Posted the chart below on Friday (see post here)…the chart/spread suggested to “Long the Dollar and Short Copper!”
Anyone checked the SPREAD…between Copper (JJC) or Freeport (FCX) to the Dollar (UUP)? For those that took this spread position, not a bad day so far….UP OVER 3%+!
The ripple effects of this “spread trade” could just be starting!!! As I shared in the post last Friday, turning point EXTREMES are where really good money can be made.
Chris,
That was a great call regarding the euro. I agree, finding uncrowded trades is the way to go.
Since you understand the risk:reward relationship, all your trades make sense. It’s ok to be wrong, it’s not ok to stay wrong.
I use market-harmonics.com to gage sentiment. Are there any other websites that you recommend that can help uncover “uncrowded” trades?
blin,
Agree with you that the Dollar index is more important than an ETF and yes the patterns are different between the two. Great TRUE observation! Thank you
I suggested to “Short” the dollar back in June when 95% of investors were bullish the Dollar, when Greece (PIIG countries) were going to bring down the world…remember those times and headlines? Hard to believe that just 5 months ago, soooo many were sure the Euro was going to break apart and Greece was going to pull us all under! What a difference 150 days makes.
I love “uncrowded trades” as per shorting the dollar and going long the Euro back then… Now I am searching for “uncrowded” trades along with something I am comfortable with…PATTERNS.
Can FCX go up another 30%? Sure!!! Even more than that on a breakout…Currently dollar support/Copper resistance is at hand with less than 5% of investors bullish the dollar. A liitle different situation than 150 days ago. Recall I did buy FCX in the “green shoots” post.
Decent place for a turn around? Time will tell! One thing for sure at this end…Dollar breaks support/Copper breaks resistance… “All aboard a breakout should it takes place!”
Chris,
I like your style but I don’t trust the UUP ETF. UUP, like most etf’s has a gravity problem. The dollar index looks a bit different from the UUP ETF. If the dollar index moves lower to test its support level ( at 70.43), then UUP can fall to about 20.50 and FCX can move up to challenge its all-time highs, which is about 30% higher than current levels.
I agree that extremes are great places to make money, but in this case, it is not extreme enough for me yet, I would stay with the trend.
Or short the euro (euo – double inverse)
kjr…you are right on track!
Few ways/possibilities…
short FCX/JJC and long UUP or BUY SMN (half position due to 200% inverse etf) and Buy UUP.
Great question and thank you for asking,
Chris
How do you do the spread trade, if I may show my ignorance? Sell one short and buy or just buy the short copper short etf?