• Background Image

    CT Journals

December 19, 2019

The Market Vs. the Outside World

On rare occasions do I find one day declines of any great magnitude happen on what is seen from the outside as dramatically bad days. No one is going to argue that the outbreak of Ebola anywhere in the world is good news.  But how the market defines what panic is and what is not, is a different breed of cat, from headline Journalism. In the same way that bear markets have a standardized definition, so panic days on Wall Street are standardized.

A quick review of the “panic” dates outlined out by Yardeni does not line up with many days that declined more than 3 ½%, or a mini panic day.

It’s wise to keep these numbers in mind, with the largest one-day declines in 2019 to date were 3.8% and 3.7% on August 5 and 14 respectively.  The largest one-day fell in 2018 occurred on February 5th at 7.4% and October 10 at 4.3%. Note, there was no outside media event on those days.

In 2017 there was not one down day from open to close over 1.6%. We all recall 2017 as the “lowest volatility” year in history. So, the North Korean Crisis was a non-event for the market and the Trump Impeachment scare also was a non-starter as well.

In 2016 on June 24 the market witnessed a 4.9% decline. On January 15, 2016, there was a 3.7% decline on the day. Both with no physical outside cause on the day.

On August 24, 2015, the market experienced a mini panic of 7.8%, nicked named the ETF flash crash, which was a price event. That event was in line with a panic day and the typical low of the three-month correction. Lastly in 2014 on October 15 the largest one-day decline for the year was 3.7%, the remaining down days were more in the order of 1 ½% or less.

Since I have been talking about the great importance of waiting to be successful, many of my ole Twitter and Facebook following is putting it in their list of traits to be a winner in the markets. But to them and the vast majority, it is only lip service and they will not do it.

However, from a Hedge Strategy engagement point of view, it is the foresight of the rare long bar decline days and their clustering into days or weeks that provide optimal trades that push returns above average, a/k/a Crisis Alpha. The same applies to one-day advances of greater than 3 1/2 %.

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinking Since 1989,

Copyright 1989-2019

Jack F. Cahn, CMT ContraryThinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264 USA. www.ThinkingMansTrader.com, 800-618-3820

— ContraryThinker does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

— Pricing is subject to change without notice.  My indicators and strategies can be withdrawn for private use without notice, at any time.

— Contrary Thinker does not refund policy all sales are the finale.

Trading futures and options involve the risk of loss. Please consider carefully whether futures or options are appropriate for your financial situation. Use only risk capital when trading futures or options

 

 

December 18, 2019

“Extreme Greed” Trigger’d – Short-Squeeze Lifts Stocks To New Record Highs

 

In the Volatility Report 12.11.2019, I pointed out that the USD was looking bearish – at least for the Intermediate-Term. ” The Hot Money for the last few years has been in the buck. From the 2011 low, a new very long term-bull market is kicked-off. That, however, does not preclude an I-T correction back to test the low of early 2018.”   I also tie a weaker dollar to a leading suggestion that stocks are going into a bear market. 

This news was coincidental at the secondary top highlighted in the chart used here. “Powell says the Fed is ‘strongly committed’ to 2% inflation goal, a sign that rates are likely to hold steady.”

“Fed Chairman Jerome Powell says the central bank is “strongly committed” to maintaining 2% inflation. The remarks are further indication that the central bank is unlikely to raise rates anytime soon. Powell also draws attention to low labor force participation and middling wage gains.”

https://www.cnbc.com/2019/11/25/powell-says-the-fed-is-strongly-committed-to-meeting-its-inflation-goal.html

“The only way is up…” China continued to surge after the ‘deal… Source: Bloomberg Mixed picture in Europe today with the FTSE tumbling along with DAX as Italy managed gains… Source: Bloomberg US markets were broadly higher led by Small Caps… Since “Phase One” of the US-China deal was supposedly complete on Oct 11th, can you spot the odd one out? Source: Bloomberg All of which began when The […]

\US President Donald Trump’s top economic adviser Larry Kudlow told reporters that US exports to China will double under the agreement and that he expects a 0.5 per cent boost to US economic growth in 2020 from the new and updated trade deals signed by the administration.

Click here to view original web page at Wall St and global share markets climb on US-China trade deal progress

 

\The U.S. has not had legitimate market in 12 years. What we call “the market” is a crude simulation that obscures the Federal Reserve’s Socialism for the Super-Wealthy: the vast majority of the income-producing assets are owned by the super-wealthy, and so all the Fed money-printing that’s been needed to inflate asset bubbles to new extremes only serves to further enrich the already-super-wealthy.

 

\

There’s more: add in the incremental liquidity from the expanded overnight repo of about $50 billion and another $60 billion in T-Bill purchases, and the Fed will inject a total of just shy of $500 billion in the next 30 days. This also means that by Jan 14, the Fed’s balance sheet would have grown by a cumulative $365BN in “temporary” repos, and together with the expanded overnight repos, and the $60BN in monthly TBill purchases, and by mid-January, the Fed’s balance sheet, currently at $4.066 trillion, will surpass its all time high of $4.5 trillion!

\

Something strange is going on: at the same time that central banks are injecting $100 billion each month in electronic money to crush volatility and ramp markets, a similar amount in hard physical currency and precious metals is literally disappearing.

Take gold: as we reported last week, it was none other than Goldman Sachs which recently laid out the case for gold, saying “gold’s strategic case still strong.” One reason for this is that the same central banks that are “full tilt” printing cash, they have also been splurging on gold, and as a result of “geopolitical uncertainty” there has been a record surge in gold demand by central banks themselves. As Goldman notes, “CBs globally have been buying gold at a very strong pace” and “2019 looks to be a record year for CB gold purchases with our target of 750 tonnes combined purchases likely to be met.”

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker Since 1989,

Copyright 1989-2020

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264 USA. 800-618-3820 or 25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889

— Contrary Thinker does not assume the risk of its clients trading futures and offers no warranties expressed or implied. The opinions expressed here are my own and grounded in sources I believe to be reliable but not guaranteed.

— Pricing is subject to change without notice.  My indicators and strategies can be withdrawn for private use without notice, at any time.

— Contrary Thinker does not refund policy. All sales are the finale.

Trading futures and options involve the risk of loss. Please consider carefully whether futures or options are appropriate for your financial situation. Use only risk capital when trading futures or options

NO WARRANTY / NO REFUND. Contrary Thinker   MAKES NO WARRANTIES, EXPRESS OR IMPLIED, On ITS PRODUCTS AND At this moment EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CBI BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY PORTION OF ITS PRODUCTS.

 

error: Content is protected !!