Is Europe About To Crush The Bears??

JC Parets
September 30, 2019

Nothing will frustrate stock market bears more than European Stocks breaking out to new all-time highs!

Do you know anyone who has anything positive to say about European Equities? Are conversations you're having and articles you're reading preaching strength and growth out of this area? I don't.

Prices, however, are telling a different story! Let me point you to the WisdomTree Europe Hedged Equity Fund, which prices European stocks in local currency. This is similar to the $DXJ vs $EWJ Funds in Japan.

The way I see it, this looks like a consolidation within an ongoing uptrend and most likely the beginning of a NEW uptrend, and not near the end of an old one:

Let me ask you a few questions:

  1. If we're breaking out to new all-time highs in Europe, is that something you want to be short?
  2. If you're bearish equities and shorting stocks, are higher stock prices in Europe consistent with your thesis?
  3. If European Stocks haven't been able to drag down the rest of the world until now, will a breakout to new highs change that, or invalidate your bearish thesis even more?

New highs in European equities is simply not the type of data point I consider to be a bearish one. This is not a reason to short stocks. For me, this is a great reason to be buying them.

If we're making new highs in $HEDJ, good luck on your short positions. It's probably not going to be fun.

JC

 

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