Wednesday Market Wrap

{+++} As you know I put on a long Japan trade back in early April. We are primarily long Japanese stocks through DXG which gives us great exposure to the best blue chip exporting stocks in Japan (it also hedges the Yen). We are also long YCS, which is the ETF that gets you short the Japanese Yen. I love these trades and they are not flips. They are longer term holds (at least until the end of the year). Japan is printing and buying bonds to the extent that it makes Bernanke look like a choir boy. This trade should work very well for us. Go Nikkei!!!

Tonight I want to press this global risk off bet with a long in the China market. Yeah I know their growth isn’t 15% anymore, but we would kill for 7-8% growth and look what our market has done as we plod along at 1.5-2% growth.

With global risk ON, it won’t be long before the market starts tripping over itself to buy China. Take a look at the Shanghai below. It has held its 200 day moving average and technically is showing what could be a bullish falling wedge.


The way to play this would be to get  long FXI which also has an interesting chart formation. As you can see in the chart  below, FXI may be forming the right side (right shoulder) of a possible bullish inverse head and shoulder pattern.


You can check the P&L for the entry for FXI. To repeat, this isn’t a fast money idea, but one to put away. If you have limited trading money dedicated to shorter term swing trades, you can just let this one go.

Have agretanight ands I’ll see you in the chat room in the morning…and welcome to all the new subscribers to the team.


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