Medium term
Trade view / 23 January 2015 at 14:16 GMT

On being a cheerleader for US equities

Managing Partner / Spotlight Group
United Kingdom
Instrument: DJI.I
Price target:
Market price:
Background

US equity index futures are edging higher this Friday, following the sharp rally in the previous session. This has seen the Standard & Poor’s 500 (SP500) and NASDAQ return to positive territory for the year. It also places the main indices on track to bring to an end the three weeks of declines.

Yesterday’s gain came after the European Central Bank (ECB) detailed an asset purchase programme to boost the region's economy and fight deflation. The programme that was announced was larger than expected and will last at least until September 2016.

Looking at the significant economic data that is due today and next week I see nothing but positives if the releases are at least in line with expectations.

Date/Time(GMT) Data Point Expected Previous

Fri Jan 23 15:00 Existing Home Sales December 5.06 Million 4.93 Million
Wed Jan 28 13:30 Durable Goods Orders December 0.5 percent -0.9 percent
Wed Jan 28 15:10 Conf Board . Cons Conf January 94.4 92.6
Fri Jan 30    13:30 GDP Q4 2014 QoQ 3.0 percent 5.0 percent (Q3)

Therefore, whereas at the start of the year I was playing several quick, in and out trades with the US markets and made a profit on two out of three, I am now looking at a medium-term perspective.

Below is an indexed chart of the three main US equity indices since 30 December 2011. One can see that despite several jolts, the main trend has been intact as price advances have been secured.
US Eq
Source: www.investing.com, Spotlight Ideas


Therefore I am going to open longs at today’s open with a medium perspective in mind. This will not be a short-term, one or two day investment…unless there is a sudden major upheaval.

Management and risk:

Instrument: Dow Jones Industrials Index Points 
Entry: Long at open on Friday, January 23rd 2016
Targets: 18, 350…18,700…19,100
Stop: 14,500
Time horizon: Medium-term


Instruments: S&P 500 Index Points
Entry: Long at open on Friday, January 23rd 2016
Targets: 2,130…2,230…2,350
Stop: 1,690
Time horizon: Medium-term


Instrument: NASDAQ Index Points
Entry: Long at open on Friday, January 23rd 2016
Targets: 4,950…5,200…5,350
Stop: 4450
Time horizon: Medium-term


— Edited by Clare MacCarthy

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