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Betting Against Equities is a 'Fool's Game': Strategist

Stocks are up nine out of the past 10 sessions, fueled by a weak dollar and strong commodities—but what happens when the greenback rebounds? Dan Fitzpatrick, president of Stock Market Mentor, and Paul Schatz, president of Heritage Capital, shared their ideas and top sector and stock plays.

“The crowd is typically right except at turning points, and there’s no reason that the dollar’s going to move higher other than a lot of folks want it to,” Fitzpatrick told CNBC.

Fitzpatrick is “mushroom-cloud bearish” on the economy in the long term, but said investors should avoid going against equities in a "cheap dollar environment."

“Going against equities in such a cheap dollar environment when equities are even cheap to foreigners with foreign currencies—that’s a fool’s game,” he said.

“You have to stick with the trend and the trend’s higher. We’ve got a really strong equity market and it’s important to trade 'what is' rather than 'what should.'”

In the meantime, Schatz said the dollar is a crowded trade and there will be a sharp move when the dollar begins to turn.

“Whether the dollar is at 'the' bottom or 'a' bottom, at a low, or when it does snap back, it’s a crowded trade,” he said. “Those elephants are all going to head out the door at the same time and you’ll see a sharp snapback—you’ll see a very sharp dollar move when it begins to turn.”

Fitzpatrick Likes:

Peabody Energy

Freeport-McMoRan

Teck

Kimberly-Clark

PepsiCo

Schatz Likes:

S&P Materials

S&P Technology

S&P Health Care

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Disclosures:

No immediate information was available for Fitzpatrick or Schatz.

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Disclaimer

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BTU
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FCX
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1767
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PEP
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TCK.B
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