Trade idea: short US500/long NAS100

Head of Research

7 avr. 2021

Trading Views's charts have been used to divide one index by another – in this case the S&P500 is the numerator and the NAS100 the denominator.

With US Q1 earnings in mind (read our preview here), one interesting trade for those who feel tech is going to outperform the S&P500 is to look at ratio analysis. Here, I’ve used Trading Views's charts, and the ability to divide one index by another – in this case the S&P500 is the numerator and the NAS100 the denominator – the fact the ratio is headed lower details that the NAS100 is outperforming the S&P500. I can trade this by taking a long position in the NAS100 and short in US500, making sure the USD notional exposure is the same.

As we see the ratio is starting to roll over and the expectation is tech earnings will be strong - if married with lower US bond yields should see this trade work.

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