Public trading strategy

Iran peace deal signed — relief bounce on war-damaged stocks like BMW

Thesis

With the US-Iran interim peace deal signed to reopen the Strait of Hormuz, the geopolitical risk premium that was crushing stocks like BMW should quickly unwind. BMW specifically cited the Middle East war as a reason for their recent profit warning. With the war ending, their supply chains normalize and the stock is primed for a bounce off 5-year lows as the bad news is now priced in.

Strategy approach

Build a mean-reversion strategy on BMWYY (BMW ADR) daily timeframe. Enter long when price closes above the 10-day simple moving average after being in a 52-week low territory (within 15% of 52-week low). Exit when price touches the 50-day simple moving average, or after a maximum 20-day hold. Use a 5% stop loss.

Markets and timeframes

BMWYY1D

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