Contrarian Tells, the Dollar Fake, and Football

Bulls are nowhere to be found, the dollar is retreating, and point spreads are now available for the upcoming football season

May 1, 2015 at 9:23 AM
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It's time for an Octogenarian Billionaire-Free outpouring of random thoughts. So, sorry George, Warren, and Sheldon.

If you like to look for contrary sentiment tells … well, here's one from Bespoke:

"Despite the fact that the S&P 500 and Nasdaq are right near all-time highs, individual investors are stuck in a rut and seemingly not in the mood to party. According to the American Association of Individual Investors (AAII), bullish sentiment saw a slight decline falling from 31.47% down to 30.84%. This represents the eighth straight week where bullish sentiment has been below its bull market average of 38.65%. The last time we saw bullish sentiment below its bull market average for this long was in August of last year."

I do like these sort of data points. Here we are rallying, and no one believes in it. It suggests that we keep rallying.

Except, is it really hard to blame anyone for a lack of bullishness now? I mean, we literally stop at similar highs in the indices over and over and over again. "Buy the Dips and Sell the Rips" oversimplifies the trading strategy that seeks to simply trade a range. But who can really argue with it? Until we prove we can extend the range, there's no particular reason to try to fight it.

So, yes. If someone surveyed me while the market was near the 2015 highs, I would not say I was bullish.

Remember when there was no scenario that could stop the dollar rally? I believe we all agreed on that all the way back in February or so. Well, funny story:

"The greenback weakened for a seventh straight day Thursday, the longest losing streak since April 2011, after Federal Reserve policy makers indicated they're in no rush to raise interest rates amid slowing growth. The losses cap the U.S. currency's first monthly decline since June."

Time to cancel that Summer 2015 Euro Tour, I guess. The theory all of two months ago was that we'll raise rates this year, while everyone else is QE-ing … or whatever they call it. Currencies do tend to trend forever. So, maybe we're in a countertrend drop. But then again, what do I know about currency trading (not an awful lot).

Which reminds me of probably the biggest key of all trading. It's all about you. Know yourself, your risk tolerances, et al. Dr. Brett Steenbarger has a great rundown in Forbes.

And finally, are you ready for some football? It's never too early. I mean, it's too early to rate your team's pick(s) from last night … I always find that utterly ridiculous. It's impossible to grade a performance until a few years have passed, and you see how your guys developed and how the guys you passed on developed.

It's not too early to start wagering on actual games, though. The schedules are out, and so are point spreads on all but Week 17, courtesy of CG Technology.

Disclaimer: Mr. Warner's opinions expressed above do not necessarily represent the views of Schaeffer's Investment Research.


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