November 30, 2020
Intermarket relationships are ephemeral, valid for the short to intermediate-term at best. The imputed market wisdom is when gold goes up US dollar declines and while the greenback advances the precious metals go down. But since late September both markets are in a decline; and both into a decline of a major COT time window according to our MarketMap change of trend dates. With today being a key date, November 30.
November 30, 2020
The new decade, the new White House, the old White House undermining the incoming, an influx of inexperienced investors plus measures of market fragility equals major changes
November 25, 2020
November 23, 2020
The solar return of Sagittarius is the Season to be, ho ho ho happy.
Sagittarius runs from November 21 to December 22. As an astrological Sun sign, it reflects the ideal that is captured by being: ” Generous, idealistic, humorous, but can promise more than can be delivered or tends to overcommit, and it’s a period that is impatience for results and a season where anything can be said or promoted no matter how undiplomatic (Donald Rumsfeld’s anyone?). It may be a coincidence to many that the holidays fall in this joyful Astro sign, yet I have always seen the curry haired member of the Marx Brothers (not Karl) as being the exemplar of the sign, if not the season.
Arthur “Harpo” Marx, born November 23, 1888, hit the stage at 17 years of age. He was a comedian, actor, mime artist, musician, of five brothers’ second-oldest. Harpo’s comic style was visual slapstick. If you’ve never watched Saturday Night Live or a Chevy Chase movie, slapstick uses intentional violence and violence by mishap, often resulting from inept use of props to get a laugh. All of that is fitting for the season, assuming the market is a prop that is typically bullish.
In any event, the ninety-nine percent of market commentators are “cheerleaders” citing recent factual performance like “the best November in history” ( they have to be happy that the low was on the last day of October ) or that 90% of all stocks are above their 200-day MA the best in six years!” All of which tells you how they sell their ideas by chasing the equity curve, the market’s direction is assumed and says nothing about risk/reward, which is the largest fault by the majority of investors, full stop.
Next to the cheerleading, here are the working predicates painting a bullish picture by my friendly competitors.
- In the face of the pandemic’s inhumanity, the market is guilty of winning, but you can’t fight the trend.
- Even more inhumanity to renters and others who do not get a stimulus package, but the market is always right.
- Observing price and trend alone, the stock market is undoubtedly in a long-term uptrend.
- Some continue to believe that the Federal Reserve is ready to act as a safety net if the market takes a turn for the worse (they mean the bearish side).
- The seasonally best months of the year for the stock market began on November 1st (and end on April 30th). Everyone knows this, but they don’t know how and when to trade it.
- The transactional types have been bemoaning the lack of good entry points for investing since before the election (see the above cheerleading), but they think they are starting to see some good set-ups now.
- The majority doubts the election will be overturned, but it would cause market damage if overturned.
- Massive hospitalizations are breaking the health care system; again, the market does not care.
The bottom line is every bulletin, post, and tweet that is pushed throw my notifications is bullish. One theme that the bulls are hanging their hat on is the bearish trend in the USD vs the majors.
Since the election, I have received a fair number of emails and direct messages regarding politics. To begin with, I am a Reagan Democrat and a Bill Clinton Republican, full stop. I vote for the person, not the party. There is no dogmatic ideology that runs the United States of America; it is an idea, and ideas change. I was asked if I thought Trump would overturn the election, the answer is NO, but he will make things as bad as he can for the incoming administration and blame any future detriment to the country on Biden and his team. As I noted elsewhere, I believe that Trump will put on a big show being pulled out of the White House to gain notoriety with his fan base for the Trump Party’s future. It goes beyond the damage he is doing to the norms of our Democracy, but the damage he will do to the markets, the economy, and national security.
The bull market from Trump’s election to February 12, 2020, and the seven-month recovery is Trump’s market; he owns it. Further, in his public pronouncements, he clearly stated. “If he (Biden) is elected, the stock market will crash.”
Trump is running interference on anything that will help Binden govern; he will not give a booming stock market to the Dems. Lastly, what should be a clear difference between the two parties today is the Democrats play softball, and the Trumpblicans play hardball when it comes to power. The only time that tact stopped working for the GOP was for Hoover’s party in 1932 went over the moon. When a major swing happened to Rosveltian measures or bottom-up economics that the far-right called Socialism, a scare word still used today. The New Deal was carried on by Truman, JFK, and Johnson into the late 1960s, forty years. A regime change of that magnitude is occurring now. It will become clearer on December 21 and throughout 2021.
What is curious is how for the last four years, the use of politics in one’s analysis was a social “no-no.” today, with Trump on his way out, how it’s ok to talk about him trying to flip the election without legal grounding or the possibility that he may not leave until they drag him out by the scruff of his neck. All these things that MarketMap-2018 envisioned at the end of 2017 and today unfolded according to Hoyle, and the potential of the FBI escorting him out of the white house is still right up there.
But what no one except several political insiders is talking about and what is now popping up in the general so-called “liberal” media is how Trump is purposely sabotaging everything he can so that the new Administration does not succeed or at least has more problems to deal with than it can handle from January 21, 2021.
I am sure that not many of us can relate to bitterness and resentfulness. This reflects about Trump, the poor loser, plus extras. Everyone hates to lose, but the extreme facts are clearly hitting the fan. It’s just not his holding back of the funding via loyalist Emily Murphy at GSA Administrator that is putting the Biden team layers deep in empty office space. It’s the damage being done to national security, which I have been pointing out since January 2018.
The 9/11 Commission Report pointed out that the lack of a leading transition for the Bush administration after the Florida hanging chad delay of three of four weeks was a contributing factor to the USA being caught off guard, when reports were coming through NSA, ETC. Do Biden and his team have any Global, national security threats to be concerned about? Yes, too many to count, from the public domain, and it’s common knowledge that all new presidential administrations are tested from abroad in their first year. The exception is the man who would be king, tested only by God’s act, a pandemic.
Moreover, directly Impacting the markets and the economy is Treasury pulling loan facilities for the FRB to provide the safety net if needed. In a recent post, I mentioned that the outgoing Trump Treasury would pull its pegs from under the market, and they are many. If you are a licensed professional, you may recall this from your series seven, the notion of “pegging.” when a Wall Street firm underwrites an IPO, it is allowed to sell short some of the new issues. Hence, there is buying support under the market as they release the new shares to the buyers. It’s called pegging; these types of operations exist by various means, like the Treasuries loan facility to the Fed. The point is: Trump will not leave the office with his bull market intact for someone else to take credit for. It is only a matter of time from now until January 21. More in MarketMap 2021.
When the number of stocks above their 200 days moving average (DMA) is above 80%, the inference is the market has been great and now is expected to begin to tread water at best. That the bulk of the performance is a has-been and rotation to the laggards are expected, which is the case. The last time I saw this index as high as it is was back in April of 2011, just before a 20% correction. While the fact of 90% stock being above 200 DMA only tells retail how great the run from the March 23 low, after the “shortest bear market” in history, it’s not a good reason to jump on the bandwagon, to bet on the pass line.
Will Donald Trump derail the economy by desperately clinging to power after being defeated by Joe Biden?
“For a man who has just suffered a humiliating defeat, Donald Trump still seems to believe he is holding quite a few aces.
While he has become just one of four US Presidents to be defeated after a single term during the past century, as expected, Mr. Trump has pushed the boundaries of the US Constitution and convention into unchartered territory as he desperately clings to power.
It is a threat that has yet to manifest itself on financial markets…”
“…On the weekend, however, a defiant Mr. Trump — who has at least 130 of his Secret Service detail in the grip of the virus — had this to say as part of a long and rambling monologue on the sterling performance of his administration, and particularly, it’s handling of the pandemic.
“Ideally, we won’t go to a lockdown,” he said. “I will not go — this administration will not be going to a lockdown.
“Hopefully, the — the — whatever happens in the future — who knows which administration it will be? I guess time will tell. But I can tell you, this administration will not go to a lockdown. There won’t be a necessity,” he said.
That puts Mr. Trump and his supporters on a direct collision course with the newly elected Mr. Biden, a proposition that does not bode well for the immediate future of the world’s biggest economy and even less so for America’s status as the global defender of democracy.”
Mnuchin-Powell Split Shows Rare Discord as Economy Struggles
” WASHINGTON • The top two United States economic policymakers have parted ways over whether to preserve emergency lending facilities designed to shore up the economy – a rare moment of discord as the nation confronts the risk of a renewed downturn spurred by a surge in coronavirus cases.
The disagreement erupted late on Thursday, touched off when outgoing Treasury Secretary Steven Mnuchin released a letter to Federal Reserve chair Jerome Powell calling for the return of funding for several Fed lending programs that rely on the Treasury’s backing.
Minutes later, the central bank issued its own statement urging that “the full suite” of facilities be kept in place.
Investor reaction to the split was swift: Futures on the S&P 500 Index slumped 0.9 percent in early trading yesterday in Asia, with haven demand sending Treasuries higher and pulling down yields.
Treasury chiefs and Fed chairs typically coordinate closely in times of crisis, appearing jointly before Congress and working in lockstep to ensure funding markets run smoothly.
The two agencies were tightly linked in the financial and auto industries’ bailouts more than a decade ago. And they became tied statutorily in the Cares Act economic rescue package in March that appropriated money for the Treasury to support Fed backstops for everything from municipal to corporate finance.
“This is a significant and disturbing breach at a critical time for the economy,” said Mr. Tony Fratto, who worked at the Treasury Department during the George W. Bush administration.
“We need all the arms of the government working together, and instead, we see a complete breakdown.”
He noted that Washington remains at an impasse on fiscal stimulus as well.
Underscoring the success of the programs the Fed established, Mr. Mnuchin argued that some could be allowed to stop buying new assets at the end of next month. He asked that others be kept in place for an additional 90 days.”
Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as subscribers before their free look runs out.
Network with me on LinkedIn and gain access to the private group I have created to keep my people up to date on forecasts and strategies, following this easy access link.
Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA
92264 USA. 760-459-4681 OR
25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889
— Contrary Thinker does not assume the risk of its client’s 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.
–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
November 19, 2020
The Pac Rim will need to prove itself during the expected worldwide bear market to achieve Alpha longer term. Contrary Thinker sees it getting that opportunity going into a cyclical bear market now.
The consistent information provided by the Technical Event Model gains in credibility daily. The meaning of TE#1 and #3 is clear as a reliable COT time windows. The long term – monthly bar – of GXC – the ETF traded here that tracks a broad, cap-weighted index of Chinese shares of all cap sizes – shows this clearly. The three TE#3 – in the vertical light blue lines – calls the market’s trend labored, becoming old, feeble, persistent, and due for a change. Unlike TE#1, because of its “persistent” and low volatility nature, there can be some lead time, yet it puts advisors, investors, and managers on the front foot. So while everyone I have read is marveling at the break to new highs, its background suggests there is a lack of vigor.
Furthermore, when you understand the context first the rest of the technicals fall into place.
November 18, 2020
Lots of bullish bravado in the social sphere
When the markets ran stops on Monday 11/9/ all the Short-Term charts hit an extreme in volatility modeling, a rule#1. This suggests that the market will not make much progress from that point. Rather it will move into a trading range or a pivotal reversal in the other direction.
The pattern for the small caps – the Russell – is 1-1-1, a panic buying extreme on all three-time frames. Hence
November 16, 2020
Bonds Long Term Bearish Trend Picking up Speed
Secular trends don’t turn on a dime, but they started at the end of 2017, the year of the lowest volatility in the market’s history. Since that date, even in the face of the need for increased sector rotation to outright market timing and long volatility investments, the sentiment repeats the same has to be a bullish narrative that began with QE1. But in the next forty years, we will witness a major shift that began in 1980 and is ending now. This does not mean everything is bearish, it means that strategies and timing, and time horizons will need to change.
The trend back to normal will be
November 10, 2020
The Long Term Readings of the Panic Buying at the Top in August has not been resolved. That peak has produced a wide trading range leaving the bulls rabid and the bears frustrated.
The monthly highs posted from August to date produced a 7 1/2% trading range. TEM’s rule #1 is accurate 99% of the time producing a change of trend (COT).