Not a short recomendation per se, just an observation, how ridiculous and broken this market is. At 87,26 14-week RSI has never been this high.
We used to get these things called "pullbacks" back in the day. Now, we don't get them anymore.
Can this market grind even higher? It sure can, but I imagine the end result will be 1987-style crash.
So, I had this strange idea:
I took XIV (long volatility ETF) and divided its value by the corresponding value of QLD (x2 NAS100 ETF) to create this chart. To my knowledge the daily value of XIV is calculated based on the price of ES options, so there shouldn't be any relationship with QLD, yet this chart has a clear structure and beauty to it.
It's peculiar how...
XIV could be due for a quick a violent correction if the pattern repeats itself.
Basically, the idea is that once XIV get stuck between resistance and rising moving averages, there is possibility for a puke.
Oil will rebound, and Russian stocks is one of the best ways to play this rally IMO. Going long YNDX here based on its recent strength vs RSX. I think it's in the position to lead the market up when oil finally bottoms.
BNS has been tightly correlated with CAD since July 2014. Specifically, the relationship appears to be:
(daily % change in BNS) = 2x(daily % change in CADUSD)
CAD itself is correlated with oil.
I originally planned to buy CAD for an upcoming oil rally. But I ended up buying BNS instead. It pays a 5% dividend.
I think it might be instructive to take a look at the real price of oil by getting the inflationary effects of paper money out of the picture.
Sadly, tradingview has no data from before 1984, but a cursory look at the chart shows that oil is already at its lowest level since 1988.
Personally, I'm betting on some kind of reversion to mean.
This chart shows the price of Brent oil in RUB. Now, the thing is Russian government needs it around 3200 RUB per barrel to balance the budget. So, shorting Russian currency when UKOIL*USDRUB<3200 used to be a reliable trade since 2011.
Not so anymore...
This chart plots weekly performance of NASX vs NYA. In my last post back in July I noted that NASX/NYA was pushing into major long-term resistance. I expected a significant multi-week correction to proceed from there. However NASX did not breakdown in August, indicating that the real correction is potentially still ahead of us.
From the trading perspective, it...
Going long in COP as a hedge against my long position in USDRUB. Just like Russian currency COP is strongly correlated with Brent. It just bounced off a long-term support. This could become a major bottom.
7% dividend yield is a nice bonus :)