Hang Seng Long Short Update
מעודכן
Update to the original post. https://www.tradingview.com/chart/HSI/Jo3ZYemK-Hang-Seng-Long-Short-Indicator/
Since the Hang Seng Index
EWH hit the upper bound in January 2018, it has since dropped as much as 22%. Shorting from the point of touching the upper bound would have beaten the market significantly this year across all indexes.
Current situation
We currently bounced off a resistance line, the same one we bounced off after the 2012 euro crisis. But the situation is a bit different here and I expect either a retest or a break. Considering none of the issues in China / Europe have been resolved and are only getting worse, I don't expect this to be a permanent bounce like it was in 2012, and I think we test the lower green line as we have done historically. Given fundamental problems in China and Europe, I see a potential for breaking the lower boundary, which could result in an enormous bust potentially. This would likely signify a banking crisis of some sort in Asia.
Original Trade Strategy Around This Chart
Everything should be self explanatory in the chart. Of course - this will work until it doesn't, but since the 90's the HSI index has called market tops when it hits it's upper resistance line, and has called market bottoms when it hits its lower resistance lines. You can see how perfect this has timed markets with the correlation to the SPX index in the lower chart. In short, you can avoid drawdowns in markets by being long SPX during the good times, and going short HSI during the bad times.
The manner which this has historically timed major market tops and bottoms is rather ridiculous. The data speaks for itself to be honest.
Since the Hang Seng Index
EWH hit the upper bound in January 2018, it has since dropped as much as 22%. Shorting from the point of touching the upper bound would have beaten the market significantly this year across all indexes. Current situation
We currently bounced off a resistance line, the same one we bounced off after the 2012 euro crisis. But the situation is a bit different here and I expect either a retest or a break. Considering none of the issues in China / Europe have been resolved and are only getting worse, I don't expect this to be a permanent bounce like it was in 2012, and I think we test the lower green line as we have done historically. Given fundamental problems in China and Europe, I see a potential for breaking the lower boundary, which could result in an enormous bust potentially. This would likely signify a banking crisis of some sort in Asia.
Original Trade Strategy Around This Chart
Everything should be self explanatory in the chart. Of course - this will work until it doesn't, but since the 90's the HSI index has called market tops when it hits it's upper resistance line, and has called market bottoms when it hits its lower resistance lines. You can see how perfect this has timed markets with the correlation to the SPX index in the lower chart. In short, you can avoid drawdowns in markets by being long SPX during the good times, and going short HSI during the bad times.
The manner which this has historically timed major market tops and bottoms is rather ridiculous. The data speaks for itself to be honest.
הערה
Original chart was posted here back around June: 
כתב ויתור
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