Point, counter-point

Sell the dollar, go long commodities has been the easy trade so far. The endless printing of the USDollar has made the trade profitable.

But with USDollar bears out in full force, will we see a temporary bottom in the USDollar, and conversely, a temporary top in equities and precious metals? According to one sentiment indicator by MBH Commodity Advisors, 96% of traders are either bearish or flat on the dollar. History shows that when sentiment is that lopsided, it's best to take the opposite side of the extreme majority.

But other momentum trading rules declare you should never get in the way of a stampede, because you will just get trampled. My thoughts? We are due for a correction on the short dollar/long commodities trade, perhaps even a severe one of up to 20%. But longer-term, as long as central bankers worldwide continue to print their way out of this financial crisis, the overall short dollar/long commodities trend is still in place.

This is an opinion, and not a recommendation. Do your due diligence.

Disclosure: long gold and silver mining shares.