the depressed valuation (P/B at 1.05 and Dividend Yield at 3.98) and the fact that the newfound easy money will most likely help the Southern European markets the most, we just bought the IBEX 35.

Based on the model signal, a long position in IBEX 35 of 1 CFD contract is initiated with a trailing stop of 3 percent.