Want to Short the US Market, Then Do it Against Germany

• Posted by Greg Harmon
• on February 25th, 2015

The US stock markets are looking very bullish. In fact there have generally been bullish for 6 years. Yet there always seems to be someone who thinks that the top is in and markets are about to crash. If that has been you over all this time then I feel sorry for you. The signs have all pointed higher except for a few brief tenuous moments. I have learned a lot of things over the years, and one of them is that people have a hard time with change. So if you are one of there perma top callers I have an idea for you. A way for you to express your opinion with real money, without losing your shirt.

The chart above shows the German DAX against the S&P 500 in a ratio. And it holds the key to you betting against the US markets. The ratio has built a Deep Crab harmonic since late September. That completed in January and started to reverse. But look at the reversal. Not even to the 38.2% retracement before turning back up. This is a strong pair. And with it moving higher there is now a target on a Measured Move to 5.89. That is 11% higher than where it currently stands.

By buying the German DAX (or its proxy $HEWG) and selling the S&P 500 ($SPY) you can express your view while still making money as the ratio rises. Just watch for a move below a ratio of 5.15 as a stop out level, and dream on bears.

Get my book, Trading Options: Using Technical Analysis to Design Winning Options Trades.

Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through February 2015 Expiry and sign up here

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus