{"id":36080,"date":"2013-02-11T14:54:57","date_gmt":"2013-02-11T19:54:57","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/?p=36080"},"modified":"2013-03-10T21:51:05","modified_gmt":"2013-03-11T01:51:05","slug":"when-spanish-stocks-rally-they-rally-hard-4","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2013\/02\/11\/when-spanish-stocks-rally-they-rally-hard-4\/","title":{"rendered":"When Spanish Stocks Rally, They Rally Hard"},"content":{"rendered":"

By The Sizemore Letter<\/u><\/a> <\/p>\n

Question:<\/strong> How do you know ahead of time when a garden-variety correction is about to turn into a bear market rout?<\/p>\n

Answer:<\/strong>\u00a0 You don\u2019t.<\/p>\n

I would love to tell you that there is a tried and true way to make that distinction ahead of time, but there isn\u2019t.\u00a0 At best, you can look at past scenarios that were similar and handicap the odds to the best of your ability.<\/p>\n

With that said, look at the recent performance of the iShares MSCI Spain ETF (NYSE:$EWP).<\/b>\u00a0<\/b>The Spain ETF is down nearly 10% from its January highs and is in negative territory for the year.\u00a0 Given the bad press coming out of Spain these days (a corruption scandal is threatening to tank to government that implemented the reforms that appeased the bond market last year), it is understandable if you fear that Spanish stocks are in the early stages of another bear market tumble.<\/p>\n

\"iShares<\/a><\/p>\n

iShares MSCI Spain (NYSE:EWP)<\/p>\n<\/div>\n

But if this is the case, then the six-month rally in EWP would be one of the shortest on record.\u00a0 When the Spanish market rallies, it rallies hard.<\/p>\n

More importantly, Spanish stocks are cheap at barely 11 times earnings, and sentiment towards them remains horrid.\u00a0 With European Central Bank President Mario Draghi suggesting this week that the euro is priced too high (implying that further monetary easing may be in the cards), my bet is that Spanish stocks are simply taking a short break before taking the next leg up.<\/p>\n

Action to take: Buy EWP at market.\u00a0 Use a 10% stop loss.<\/p>\n

Disclosures: Sizemore Capital is long EWP. This post first appeared on TraderPlanet<\/a>.<\/p>\n

SUBSCRIBE <\/a><\/strong>to Sizemore Insights<\/em>\u00a0via e-mail today.<\/p>\n

The post When Spanish Stocks Rally, They Rally Hard<\/a> appeared first on Sizemore Insights<\/a>.<\/p>\n

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