Axis Tactics 31st October, 2024 - Interim Position Update
Quick Bullet Update on recent positions and recommendations
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Capri/Tapestry : The Judge from FTC, She Say No….
Readers will recall that we closed our Long position in Capri (CPRI) on ~8th October at an absolute return profit of 28%, at USD 42.25. Our risk/reward view took us out of the position and onto the sidelines, awaiting another entry point.
After the Judge’s ruling, Capri halved and now sits around USD 20 or thereabouts. The probability of a successful takeover deal with Tapestry has dropped materially but is far from zero. In our view the reaction is overdone and based on fundamental analysis, the shares have been excessively punished to the point where they are well below the level prior to the initial bid. This is no longer a risk arbitrage trade. But more akin to a longer term fundamental trade, for those minded to look at it in those terms.
Futures Trading Update
Also, c. 8th October, we initiated a short sell/reduce trading recommendation on the Nasdaq 100 and disclosed this in the Newsletter of that day. For any interested parties looking to trade in this manner in future, a view such as this can be deployed using ETFs, Short Futures, CFDs, Put options (so limited/capped risk trading is possible) or by simply reducing exposed positions and/or booking profits.
Today the Nasdaq 100 is down over 400 points and hence we suggest 2 courses of action, depending on your timeframe.
If you have a short term outlook : You have a very nice quick profit on this one - right here, right now.
If you have a medium term outlook : We would suggest that you let this run a little longer. Lighten up if you have taken a heavy position. Reduce your leverage if you’d like. But retain some of this position, in case the downtrend carries on.
For insight on how we are trading this move ourselves and our own Index Targets, please get in touch. Such precise details are mainly contained within the second section of these Newsletters.
Novo Nordisk & Eli Lilly
Novo is down over 30% from its recent high. Eli Lilly is down over 15% from its recent high, with a 10% drop yesterday after an earnings miss and a cut-down future outlook.
Just saying.
….And while this isn’t applicable to everyone that is reading - For those that do celebrate it - Happy Diwali and best wishes for a Healthy, Happy & Prosperous New Year.
More news and commentary to follow shortly….
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