Medium term
Trade view / 18 July 2016 at 5:33 GMT

Positioning short on Nordea ahead of earnings


Nordea (NDA:xome) has been through some rough times. Not only are banks under pressure overall but this company has been involved in a couple of disturbing events such as the Panama papers.

Nordea has also been put into question concerning their financial situation in relation as to how they comply with rules concerning capitalisation. Nordea reports earnings on July 20.

From a technical perspective we can see that Nordea is stuck in a down trend, in the short-to-medium-term we should therefore look for opportunities to short this stock.

The most recent bounce appears to have started on June 27, from there we have a possible Elliott wave flat structure into a cycle date this past Saturday. Friday price hit a Gann pivot of SEK 73.

If price react lower from here and fail to establish itself above the aforementioned pivot we have an opportunity to go short.

Looking at the oscillators we can see that the Slow stochastic indicator (STOC-S) is at lofty levels and could very well turn down from here. The Relative strength indicator (RSI) isn't stretched yet but in a down trend we don't necessarily expect this to happen before the next leg lower kick in.

The cycle off the March 14 peak most likely isn't over yet. We now have the opportunity to get involved on the short side ahead of the earnings release.

We would like price to come down into Wednesday building a buffer to the entry price so that we in the ideal case could sit through those earnings hoping for a negative and larger move following the earnings release.

Management and risk description

The plan is to get short below SEK 73 ahead of its earnings release Wednesday. The key point here is that we get a buffer to our entry price before the close of trading Tuesday, if we don't we need to consider to close the position.

The stop is a daily close above SEK 73. Targets are SEK 65 and SEK 61.

The main risk to this setup is a positive earnings release. If price close above SEK 73 indications are for a move higher into at least SEK 77.


Entry: Sell below SEK 73

Stop: Daily close above SEK 73

Target: SEK 65 and SEK 61

Time horizon: One to two weeks

Nordea daily chart
NDA:xome daily chart
Nordea daily development chart
NDA:xome daily development chart
Source: Both charts, Saxo Trader - create your own charts with SaxoTrader. Click here for more 

— Edited by Adam Courtenay

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Non-independent investment research disclaimer applies. Read more
18 July
Johan Berntorp Johan Berntorp
Nordea (NDA:xome) has seen strength today and is trying to establish itself above SEK 73 but a failure here would still indicate time cycles could get traction.
20 July
Johan Berntorp Johan Berntorp
Obviously this thing went the opposite direction, luckily the trade didn't trigger...but going long a stock in a situation like Nordea is not my cup of tea...


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