Shorting here shall make money soon: a correction to 152 is in the cards.
Perfection: Sell spike to 158.60/160.00. May happen.
Conclusion: If you were note interested in that trade, do nothing and get involved if 158.60.
i plotted this bund spread chart, looks at decision point but struggle to interprete it fundamentally, what would be your take?
there are imo these options:
either - bund will be held as safe and quality asset, no one will sell it (consider greece or whatever), no matter what the yield is (and ecb buying gives floor), dax will capitulate and spread breaks upside
or - bund will crash or just some will sell it - maybe because of low yield or just for booking profits (?), dax will fly, then inflation comes, yields will fly, and after very long time dax crash?
thx - l4e
WIth a Bund toppish (even if it remains supported) and a DAX theoretically unleashed to the upside, the ratio might fall further and discover new lows.
Note that DAX unlike spx has dividends reinvested... it can go very high from this relative value stance (PE of 10 versus 17 in spx.. etc...)
but relatively, that break of trendline could in some extent mean overcoming the situation in 2000 (or the period from 2000 = correction) and therefore is to be expected that dax could go very high, you seem to be very bullish on dax, btw.