Last week I spent a ton of time talking about and making a very big
bearish case for stocks.
Let's examine the bullish case and
the bearish case for the US Dollar.
Investors constantly reference the P / E ratio when making a bullish or
bearish case for a stock.
Not exact matches
In this
case, buying EEV was the same as taking a
bearish position on the MSCI Emerging Markets Index (note that «short ETFs» are designed to be used only
for quick, short - term trades).
Think of Spotify,
for example: I was a bit
bearish on the company last month because of the power of Spotify's suppliers; the bull
case is that Spotify's ownership of the customer relationship will allow the company to build out the capability to sidestep the record labels even as the record labels can't punish Spotify because they need them.
Presently, the likely range of S&P 500 annual total returns
for the coming decade is in the 2 - 3 % range based on average and median scenarios, with outside possibilities as low as -3 % in the very
bearish case and still less than 8 % in the very bullish
case.
So, unless you're particularly
bearish on the dollar (or bullish on the won), there is a
case to be made
for hedging.
In some
cases, the ATR can be used as a confirmation
for bullish or
bearish reversals.
Try to analyze
for the long run the performance of the stocks you bought during
bearish trends to the ones you bought during bullish trends (but only the ones that proved to be good choices in both
cases, not ones that were proven to be mistakes or you regret buying) and see
for yourself.
As has been the
case in the past few weeks, the Aussie took directional cues from gold and risk sentiment, which makes
for some rather weird and messy price action, especially on Monday when gold prices dropped because of the Greenback's overall strength, which is
bearish for the Aussie.
An RSI in the low - 30s makes a strong
case for Facebook's
bearish downturn, although current levels indicate that an oversold bounce is likely.