The Trump missile trade

Monday, 10th April 2017 15:41 - by Rajan Dhall

Above is the daily chart of BAE Systems and it has a very clear uptrend, making higher highs and higher lows. I believe this is a trade based on how much you fell the new president can control himself. The 600 mark looks fair value to me but the prospect of a prolonged battle in Syria is on the cards and we could easily see a push back up to 660 or even new highs on 700.

This seems to be a very technical minded share, break - consolidate - break - consolidate and so on, but we haven't really seen a break down recently. If this stock moves up its always on geopolitical tension. That means we have been worried since 2015, which is probably true. This stock gives me two obvious base case scenarios, my favourite is the long trade carrying the trend if the attacks on Syria continue. If things calm down then a short but only to 600 where I feel buyers will come back into the market as it always feels trouble is around the corner. Average volume at the bottom of the chart seems to also be carrying the trade and I will also be looking to see if this is sustained through the rally.

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