A trade for 2017...
Banks -> Asset Managers -> ?? ==> BROKERS !
SECTOR THEME FOR 2017 ?
Main street banks flew first, and we are betting that asset managers will follow (LM, BX). And then what? The logical step down the sector will be the brokers: Smaller, less visible, less owned, yet sure to benefit from the pickup in trading volume of the bull market. They will be equally served (fundamentally) by any market consolidation, as volumes generally accelerate on the downside. IBKR is a leading independent online broker and is set to benefit. Set this plain-vanilla, long trade as one of the sector picks for 2017...
FUNDAMENTALLY IMPROVING ?
BAC highlighted recently that December had been one of the best months EVER for asset collection. This is bound to translate into the numbers of asset managers, and brokers. GS upgraded two of the main players of the brokerage sector today (E*TRADE and IBKR). Expect more upgrades to come. Expect good earnings and guidance, as earnings releases provide catalysts for the stocks to move higher. Technically, IBKR has been attempting to complete a very compelling Cup-with-handle (see long term chart below).
TRADING STRATEGY: PLAIN VANILLA LONG AHEAD OF EXPECTED BREAKOUT
Go long here
Target = $52
Stop = $32
R/R = 1.76x
SECTOR THEME FOR 2017 ?
Main street banks flew first, and we are betting that asset managers will follow (LM, BX). And then what? The logical step down the sector will be the brokers: Smaller, less visible, less owned, yet sure to benefit from the pickup in trading volume of the bull market. They will be equally served (fundamentally) by any market consolidation, as volumes generally accelerate on the downside. IBKR is a leading independent online broker and is set to benefit. Set this plain-vanilla, long trade as one of the sector picks for 2017...
FUNDAMENTALLY IMPROVING ?
BAC highlighted recently that December had been one of the best months EVER for asset collection. This is bound to translate into the numbers of asset managers, and brokers. GS upgraded two of the main players of the brokerage sector today (E*TRADE and IBKR). Expect more upgrades to come. Expect good earnings and guidance, as earnings releases provide catalysts for the stocks to move higher. Technically, IBKR has been attempting to complete a very compelling Cup-with-handle (see long term chart below).
TRADING STRATEGY: PLAIN VANILLA LONG AHEAD OF EXPECTED BREAKOUT
Go long here
Target = $52
Stop = $32
R/R = 1.76x
Trade active
IBKR published disappointing earnings today and the stock is taking a (mild) beating: Down -3.7% at the weakest point so far this morning. Nonetheless, the stock is still significantly above our stop-loss (32/share) and has held above the main support at 36. Recommend doubling-up here with a new, higher stop-loss at $36.Note
Every weakness, such as two sessions ago, is met with significant buying, such as yesterday's. Furthermore, the 36.60 200MA level held its ground as a significant support for the shares, close to the key 36.00 level we have identified. For those who increased their position size as recommended a month ago, keep holding with a $36 stop loss. Other should continue to hold with a $32 stop loss. Look for a breach of the $39.50 level for a resumption of the "up" scenario.Trade closed: stop reached
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.