ICYMI: A Simple Playbook for European Stocks

02/14/17 05:26PM EST

https://youtu.be/PkTFdAuZ5vg

We are long-term U.S. Dollar bulls. And as the euro falls versus the dollar, that’s bullish for European equities.

Euro ↓ = European Stocks  ↑

That’s it.

Simple.

If you’ve been playing that game profitably for some time now, consider selling some (European equities that is). The euro is oversold. Plus, stock markets in Europe have had a great since run in the past three months as the post-Election Day rally in the U.S. dollar weakened the euro:

  • Italy, FTSE MIB: +15%
  • Germany, DAX: +10%
  • Spain, IBEX: +9.8%

HOW TO TRADE IT:

Our immediate-term proprietary risk range for the Euro versus the U.S. Dollar is $1.05 to $1.08. As the euro dipped to the low-end, European equities flat-lined in today’s trading. At the end of the range on the euro, that means sell some European equities. 

© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.