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I am the founder of Blue Object Software, LLC with over twenty years of development and ten plus years of Program Management. I have designed and developed a wide range of software applications and tools for diverse companies ranging from small software start-ups to manufacturing, finance and... More
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Blue Object Software, LLC
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Counting Crowds
  • Time to go long US Financials and Short Euro  0 comments
    Oct 20, 2011 12:57 AM | about stocks: EUO, UYG, BAC, C, MS

    With the banks earnings almost all in, it looks like some have posted good gains on the bottom line but everyone was looking for top line revenue growth... But we did see some not so bad revenues from Morgan Stanley(NYSE:MS) and others and the (NYSEARCA:UYG) is actually looking like it broke out of a down-trend.  Heck, even Cramer is changing his tune about the banks, that we would not sell Citi (NYSE:C) in here or Bank of America (NYSE:BAC).  I think this group can go lower and re-test but I think the bottom we saw in October are in the banks.  Yes we are still worried about Europe but the worry and waiting will get old soon and the huge volatile swings we are seeing are going to fade as we will focus more on US-earnings and high divident paying stocks... That said, I think the banks are way over sold and yet the best way to play the worry is to just short the Euro in the form of (NYSEARCA:EUO).

    If you compare the UYG and the EUO you will see that we were failrly correlated up until August when we went through our debt down-grade crisis and never really recovered... Well, Europe is starting to go through their own debt downgrade process with the advent of Spain and it will be inevitable that they will have to see more downgrades.

    So, I think a good play is to start accumulating UYG at current levels, hopefully we get some lift and create a support above the current 50 day moving averages at around $41,  and also short the Euro via (EUO) at $18 right at its 50/200 day moving average and watch the Euro/Dollar play out and see if we go lower to 1.30 or even 1.20 before its all over, and stop loss out at 1.39 per this article.

    Stocks: EUO, UYG, BAC, C, MS
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