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The opposite market condition to normal backwardation is known as contango. Contango refers to "negative basis" where the future price is trading above the expected spot price. [3] Note: In industry parlance backwardation may refer to the situation that futures prices are below the current spot price. [4]
[2] [3] On the other side of the trade, hedgers (commodity producers and commodity holders) are happy to sell futures contracts and accept the higher-than-expected returns. A contango market is also known as a normal market or carrying-cost market. The opposite market condition to contango is known as backwardation.
Very bearish sentiment is usually followed by the market going up more than normal, and vice versa. [3] A bull market refers to a sustained period of either realized or expected price rises, [4] whereas a bear market is used to describe when an index or stock has fallen 20% or more from a recent high for a sustained length of time. [5]
Backwardation indicates the futures curve is falling, with spot markets and short-term futures contracts priced higher than longer-dated contracts.
A bear market is essentially the opposite of a bull market, meaning that it is a prolonged period of declining prices. A bear market generally occurs when prices have declined by at least 20 ...
Bottom line. Whether stock prices rise in a bull market or fall in a bear market, the same investing basics hold true. Use dollar-cost averaging to your advantage; consider buying and holding low ...
The pole is formed by a line which represents the primary trend in the market. The pattern, which could be bullish or bearish, is seen as the market potentially just taking a "breather" after a big move before continuing its primary trend. [3] [4] The chart below illustrates a bull flag. A bear flag would trend in the opposite direction.
In terms of bullish and bearish approaches to investing, which is best depends on the investment. A bullish approach might be good for a stock that’s on the rise, whereas a bearish approach ...