Play 'Bearish to Bullish Reversals' With Pairs Trades
Finding it tough to navigate this sideways market? Let Oppenheimer’s Carter Worth lead you through the storm.
As you may know Worth is a market technician who follows patterns in charts. Because he believes stocks are stuck in a range – basically dead -- Worth feels this market is ripe for pairs trades.
In a nutshell he advocates looking at stocks that have been highly correlated over time until lately when they have diverged. The assumption is that they will converge again.
Trade #1: Long Daimler (DAI); Short (F)
Worth’s thesis: Patterns suggest Daimler's stock looks be in the throws of a bearish to bullish reversal while Ford's stock has recovered too steeply.
Trade #2: Long (ACN); Short (IBM)
Worth’s thesis: Patterns suggest Accenture is in the early stages of a bearish to bullish reversal while IBM's November – June advance has been very steep and 'uncorrected'.
Trade #3: Long (UBS); Short (CS)
Worth’s thesis: UBS's bearish to bullish reversal appears well-defined while credit Suisse has “shot the moon.”