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Swing Trade Idea (FIS) – August 14th, 2023

Market Outlook:

After last week’s inflation numbers, equities lost some momentum from previous weeks and have turned into a more neutral/bearish trend. We view this as a pullback before a potential move higher as opposed to a trend reversal as the VIX still remains quite low and the major indices are still in a bullish structure. This pullback should provide good buying opportunities after a strong rally in equities has seen price reach overbought conditions. With most of earnings season out of the way, focus shifts to the Fed which are largely expected to keep interest rates where they are for the next 2 meetings. The December meeting could potentially see a rate cut, and depending on the data that releases before then, it could act as a bullish catalyst for a return to all time high territory. 

FIS Trade Idea:

Our bearish trade idea today is Fidelity National Information Services (FIS). FIS recently experienced a breakdown from the $58 support level. Despite price expecting to open higher this morning, the risk/reward favors the downside as there is a clear lack of upside momentum and price failing to produce a new higher high in recent days. Our downside target is between $52.50 and $50 and therefore, the preferred strategy is a put debit spread to take advantage of a sharp downward move with a favorable risk/reward.