Expressing a Bearish View

I know there are a lot of traders out there saying this one month rally in the SPX is way overdone, ridiculous, a setup for another dive. etc.  But there are other ways to express your bearishness without having to deal with the underlying strength of the S&P.

1.  Long bonds.  The ECB has upped the stakes and will do more QE.   There is a strong correlation between German Bund yields and Treasury yields.  If Bunds maintain a low yield, expect Treasuries to follow.  There is limited downside in Treasuries as long as Bunds remain strong.  And since the ECB is expected to make the announcement in Decemver, there should be a solid bid remaining for Bunds even as equities rally.  And if equities selloff, then you could get an explosive move higher in bonds.

2.  Short crude oil.  As I mentioned last week, crude oil is in a seasonally weak time period and has been weak relative to equities for most of the rally.  It caught up a bit last week, but still can't get close to $50, and is down today even though equities are strong.

3.  Short USD/JPY.  For the currency traders, this is the best way to express your bearishness.  With the BOJ failing to act last week, and with Fed rate hikes still uncertain, the bears have the upper hand.   My least favorite of the three ideas, but better than shorting ES.