We’ve had a wave of good economic news in the States that has everyone feeling increasingly optimistic. However, we're also starting to hear some bearish rumblings in Europe that have yields rising on Italian and Spanish Debt.
Since the summer, Europe and the Euro have been red hot, but nothing stays hot forever. It’s time to start thinking about cashing in those gains and positioning yourself for the next market back swing. Here are three effective ways to do just that.
Currency Shares Euro Trust FXE
This ETF tracks the Euro which has been streaking higher ever since the European Central Bank promised to act as the lender of last resort to those European countries that couldn’t find buyers for their debt.
This currency has rallied by over 10% which is a massive move when it comes to currencies. However, it's looking a little overdone here, so I’d short it at $135, with a $137 stop and a price target of $131.
SPDR Gold Trust GLD
When the Euro gets hit, the U.S. Dollar rallies which then usually puts pressure on gold. However, usually doesn’t mean always. GLD is an ETF that gives you pure exposure to gold prices. The chart is at an important level of support and if it can hold it you should see a nice swing higher.
You can own GLD here at $162 or cheaper, use a $158 stop loss and, assuming support holds, $170 could be in the cards on the upside.
iShares Dow Jones U.S. Home Construction Index Fund ITB
The time to own the homebuilders was last year, not this year. The last time I saw these stocks so overbought was back in 2005. This homebuilder ETF has boomed higher, and I wouldn’t short it yet. However, if you see a move to $25, I’d look to short it there with a $27 stop and a price target of $20