Can The Last Dollar Bull Please Turn Out The Lights?

Over the past week, we've been investigating dollar sentiment, which appears to be overwhelmingly bearish at the moment.

I was surprised when our dollar sentiment survey revealed that only 56% of readers were bearish on the dollar. After seeing bearish readings north of 90% in some places, and anecdotal evidence to support these #'s, I was a bit surprised that our results weren't as extreme.

Though astute reader MarketAddict pointed out that perhaps our readers are a bit more contrarian in nature, and thus the balanced opinion in our house poll.

Today in Growth Stock Wire, expert trader Jeff Clark sounded a Bubble Alert in everything except the dollar.

The problem now is everybody – and I mean EVERYBODY – is bearish on the dollar. It's a doomed currency, and everyone is expecting its eventual demise. Of course, that was the case last December as well, just before the dollar kicked off a three-month rally that boosted the greenback 12% and sent stocks and commodities reeling.

From a contrarian point of view, a bottom in the dollar is near. Too many people are betting on its demise. And while they may eventually be proven correct, the market is likely to make them suffer in the short term.

We're probably no more than a few days away from an important short-term bottom in the dollar, which means we're probably close to a short-term top in the stock and commodities markets. Given the extent of the selloff in the dollar and the rally in all the other markets, a counter-trend move could be substantial.

I agree wholeheartedly with Jeff, and believe that we could be in for a powerful, sustained dollar rally coming up. So if you're glancing longingly at gold, oil, stocks, and other "dollar hedges" - this is probably a wise time to check our emotions and channel your inner contrarian.

Ed. note: I'll make a quick plug for Jeff's premium trading service, The Short Report. It's excellent - I've been a subscriber for several months now - worth checking out if you're a serious short term trader.

It's not hard to be bearish on the dollar when you see this chart.

(Source: Barchart.com)

Is Natural Gas As Low As It Can Go?

May Natural Gas futures currently sit a shade above $3.50 - their lowest point since 2002!  Check out this chart...can you spot the trend?

Source: BarChart.com

Jeff Clark writes that $3.50 is widely regarded as the "shut in" price for natural gas - the price where drillers are better off closing the well than continuing to operate it.

When the price of a commodity drops below the cost of production, that is music to our ears.  After all, the best cure for low prices is low prices.  Keep an eye on the natty, because something has to give, sooner or later.

Looking for an easy way to invest in natural gas?  Check out UNG, a fund that tracks the price of the natty - it's a simple way to speculate on natural gas prices from the comfort of your stock trading account.

Platinum's Quiet Rally

Platinum is staging a steady and impressive rally off its December 2008 lows.  After dropping below 800, July Platinum futures hit as high as 1220 today, eventually settling at 1195 for the day.

Platinum is mostly used in industry, but is also considered "hard money", and maybe the 3rd most obvious hard money alternative to fiat currencies - behind gold and silver.  Platinum should do quite well as this newly printed money makes its way into circulation.

Tom Dyson from GrowthStock Wire also likes Platinum a lot, saying "you're nuts if you ignore platinum."

Oil/Gold Ratio at 10-Year Extreme

Oil has not been this cheap relative to gold in 10 years, expert trader Jeff Clark writes in today's Growth Stock Wire. He believes it's time to go long oil.

The last time the ratio was this high, back in 1999, oil quadrupled from $10 per barrel to over $40 in just one year. A similar move this time will generate big gains for anyone willing to buck the trend and buy oil today.

So if you missed the shot at buying gold near $800 per ounce last week, then don't miss your shot at oil right now.

Are We Due For a Short Term Pop in Equities?

Many people smarter than I think that, indeed, a short term contrarian play of going long stocks could be a profitable one.

• Jeff Clark writes in today's Growth Stock Wire that yesterday was a short term bottom in the markets. OK, maybe his timing wasn't exactly right, but Jeff's trades are traditionally pretty well on point, so I wouldn't ignore him by any means.

• Dr. Steve Sjuggerud concurs, and actually sees significant values in the market at current levels - provided we are not heading into The Greater Depression.
  

And finally, I'll leave you with this chart, courtesy of Agora Financial. Over the last 10 years, short term spikes in the VIX have preceeded rallies on the broader stock market.



Personally though, I'll leave these trades to folks braver and bolder than I.

Historically, commodity bull markets coincide with stock bear markets, which typically last roughly 15-20 years. We're not even 10 years into this cycle. Cheap cotton, anyone?

A (Short Term) Bubble in Oil?

Let's look at a few opinions I've heard over the last couple of days:

• Chuck Butler at the Daily Pfennig believes at least 20% of the current price is speculation driven

• Jeff Clark at The Growth Stock Wire thinks it's time to sell oil stocks now

• T. Boone Pickens (video posted yesterday) says demand is 87 million barrels per day, while the world can only produce 85 million of barrels per day - something has to give, and that's the price, he says

What does everyone think? Does anyone have the onions to short oil right now? Or is that like shorting Yahoo in 1998?

Falling VIX Bearish for Market

Jeff Clark from Growth Stock Wire believes we may be at an inflection point for a downturn in the market. He sites a falling VIX, CNBC exuberance, a falling put/call ratio, and underperforming shares of Merrill Lynch as potential caution signs.