You are exactly right Indahook. I've thought about that too, how everyone says they are a contrarian...seems like they don't even know why they are taking that stance. Being a contrarian at the wrong time is ignorant....all about knowing when it's time to plunge.
I made the OP's point back in January. http://www.elitetrader.com/vb/showthread.php?s=&postid=1746240&highlight=sentiment#post1746240 "Sentiment, as too many seem to know, is begging for a bounce. AAll, ISE and CBOE p/c's, ET polls and just talking to other traders, most everyone hates the market. We all know you're to fade the crowd and the crowd's either short or bearish enough to be getting short. This is one of those times that I believe the crowd is right. I've talked earlier in the thread about football betting and sentiment. Reading consensus is a great indicator but no guaranteed be all. Just the fact that guy's who a month ago never heard of sentiment are now talking about "that fadable AAll survey" and "the retail morons are buying puts" makes me think fading the fade is the fade. Just the same I'll make judicious use of buying futures if the break doesn't seem in the offing."
Pabst, you're right buddy. I have started looking to fade the bearish sentiment on the USD recently and it's not really working out. Even though extremes are in place, still no contra move. Sentiment is great but like you said, it's not the be all end all that many think it is. Great post. Also notice what the post you linked to prompted me to say on your thread. ha ha