Short term
Trade view / 16 September 2016 at 13:57 GMT

Still short-term scope for equities on the upside

Managing Partner / Spotlight Group
United Kingdom

US equity futures have stayed in negative territory even though the core CPI and headline CPI data did not present any new terrors.

Item Actual Expected Previous
Core CPI August MoM 0.3% 0.2% 0.1%
Core CPI August YoY 2.3% 2.2% 2.2%
CPI Headline August MoM 0.2% 0.1% 0.0%
CPI Headline August YoY 1.1% 1.0% 0.8%

At the time of writing, the Dow Jones futures were down 41 points or -0.22%, S&P 500 Futures down 4.50 or -0.21%and Nasdaq down 7.63 or -0.16%.

At 1000 Eastern time (1400 GMT), the University of Michigan Confidence data is due, and both the expectations and sentiment for September are expected to show small improvements.

I think that the cash S&P will open lower, in line with the futures, however, the technical aspect on the longer measures, i.e. weekly and monthly, do have a positive aspect. So, after the first 30 minutes of trading, once the Michigan data is out, It may be worthwhile taking a long position for a play into next week. I do not see any scope for the Fed to move in September, and I sense the recent selloff may have just pushed the downside a bit too far.
S&P Source: Ideas

The S&P500 is oversold and should bounce back, however this is not a pure buy and hold on the dip situation. Too many technical based players will use any recovery as a chance to unload stale long positions, so I am seeking a ride on the coattails. I already have a position from February at 2,092 points; so I am building from a lower base.
S&P 500 10-year chart
Source: Ideas

I would be interested in adding at a level near 2,120 points, but wait till after 1000 Eastern time.

Management and risk

Parameters: S&P 500

Entry: Buy at 2,120 points, but wait till 1000 Eastern time or 1400 GMT

Targets: 2,170 ... 2,190 ... 2,280

Stop: 2,000

Time horizon: Short-Term Trade

— Edited by John Acher

Non-independent investment research disclaimer applies. Read more


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