This stock market is crushing the Nasdaq

It’s not just the Nasdaq that reclaimed its post-tech-bubble highs.

The Japanese stock market is breaking out as well, hitting levels not seen since 2000. But rather than use the massive rally as an opportunity to get out, one trader still thinks there’s time to get in.

On CNBC’s “Trading Nation,” analyst Andrew Keene said Friday that the Japanese stock market looks very strong technically.

Looking at the DXJ, the WisdomTree Japan ETF, which is closely correlated to the Nikkei stock index, Keene noted that the ETF “has been above its 50 and 100 day moving average for quite some time.”

According to Keene, those moving averages provide a good entry point on any dip, since they’ve held over the past couple of years.

“This means I want to be a buyer on any sort of a pullback,” said Keene, founder of Keene on the Market.

The DXJ is up nearly 20 percent this year, easily beating the S&P 500‘s return of 2.5 percent. And to Keene, that outperformance is just another reason to buy Japan.

To gain exposure in the DXJ on a potential pullback, Keene turned to the options market. Specifically, he looked to sell the August 55/54 put spread for a 30 cent credit. That 30 cents is the most he can make on the trade. But by selling options, Keene, while limiting his gains, made high probability trade.

“My breakeven on this trade is $54.70,” he said. “And with the DXJ trading at $58, I’ll make money if the ETF goes higher, is flat or sells off as much as 6 percent.”

“This strategy is a great way get long Japan, and protect yourself from a potential selloff.”

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