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February 28, 2022

Volatility Reports 2/28/22

Vice-President Kamala Harris said in her meetings with European leaders, this is “a defining moment” for the future of the world.

The impact of the collapse of the Russian economy is being used as an excuse for the bear market around the world. Rather as Vice President Harris puts it well as a defining moment. How will western-style democracies and western values hold up? In the study of BIG HISTORY, the academics see the current period as a threshold, time will tell.

With that said, my best advice to advisors, investors, and managers is not to be swayed by headlines. The media only sees them as excuses for what the market is doing and it will not be until the end of the trend that the truth is understood.

In the short MartketMap Issue#7a I said that “After the mini panic low 3/23/2020, there was an ADV/DEC ratio buy signal along with an Upvol/DownVol ratio surge buy signal with the long bar days.

However, from the low on 2/24/22, which many of my competitors called a panic there was no such buy signal. Rather the high/low diffusion index on both major markets continued to show distribution. Our featured chart shows the indicator here still holding above 1.00 telling investors there are more new lows than new highs. this indicator is not the only “bearish” indicator in play now, Contrary thinker does not work such tools in a vacuum.

The charts also give clues on a number of issues. The SPY chart shows how old support is not resistance, high lighted in blue; and that price level is coincidental with the Gann 1×1 trend line cross-over. From a trend following point of view, the SPY has broken below the smoothed Bollinger Bands and continues to trade below it, suggesting the trend is down.

From an EWT point of view, each leg of decline is only a first wave, setting up a one-two series, which is almost always the lead up to a waterfall high ROC trend. In this case a downtrend. Last Friday’s rally appears to be a one-day wonder into new resistance, high lighted in blue.

Just as bearish is the NASDAQ comp with a clear five wave structure leading to a wave [1] end on 2/24/28, right in line with MarketMaps COT calendar.

In MarketMap™ 2022- Issue 7a I explained why Friday’s rally was typically a one day wonder:

“One of the elements of a bull market, especially in the early stages, there are one-day long bar declines, shakeouts that at most suggest a 10% correction. they happen 99% of the time within a few days of a high pivot.”  I went on to say that,

“The inverse is true of a bear market, that near a low pivot – especially one that is being called a panic when there is no evidence of a panic – a one-day wonder is a natural occurrence to shake out the weak hands and keep the Perma bulls compliant.

Contrary Thinker’s expectations are the same. Both time and price suggest that without a bell ringing panic extreme, there is more decline.  I stated that “A minor recovery is expected into March 3-6. From that COT high the decline remains on track for a low in mid to late summer and panic in May is possible.”

Any recovery early this week will be used to add back closed-out mega-profits from late last week plus new bearish ideas.

The decline from here should last two trading weeks with the second week prone to long bar declines, something that exceeds 4%, which has not been seen yet.

Check-in with Trade Exchange for new ideas, they hit there first. An updated user doc is forthcoming.

Are you getting your investment advice from memes? Leave the public domain. Are 30 years of successful experience worth $10/month? Use this URL and put it in your pocket – smartphone and other handheld devices.

Trade-Ideas? Just $10/month for all of them! Use your smartphone here, clip and paste: https://tradeexchange.app.link/jack_cahn

Great and Many Thanks,

Jack F. Cahn, CMT

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 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.

— 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

February 25, 2022

Volatility Reports 2/25/22

Headlines after the close Thursday “7 of the 11 sectors closed higher. Tech led, gaining 3.42%. Consumer Staples lagged, dropping 1.72%.”

The full-time providers of market information are all in unison after the recovery Thursday. A few point out how sentiment is one-sidedly bearish, which is bullish from a contrarin point of view. but all of them assuming they are professionals as they post this content full time, are bullish.

  1. Russell 2000 digging in at the AVWAP from COVID lows for the 2nd time this year. Along with momo divergence, finally getting some signs of a bottom $IWM
  2. Neutral Sentiment Plunges as Bears Move Back Above 50%
  3. The big difference between today’s reversal and the reversal on the 24th can be summed up in one word… PANIC!  We saw it today, but not on the 24th.
  4. S&P 500 Information Technology 1D  Bullish divergence is displaying at support.
  5. Investors Intelligence Bulls minus Bears is now at 1.2%, nearing those extreme pessimistic levels where we’ve seen bottoms in stocks since the mid-90s, with the exception of 2008.

Also, one thing that has become such a glaring insult to a trained market analyst, strategies and trader is the spitballing that is chronically posted, and to what end is unclear. But #3 above, there was no panic yesterday, not even a mini-panic.

What the good ones know is it’s the consensus of the purported professionals on how one builds a contrarian case.

Also, the bulls are in retreat. Here is a chart posted with the head lines “RSP holding the line.”  The RSP is Invesco’s weighted S&P ETF. But what is clear is how the index broke support, and now he has had to retreat to the next “bar chart” horizontal line. The keyword is the bulls are in “retreat.”

The brief MarketMap™ -2022 Issue#7a sent to members before the open suggested the lower gap open into our COT time window could lead to a reversal on Thursday or Friday.

Yesterday on the opening weakness 1/2 of the bearish option positions took profits and a number of the ETFs some had better than 25% profits and a few laggards were disposed of off.(see Trade Markets App.)

Trade-Ideas? Just $10/month for all of them! Use your smartphone here, clip and paste: https://tradeexchange.app.link/jack_cahn

Bottom Line and Strategies going into today:

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February 24, 2022

MarketMap™ 2022- Issue 7a

The study of history plays an important role in all aspects of life including investing and trading.

Contrary Thinker’s publications are not about cheap talk. Our publications are about providing a research product from hours of work to your benefit, for a fee, full stop. No one wants to benefit from outside world events as negative as the pandemic was or Putin’s invasion of Ukraine. However, I do not believe in coincidences and have witnessed over my career the market (form) preceding outside world events (content), to be meaningful.

Clients following MarketMap™-2020 Issue#1, received an “off risk” advisory to raise cash and engage hedge systems.

Two years later, in all of the issues of MarketMap™ -2022, Contrary Thinker has made clear the risk of a major bear – when price and time analysis gave a clear “risk-off” signal mid-May 2022. Our advisory pointed out it was the train not seen that will kill you, and over the long term, the risk remains little noticed or thought of and it is a political one here in the USA. The events offshore are only a catalyst.

MarketMap™ -2022 Issue#2 is important to you, your investments, and your client’s investment. That publication pointed out a series of historical parallels

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February 23, 2022

Volatility Reports 2/23/22

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February 23, 2022

Trade Ideas on Your Smart Phone for only $10/Month

The alchemy of trading volatility (VX) is not magic for the fool. You must be the sorcerer and not his apprentice

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In the mid-’80s I was mentored by Bob Prechter at EWI and his mentor Dick Dimond. Dick teaches time of day execution and I learned to use EWT and time of day timing to make a small fortune trading high delta OEX 100 puts and calls.

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“The way to build superior long-term returns is through preservations of capital and home runs…When you have tremendous conviction on a trade, you have to go for the jugular. It takes courage to be a pig.”  Stanley Druckenmiller. It is not only Stanley but the best from P.T. Jones to Richard Dennis. “Do not take suboptimal trades.” That is do not trade for an average, why take the risk!  This is head and shoulders above the industry.  With that in mind, the method isolates trades that are 10 to 1 or better reward to risk setups.  With such a method, one winner will be able to overcome most drawdowns.

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It’s like the 10-1 program, the focus is more on the percent win rate, but still, the focus is risk management. The trades are short-term less than four weeks, with price-based profit targets nearer to entry for a 4 to 1 reward to risk ratio. It trades leveraged ETFs on the stock averages, offshore stock averages, and S&P sectors and micro sector ETFs

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The focus is on intermediate-term trends, where the reward to risk precondition can be anywhere from 5 to 1 or as high as 10 to 1 sometimes better. The focus here will be on new bull market leadership after bear markets and fad sectors that fall out of favor. The universe of ETFs here includes everything except the standard stock averages and S&P sectors.

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Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
Copyright 1989-2022

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

February 21, 2022

MarketMap-2022 Scenario Planner Long Bonds

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February 19, 2022

Volatility Reports 2/22/22

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February 17, 2022

Volatility Reports 2/18/22

Don’t get caught in the slope of hope.

The Superbowl baby bitcoins promoting their brand of cryptos rings similar to the Dotcoms paying megabucks for Superbowl advertising space in the 2000 Superbowl, the last time the Rams won the big game.

BTC is the risk-takers market of choice, it is not a hedge. In fact, I saw a headline after it rallied on Tuesday that it was in response to Russia withdrawing troops. So the content providers are not sure what role it plays. 

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February 17, 2022

MarketMap-2022 Scenario Planner Issue #7

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February 13, 2022

MarketMap-2022 Scenario Planner Issue #6

MarketMap™ 2022 Scenario Planner Update

The 56-year cycle (solar/lunar cycle)

There are several impacts the tidal cycles have on the stock markets – based on empirical studies worldwide over 200 years plus. In various mathematical sequences, the 9 yr/56 yr cycle is used to provide insights into when long-term highs and lows are likely, insights into the character of the market for the coming year, and wheater or not the market during the 12 months period will be prone to panic days. Furthermore, once a scenario for the year has been highlighted, calendar math can be used to count when the big one-day wonders can be expected, the mega one-day recoveries like 3/24/2020.

Obviously, these items are good to know for both offense and defensive reasons.

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