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Europe, Spain and China Setting up Short Plays

Stock-Markets / Stock Index Trading Jan 10, 2011 - 10:42 AM GMT

By: Jim_Farrish

Stock-Markets

Worry over European sovereign debt puts pressure on global stocks. We talked last week about opportunities developing in specific country ETFs on the upside, but the Portugal sovereign debt news today is putting some pressure on stock prices overseas. Europe ETF IEV broke below support at $38.60 today inviting the short sellers to take advantage of the downside risk.


Germany (EWG) is down 1.1% and Spain (EWP) is down 1.1% as well. The move in EWP takes out the November low as the downtrend accelerates. EWP remains a good opportunity on the downside. If the news continues to be negative relative to the sovereign debt the fund is likely to test the June low near $30.40 offering an opportunity to be short the country ETF.

Another opportunity on the downside that could result from the debt challenges in Europe is FXP, ProShares UltraShort China 25 ETF. China is down 1.1% today as a result of the news relative to Portugal. If Spain were to follow suit on a bailout the impact to China would be worth playing the downside. Remember FXP is leveraged 200% adding risk to the play. Take that into account before investing.

As with any investment make sure you weigh the risk relative to the potential reward. Determine your entry, exit and target prior to investing.

Jim Farrish is the Founder and Editor of SectorExchange.com and TheETFexchange.com.  His primary goal is to educate people about investing.  He has taught workshops locally and nationally for over 25 years, teaching thousands of individuals, business owners, and advisors how to focus on achieving financial independence.  Jim Farrish is the CEO of Money Strategies, Inc., a Registered Investment Adviser with the SEC. The company and/or its clients may hold positions in the ETFs, mutual funds and/or index funds mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. Investors who are interested in money management services may visit the Money Strategies, Inc., web site.

© 2011 Copyright  Jim Farrish


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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