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Buy Australia, Sell US

Buy Australia, Sell US

I'm always interested in what other traders are thinking and doing. That's why I use the Client Sentiment Indicator. Sometimes I'm inclined to go with the majority, sometimes against. Often, it sparks a train of thought that leads to a completely different trade. This morning, the CSI gave me a pairs trade idea:

20151118 sent

Looking at the positions by value, traders are long the Australia 200 index, and short the US 30. I can't see client accounts, so I don't know if anyone has put this trade on as a pair (long Australia, short US in equal dollar values) but the chart below suggests why some would:

20151118 pairtThe Australia 200 (pink line) outperformed the US 30 (black line) over the first half of the year. However, when the sell off came, the Australia 200 took a bigger beating, and commodity concerns may have weighed on the Australia 200. Those looking for a "catch up" for Australian shares may contemplate this style of pairs trading:

20151118 pair tkt

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