I normally take a systematic approach to these top trade installments. With a heavy focus on FX I’ve found a system that works for me. See, most of the time when I’m working with FX I’m following major pairs, like EUR/USD[1] or AUD/USD[2]. In many cases, I’m looking to hedge some element of risk while focusing my exposure in somewhat of a calculated manner. For top trades, I’ll often look at cross pairs as the themes that I’ve been working with in majors can often filter out into longer-term opportunity in a cross. So like GBP/JPY[3], for instance, from Q4 of last year. I was basically just looking to play the strength trend in GBP[4] against the expected weakness that I was pricing-in for JPY[5] and, rather than setting up GBP/USD[6] and USD/JPY[7] separately, just cut-out the middle man and go right for GBP/JPY. My Top Trade from Q1 of this year was far simpler, just bullish USD[8] as I saw a burgeoning confluence of fundamentals and techs that were difficult to ignore.
For this quarter, however, there’s really only one area that I want to look at for a top trade and that’s equity weakness, specifically in the Nasdaq[9] 100 and the S&P 500[10].
I know that the fear from rate hikes appears to be overplayed. The Fed, after all, does get to choose how quickly to hike rates. And when this has been an issue in the past, they’ve erred on the side of caution and equity strength. And even today, stocks have still continued to trade with strength amidst a number of worrying factors that
