Dollar pessimism, stocks & agriculture optimism

Despite repeated calls for a U.S. Dollar rally, the USD Index continues to sit near a multi-year low. Perhaps this will change once a winner is declared in this election. But then again, guessing how an event will impact the market is mostly a fool's game.

With that being said, such extreme pessimism led to U.S. Dollar rallies over the next few weeks. This nailed the bottom perfectly in two major bear market waves (January and December 2004).

In addition, this consistently led to bearish results for the S&P 500 over the next 6 months:

While a U.S. Dollar rally doesn't always coincide with a stock market decline (the correlation is more mixed), this time around the USD and S&P 500 have been somewhat negatively correlated.

Weakness in the USD has been a boon for agricultural commodities. Soybeans Optix's 20 dma is at 76, the highest level in years:

As I've stated before, this usually led to bearish results for soybeans in the next several months:

In equities-land, our Smart Money / Dumb Money Confidence Spread's 100 day moving average still remains consistently low:

Historical instances weren't necessarily bearish, but they did lead to worse-than-random outcomes over the next 3 months for the stock market:

Overall, we're seeing a confluence of low sentiment in the USD and high sentiment in stocks & bonds. Given the inverse correlation between stocks and the USD, there is a strong risk that should the dollar rally, U.S. equities will fall.