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XLE and EEM look ripe for a short


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#1 Charvo

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Posted 27 September 2016 - 10:20 PM

Judging by the trend from 2014 onwards, XLE and EEM drop first.  Then the broad market drops.  QQQ drops last.  VXX is starting to flatten out with F1-F2 contango under 10%.  I've seen that the market is very vulnerable when VXX makes lows with contango under 10%.  I think the best way to speculate on this developing situation is to continue to be long QQQ while being short a combination of XLE and EEM.  EEM is dependent on Chinese money, and I believe Chinese credit starts off the year strong as a bull because of the new year's credit quotas for banks.  Many articles have been written about the amount of debt issued this year in China.  EEM had bearish 4th quarters in 2014 and 2015. A lot of the credit growth necessary to blow the emerging markets bubble may have happened already.

 

XLE seems to have broken down already, but EEM in particular looks like it is ready to get rocked.

 


Edited by Charvo, 27 September 2016 - 10:24 PM.


#2 gannman

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Posted 27 September 2016 - 10:34 PM

eem i agree is close to an important top.xle i believe is close to an important bottom fwiw


feeling mellow with the yellow metal


#3 Charvo

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Posted 28 September 2016 - 12:08 AM

eem i agree is close to an important top.xle i believe is close to an important bottom fwiw

Thanks for the input.  EEM is what I'm going with as a short now, but I'm looking at opportunities with XLE on bounces.  I think TLT is looking at making a move up which I think will be bearish for stocks in general.



#4 Iblayz

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Posted 28 September 2016 - 08:43 AM

We will certainly see but, FWIW, I don't regard the gap closure on SPX as bullish. Expected it yesterday but they couldn't pull it off. It eliminates what otherwise would have remained as an upside target. And I stand by what I have said. SPX cash WILL print 2108.25 minimum.

#5 dasein

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Posted 28 September 2016 - 01:34 PM

eem should tag 40 first


best,
klh

#6 NAV

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Posted 28 September 2016 - 01:39 PM

 And I stand by what I have said. SPX cash WILL print 2108.25 minimum.

 

Opinions are bad. Publicly asserting them is worse. There are no gaurantees in the market. When i see somebody making categorical statements i know they are going to be 100% wrong. This is a counter-intuitive business.


"It's not the knowing that is difficult, but the doing"

 

https://twitter.com/Trader_NAV

 

 


#7 dasein

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Posted 28 September 2016 - 06:03 PM

I guess I did too - but that is the way it looks to me - I understand your position NAV and I think it avoids a lot of the pain - but as you say nothing works all the time....

 

"eem should tag 40 first"


best,
klh