October 5, 2020
How soon they forget Contrary Thinker’s headlines.
Today 9/3/2020, the markets are flashing “DANGER,” and no one is paying attention, NO ONE.
Today 9/10/20, the majority continue to find a rationalization for more bull market.
Yet a full month later, the boogie-man-month of September is done and dusted, hence an all-clear for the bull market. Contrary Thinker sees the next range day lower that exceeds 4% without an intervening new high etching in stone that the market is in a long term bear market. The Summaries below support that expectation and the Chart Gallery to follow.
As a general observation of all the primary markets, they all peaked on panic buying in August – based on the TE Model. Such action, as previously observed, is easy to stop and will be flipped at least back to the point where the highly emotional buying began. However, given the age of the uptrends, the flip, the reversal should take prices very much below that point.
US Stock Indices
Our focus over the last few weeks is on when to expect an acceleration of the bear market decline that posted its ATH on 9/2/20 for the majority indices. But, the Dow’s high was posted back on February 12 with the low pivot March 23 rally “failing: to make new highs. Keyword FAILURE
“MarketMap2020 Issue #17” dated 9/29/20 said, “Coming into this time window, both MarketMap and Volatility Reports has put advisors, managers, and traders on alert, that any rally, unless it was a momentum surge, would stall and the bear market will reassert itself.” I went on to point out that “The rally over the last two trading days were not A/D surges,” and that is the case per this update.
After a prolonged period of distribution, the 30-year government bonds are following the lower-quality bonds lower with a break below trend lines. S-T support at 175 8/ should not provide much help, the next stop in October is the 17412 to 172 28/ zone for I-T support. The long-term target remains from 144 – to 152, which takes the market below the end of the Elliott Wave (4), a bearish sign.
The I-T Tidal wave system is short from five weeks ago, and its trend-following filter is trending lower. The S-T version of that is trend lower now as well.
TEM is the most critical element going into the week of October 4, with both I-T and S-T calling for a high rate of change decline. This has been in play as a leading signal for the last four weeks. At the end of last week, S-T has cycled back to a new TE#2 for the third time. This market is ready to break.
The buck made an L-T size panic size low at the end of August-early September. That was, at the same time, the risk markets were making their panic highs. From that point, the market-tested lows building a base before its recent breakout run. The Tidal Wave cycle made a low last week, and its trend filtered strategy turned higher, causing an outright buy, which Contrary Thinker supports.
The base was tested early last week and held, followed by a rebound, a bullish occurrence. TEM is in no man’s land. In other words, it does not supply any new information. Hence the s-T uptrend is expected to sustain without much in terms of dynamics. The most previous high of 95.60 should act as resistance.
Contrary Thinker is long term bullish.
Contrary Thinker does not see the Fed adopting a more dovish policy compared to the ECB, BOJ, or even BOE. It’s about conserving wealth and buying power.
It is the mirror image of the buck. Since its major bull market peak in 2008, the downtrend is a new secular bear market. From its peak in early 2018, the decline is being corrected by a minor recovery in the face of the majority of Yanks that favor the Euro and somehow connect that to gold. But that is a sideshow.
The euro’s I-T Tidal systems are still long from 1.1290; however, the leading indicators, CT’s smooth RSI and Smooth CMB index, have both posted warning signals. The SMA is rolling over as well but has not crossed over.
Underlying implied volatility is flat, not showing much, and CT’s model also sees dull action in the near term. Range trading from 1.17 to 1.18 is expected in the near term.
It is easy to say that the carbon energy complex, like crude oil, looks super bearish, and there is nothing wrong about taking advantage of what is easy. The start with the implied VX for Crude oil made a stunning breakout on Friday, a sign of the fear and anxiety that is gripping this market.
That break was above CT’s smooth upper Bollinger Band, and what is key here is that the set up that preceded the breakout was a Technical Event #2. When this happens, the probability is high that there will be follow-through in the direction of the break: a bearish sign, a strong bearish signal.
CT’s intermediate-term %BB-VIX is coming off an extreme no fear condition and is breaking higher, another bearish sign from “implied volatility.”
Crude is in the last throw of a bear market that will test “zero” again and place a final panic low. I will add that the price of crude and other forms of carbon-based energy will never recover again. In other words, no new cyclical bull market of any considerable gain as the focus will continue its shift to the “Green New Deal.”
Political parallelism, ninety years ago, two 45 year cycles, five nine-year cycles, brought about the Presidential election of 1932. On November 4, 1932, in the middle of Republican President Herbert Hoover’s term, he lost in a landslide shortly after the start of the Great Depression, and the Republican Party suffered substantial losses.
The Fourth Party System is the term used in political science and history for the period in American political history from about 1896 to 1932 that was dominated by the Republican Party,
Wealth-X: World’s Billionaire Population Jumps 8.5% to 2,825
The global billionaire population and their combined wealth both increased strongly, reversing the previous year’s decline, according to a Wealth-X report released Tuesday.
The number of billionaires known to exist around the globe reached 2,825 last year, 8.5%, or 221 increase from 2018. Their combined wealth rose 10.3% year-over-year to a total of US$9.4 trillion, according to Billionaire Census 2020, Barron’s reported, citing research by Wealth-X.
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Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
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