Hang Seng If the recent developments in the markets hold and fear dissipates, I think a play on Hang Seng index would be terrific opportunity. To be sure, I am still expecting a slight pull back to around 18500.
This index is peculiar in the sense it has some good correlation with China but is not as violent as CSI index.
For someone with high risk appetite, this should work well. Some risk money could be allocated here.
Note: This is not exactly a China play. It's more of decoupling from the ridiculously elevated level of coupling play.
Fear
Long VVX Short PlayAll I care about here is that green dotted resistance line. Once we can get a 30 mn candlestick to close above that line then we can setup a long trade. If the candle never closes above I don't to trade it. Heres why I think this has a chance at rallying.
1) Closed red on the year just a few days ago, first time in a long time.
2) Sentiment in market is fearful, thats why you see the VXX reatracing not selling off .
3) Continuation Flag pattern here
4) Fading Volume in the downtrend (weakness + trend reversal clue)
5) A lot of support at 20.50
Keep a tight stop below whatever market structure is created tommorow. But once again, we don't want to go long unless we close above/ violate that green dotted resistance line.
The fall in Bund yield do not mean the same than beforeAs you could remember during the last Greek crisis the Bund Yield fell even to negative territory, this was due the haven factor in the biggest economy in EZ
Now that every body says that the situation is much better than in the 2012 the Yield (as you can see in brown, remember that the price of Bund is inverse to it's yield) is even lower. Why?
The mail reason is the demand that is expected from March due the QE announced by the ECB.
This expectancy of scarcity of bunds is pushing the price of the bund upper (or the yield lower) so now by this ECB QE we can not use the Bund as a measure of fear so plain as we did in the past.
The main evidence of it is the behavior of the DAX, the Equity is still rising (not as happened in the last peek of Bund price)
Any Way the rise in Bund still very good correlation with the EUR.
Possible bearish targetsAs the charts begin to turn more bearish, we are forced to look for some sign of a turnaround. The trend, which has been going on for over a year, appears to still be intact. I expect that we will either form a double bottom as we did back in 2011 (I will link to an interesting chart by lowstrife that caught my attention), or we will have one final leg down to the $120-$130 level where we will find the most support. If that doesn't hold, then we could see a flash crash to $86 followed by a very slow crawl upward/sideways for a long time. At the current rate, I'm sad to say it doesn't look like we will see a swift recovery. It may still recovery, but it may take longer than we expect.
One thing is clear now: that the China bubble really was a bubble. Now we are in the despair phase and we may hang around here a bit longer before an uptrend can begin in earnest.