{"id":108626,"date":"2017-07-07T09:42:24","date_gmt":"2017-07-07T13:42:24","guid":{"rendered":"http:\/\/countingpips.com\/?p=108626"},"modified":"2017-07-07T07:43:16","modified_gmt":"2017-07-07T11:43:16","slug":"friday-charts-overly-bullish-analysts-and-the-dumbest-trade-in-the-market","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/07\/friday-charts-overly-bullish-analysts-and-the-dumbest-trade-in-the-market\/","title":{"rendered":"Friday Charts: Overly Bullish Analysts and the Dumbest Trade in the Market"},"content":{"rendered":"<div id=\"inves-3646177935\" class=\"inves-below-title-posts inves-entity-placement\"><div id =\"posts_date_custom\"><div align=\"left\">July 7, 2017<\/div><hr style=\"border: none; border-bottom: 3px solid black;\">\r\n<\/div><\/div><p>By <a href=\"http:\/\/WallStreetDaily.com\/\"><u>WallStreetDaily.com<\/u><\/a> <img loading=\"lazy\" decoding=\"async\" class=\"attachment-home-th size-home-th wp-post-image\" style=\"display: block; margin-bottom: 5px; clear: both;\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/0717_charts_feature.jpg\" sizes=\"auto, (max-width: 580px) 100vw, 580px\" srcset=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/0717_charts_feature.jpg 580w, https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/0717_charts_feature-300x155.jpg 300w\" alt=\"Friday Charts: Overly Bullish Analysts and the Dumbest Trade in the Market\" width=\"580\" height=\"300\" \/><\/p>\n<ul>\n<li>Why you should always zig when this chart zags.<\/li>\n<li>Brain-dead trade you should avoid at all costs.<\/li>\n<li>Cast your vote for the next big thing.<\/li>\n<li><strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/707895\" target=\"_blank\" rel=\"noopener\">Also recommended: Underground currencies gain traction\u2026<\/a><\/strong><\/li>\n<\/ul>\n<hr \/>\n<p>If you\u2019re new to the <i>Wall Street Daily <\/i>nation, here\u2019s the rundown\u2026<\/p>\n<p>I\u2019ve embraced the adage that \u201ca picture is worth a thousand words.\u201d So each Friday, I hand-select compelling graphics to put the week\u2019s investment news into perspective.<\/p>\n<p>All it takes is a quick glance and you\u2019ll be up to speed \u2014 this time, regarding analyst sentiment, digital disruption and the dumbest trade in the market.<\/p>\n<p>Whoever said achieving enlightenment isn\u2019t easy? Enjoy!<\/p>\n<h2 class=\"subhead\">Consensus or Contrarian<\/h2>\n<p>Sell-side analysts are notoriously liberal with their buy ratings and stingy with their sell ratings. At any given time, buy ratings outnumber sell ratings by a factor of 8:1.<\/p><div id=\"inves-4088574020\" class=\"inves-in-content inves-entity-placement\"><hr style=\"border: 1px solid #ddd;\">\r\n<div id=\"inpost_ads_header\">\r\n<p style=\"font-size:10px; float:left; color:#666;\">Free Reports:<\/p><\/div>\r\n<div id=\"inpost_ads\"> \r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/1ApBOV\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2018\/06\/graph_techs_PD.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t     <a href=\"https:\/\/goo.gl\/1ApBOV\"><b><u>Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p><br><br>\r\n<br>\r\n<br>\r\n<p style=\"font-size:15px; float:left;\"><a href=\"https:\/\/goo.gl\/f3RrHX\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/investmacro.com\/wp-content\/uploads\/2019\/01\/cot_pie_80.png\" align=\"left\" width=\"80\"  height=\"55\"\/><\/a>\r\n\t    <a href=\"https:\/\/goo.gl\/f3RrHX\"><b><u>Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p><br><br>\r\n<\/div>\r\n<hr style=\"border: 1px solid #ddd;\">\r\n<br><\/div>\n<p>Clearly, all those stocks aren\u2019t screaming buys, though. So what are analysts good for? Absolutely nothing \u2014 except perhaps serving as a contrarian indicator.<\/p>\n<p>Don\u2019t just take my word for it.<\/p>\n<p>\u201cWe have found that Wall Street\u2019s consensus equity allocation has been a reliable contrary indicator,\u201d says Savita Subramanian, the head of equity and quant strategy at Bank of America Merrill Lynch.<\/p>\n<p>\u201cIn other words, it has historically been a bullish signal when Wall Street was extremely bearish, and vice versa.\u201d<\/p>\n<p>Where do we stand now? Well, don\u2019t kill the messenger. But the consensus is trending rapidly in a bearish direction.<\/p>\n<p>In fact, the latest survey of Wall Street strategists\u2019 asset allocation recommendations is at its most bullish level since 2011:<\/p>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/Extreme_bullishness_bearishness_chart2.png\" alt=\"Zig When Wall Street Analysts Zag\" \/><\/p>\n<p>We\u2019d be hard-pressed to find an individual analyst that\u2019s calling for an outright end to the eight-year-old bull market. Their collective opinions, however, might be signaling it. Be on guard!<\/p>\n<p>Speaking of caution\u2026<\/p>\n<h2 class=\"subhead\">A Mind-Numbingly Dumb Trade<\/h2>\n<p>We\u2019ve been chronicling the absence of volatility in the stock market for months now (see \u201c<a href=\"https:\/\/www.wallstreetdaily.com\/2017\/05\/12\/strange-disappearance-gets-debunked\/\"><strong>O Volatility, Volatility, Wherefore Art Thou, Volatility?<\/strong><\/a>\u201d).<\/p>\n<p>And we\u2019ve struck a cautious (not cavalier) tone. That is, we should expect volatility to return with a vengeance \u2014 and prepare for it. Either by going long the CBOE Volatility Index (VIX) or by implementing trailing stops to protect your profits in the event of any sudden and severe market sell-offs.<\/p>\n<p>Go figure. It appears that the investing herd is doing <i>exactly<\/i> the opposite. They\u2019re betting that the placidity continues.<\/p>\n<p>According to Macro Risk Advisors (MRA), a firm that arranges volatility trades, anti-volatility bets on the VelocityShares Daily Inverse VIX Short-Term ETN (XIV) are surging.<\/p>\n<p>A single day in late June witnessed $3.3 billion worth of bets that U.S. stocks will essentially trade flat. As you can see in the chart, this is becoming an extremely crowded trade:<\/p>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/dumbest_trade_ever_540.png\" alt=\"Dumbest Trade Ever?\" \/><\/p>\n<p>What\u2019s most concerning is the \u201cgrowing interest in shorting volatility among retail and others who are not specialists in volatility trading,\u201d\u00a0says Pravit Chintawongvanich, the head of derivatives strategy at MRA.<\/p>\n<p>Don\u2019t fall into the trap.<\/p>\n<p>When a sudden unexpected spike in volatility hits \u2014 and it will \u2014 anyone making this mind-numbingly dumb trade is going to be in a world of hurt.<\/p>\n<p>If you\u2019re looking for the smartest trade in the market right now, check out my latest research on a rare class of stocks that surge as high as 1,000% every Monday, <strong><a href=\"https:\/\/pro.agorafinancial.com\/m\/707898\" target=\"_blank\" rel=\"noopener\">here<\/a><\/strong>.<\/p>\n<p>Now it\u2019s back to the hurt\u2026<\/p>\n<h2 class=\"subhead\">Disruption Quantified<\/h2>\n<p>We\u2019ve spilled a ton of pixels here identifying the winners of the smartphone boom. From personal experience, we know the losers \u2014 MP3 players, digital cameras, GPS devices and camcorders (remember those?).<\/p>\n<p>But this graphic puts the drubbing into perspective. It shows the decline in sales for the various gadgets since the introduction of the first iPhone in 2007:<\/p>\n<p class=\"centered\"><img decoding=\"async\" class=\"centered aligncenter\" src=\"https:\/\/s3.amazonaws.com\/wallstreetdailywebsite\/wp-content\/uploads\/2017\/07\/Smartphones_chart4.png\" alt=\"The Smartphone Victims\" \/><\/p>\n<p>I know it\u2019s hard to imagine a time without smartphones. But if history is any guide, a different electronic gadget will dominate our lives in less than 10 years.<\/p>\n<p>Any guesses? Augmented reality headsets? Voice assistants like Amazon\u2019s Alexa?<\/p>\n<p>Put on your Nostradamus hat and let us know what you think in the comments section on our website, or by emailing us at wallstreetdaily@agorafinancial.com.<\/p>\n<p>Ahead of the tape,<\/p>\n<p>Louis Basenese<br \/>\nChief Investment Strategist, <em>Wall Street Daily<\/em><\/p>\n<p>The post <a href=\"https:\/\/www.wallstreetdaily.com\/2017\/07\/07\/friday-charts-overly-bullish-analysts-and-the-dumbest-trade-in-the-market\/\" rel=\"nofollow\">Friday Charts: Overly Bullish Analysts and the Dumbest Trade in the Market<\/a> appeared first on <a href=\"https:\/\/www.wallstreetdaily.com\" rel=\"nofollow\">Wall Street Daily<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By WallStreetDaily.com Why you should always zig when this chart zags. Brain-dead trade you should avoid at all costs. Cast your vote for the next big thing. Also recommended: Underground currencies gain traction\u2026 If you\u2019re new to the Wall Street Daily nation, here\u2019s the rundown\u2026 I\u2019ve embraced the adage that \u201ca picture is worth a [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-108626","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108626","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=108626"}],"version-history":[{"count":2,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108626\/revisions"}],"predecessor-version":[{"id":108633,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/108626\/revisions\/108633"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=108626"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=108626"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=108626"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}