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March 29, 2022

MarketMap #10

Only a few of the great ones gift away the secrets behind their methods

In the majority, few in the industry are open-minded to these methods, no one believes anything works unless they are running with the herd so they feel better when they are wrong because everyone else was.

The attitude that “I would rather be right and alone than be wrong in good company is not one of the best ideas for sales/marketing letters.  Because everyone chases the equity curve. As everyone reading this memorandum knows, the advisor/trader is only as good as his last trade. So they grow cynical after finding a hot advisor/trader right in time for a few losing trades and drop out. For the herd, this cynical cycle persists over the long term, not for the Contrary Thinker.

Refer to MarketMap-2022 Issue #9 

It outlines how a number of long-term cycles are coming into play now. You can go back and review older issues of MarketMap™ (MM) from this year to see how it is crunch time, tieing into the 40/20 year fixed cycle into 2022, the 83/84 year cycle coming from the panic year of 1857 into WWII year 1939 then into today, which has the strange coincident with Russia’s invasion of Ukraine. Plus the 60/30 year cycle from 1903 to 1962 (which is our scenario year) into 2022.

However, a few charts and analyses are left out. For example, the thirty-year cycle is shown in this animated Giff. From the big crash pivot low in 1932 to the 1962 crash, the cycle skipped 1992 (mini-panic in late 1989 and full-on panic on the Bombay Exchange. Leading the market to the big change expected in 2022.

It is just not anchored in fixed change dates by the market. But an astronomical event anchors it as well because Venus, Mars, and Saturn are all at 0* – in a line – in the calendar month of Aquarius, A rare occurrence, about every 30 years, and it is closely associated with major changes in the market, crash, and recessions. For example, going back from the bear in 1903, there is another great crash.

The Panic of 1873 and the subsequent depression had several underlying causes for which economic historians debate relative importance. American inflation, rampant speculative investments (overwhelmingly in railroads), the demonetization of silver in Germany and the United States, ripples from economic dislocation in Europe resulting from the Franco-Prussian War (1870–1871), and major property losses in the Great Chicago Fire (1871) and the Great Boston Fire (1872) helped to place a massive strain on bank reserves, which, in New York City, plummeted from $50 million to $17 million between September and October 1873.

Advancing 30 years, Teddy Roosevelt became president after the assassination of President William McKinley.

Roosevelt’s words and actions soon frightened businesses. His administration launched the first of many antitrust suits in February 1902. And in August of that year, Roosevelt gave a speech in which he asserted that corporations were “creatures of the state” and that the government has “the right to control them.”

The next month, the U.S. economy fell into a recession.

The stock market had been falling for four months when the recession started. By November 1903, the Dow Jones industrial average marked a low that was 40% lower than it was the day Roosevelt took office.

Stock Market Crash 1932
Putting the Buy-and-Hold Gospel to the Ultimate Test
Think you know the lessons from ‘Black Monday’? Think again.

By Jason Zweig
Oct. 25, 2019 11:00 am ET

By mid-November, the Dow had lost almost half of its value. The slide continued through the summer of 1932, when the Dow closed at 41.22, its lowest value of the twentieth century, 89 percent below its peak. The Dow did not return to its pre-crash heights until November 1954.

More big change dates and 2022 refinements with risk asset map for 2022 next…

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March 28, 2022

Volatility Reports 3/28/22 “The Bust”

How can something come from nothing? Or what happens when a one billion dollar industry goes bust?

The Dot.Com Industry did it, 22 1/2 years ago when that industry chased up the advertising cost on the SuperBowl broadcast to make a “brand” for themselves. All of that led to a bust.

The dot-com bubble was a rapid rise in U.S. technology stock equity valuations fueled by investments in Internet-based companies in the late 1990s. The value of equity markets grew exponentially during the dot-com bubble, with the Nasdaq rising from under 1,000 to more than 5,000 between 1995 and 2000. Today the Crypto Industry has done the same thing and worse it has produced an industry with no economic benefit and produce what they call an asset – something with value – out of thin air.

Blockchain technology is not revolutionary and disruptive except in the sense that it has taken to a whole new level the gullibility of just not the public but the professionals that have fallen in behind it. This new industry is nothing more than a meaningless marketing term representing an overhyped concept.

Unlike the smartphone and other high-tech gadgets, the world of crypto is living on a dream on the left-hand side of “the chasm.”  There are many reasons why they will call fall into the chasm. One is volatility which makes it impossible to regard Bitcoin and other cryptocurrencies as useful for anything other than speculation. NOT a replacement for a fiat currency as they have promoted from day one.

Besides being too changeable that the merchant would have to have such a wide bid to offer spread to cover their risk the market will not accept it until it becomes STABLE, which is not going to happen, until after the crash, when markets go flat after a dead cat bounce.

Furthermore, the big tout was limited supply vs the worldwide float of fiat currencies. Two key problems with that are the crypto factories do not have the full faith and taxing power of a government to back up their so-called coins. Plus there is no limited supply as there are opportunists every day making these things out of thin air to the extent that there are more than 10,000 cryptocurrencies in existence, and more coming every day.

All over social media and financial news, they are throwing around the idea of contrarian like it’s so easy to be one, while the bullish following on BTC&Co is cult-like and they are holding on for dear life, either to the pseudo investment or to their opinion.

All the “line drawers” that call themselves analysis in the Tweetershphere are rabid about a breakout they see in this market. Rather, the breakout is a little post triangle break that is finishing a simple correction retracing a Fibancai 38% of the decline.

What is keen about the advance is the time factor is for a reversal today and for cycles to pull the market lower into a minor low mid to late April. 

It’s a phenomenon I have seen since the gold and oil boom in the early 80s and investors and traders – after they crashed – were still holding on and wanted to buy more twenty years later. At the beginning of the 1980s, inflation was a “way of life” and was never going to go away, never.  How the long cycles impact the markets. Today the crypto cult is even ignoring the downtrend and the underlying facts that they are actions are based on greed, and nothing rational.

The bigger problem is what happens when a billion-dollar industry goes bust?

“…both fiscal and monetary policy has painted America’s economy into a corner, a corner that has no alternatives that are positive to bail out the market and the economy when the next down cycle occurs.”  There will be no soft landing. 

So the cycles from the 2020 crash are now translated out a few years, they kicked the can down the road. But the Fed seems determined to bring things “back to normal.” Yet everyone knows that the market does not care about that. Crammer confirm that on his CNBC

I just watched a 3-minute video of a Crammer rant self-contradicting himself along the way and he’s happy with the bear market being over and what everyone is focused on “greed”.

From Covid19 in China, the Fed’s more hawkish rate policy, the price of oil, and the rate of inflation plus the war in Ukraine. The Russian threat of escalation. But the market since the invasion started on the 24th of February does not care.

So what are we missing? BTC&Co going bust.

Key stocks on the monitor list as leading indicators of the industry getting ready to puke are

The key market players are listed in the report with their revenues, sales, and strategies are Advanced Micro Devices Inc., NVIDIA Corporation,  Intel Corporation, Microsoft Corporation, Coinbase Ltd.

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Country Thinking is about letting go of traditional ways of thinking, the commonplace that no longer serves you well in investing and trading. Building from the truth, from first principles the robust into anti-fragile. Thanks in advance for your consideration, I look ahead to working with you for the duration.

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
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March 24, 2022

MarketMap #9

Ecclesiastes 1:9 “The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.”

Few, not even 1% of the active and well-known market analysts I know of consider the time factor. The majority of CMTs I talk with want to pick my brain regarding “how I come up with these change dates. How did you do that?”

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March 20, 2022

Volatility Reports 3/21/22

Meaningless Facts

Without context analogical inferences have little meaning. From the get-go, analogies have a handy cap of no grounding in first principles.

So, after 2 ½ months of a downturn, the majority of retail types are grasping at straws confusing time periods and purporting long-term implications from short-term models.

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March 14, 2022

MarketMap2022 Issue#8

Cuban Missile Crisis/Period

16 October 1962 – 28 October 1962

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March 10, 2022

Volatility Reports 3/10/22

 

There are a number of trade ideas you can gather from this chart.

I have confidence in my work here and with overall cycles going into their second half, which is typically a period of pro-directional action. That is one day is lower the next day is down and the following day is down, into a mini climatic low. Long bar days are expected, greater than 4%.

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March 3, 2022

Volatility Reports 3/3/22 LinkedIn Network

We are all traders of Volatility

The primary source of performance for capital managers is (1) asset selection and (2) short volatility or short correlation exposure. When the asset groups converge on one (1) all that remains is being “short volatility” for the majority.  Selection does not matter. In other words, capital managers are long everything! Hence it is not a shock that the majority underperform during a crisis.

The emergence of the components for variance swaps to hedge is just one example of a bull market in fear since 2008-2009 but also it requires the use of “market timing” to be effective.

Without getting into the methods of “short variance swaps” the bottom line is “Regardless of the asset class, the true source of alpha seems to be moving between short and long volatility exposure—the volatility risk process and not the underlying asset.”  Artemis Capital Management

In other words, the method that can achieve Alpha the industry commercializes as unfeasible is market timing!  If you buy into that propaganda by the industry, you are reading the wrong newsletter.

The first chart featured today reveals a number of important factors. With that in mind, here is some background backing up a number of Contrary Thinker’s assertions.

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March 3, 2022

Volatility Reports 3/3/22

We are all traders of Volatility

The primary source of performance for capital managers is (1) asset selection and (2) short volatility or short correlation exposure. When the asset groups’ diversification converges on one (1) all that remains is being “short volatility” for the majority.  Selection does not matter. In other words, capital managers are long everything! Hence it is not a shock that the majority underperform during a crisis.

The emergence of the components for variance swaps to hedge is just one example of a bull market in fear since 2008-2009 but also it requires the use of “market timing” to be effective.

Without getting into the methods of “short variance swaps” the bottom line is “Regardless of the asset class, the true source of alpha seems to be moving between short and long volatility exposure—the volatility risk process and not the underlying asset.”  Artemis Capital Management

In other words, the method that can achieve Alpha the industry commercializes as unfeasible is market timing!  If you buy into that propaganda by the industry, you are reading the wrong newsletter.

The first chart featured today reveals a number of important factors. With that in mind, here is some background backing up a number of Contrary Thinker’s assertions.

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March 1, 2022

Volatility Reports & Trade Exchange

Expect an Encore

Yes, this is at least in part shameless self-promoting. Contrary Thinker is in its comfort zone when it comes to trading ITM long puts and calls. Obviously, the trading team, membership and I want you to have confidence in is accomplished and join.

This screengrab regards the recent trade on Tesla, which did well and I am one of the biggest fans of Elon, he certainly has the “X” factor. But the insider trading thing may bring him down.

Be that as it may, this analysis called the top tick of Tesla when it happened. The featured chart here shows on the monthly bar

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March 1, 2022

Volatility Reports 3/1/2022

Leading Indicator

the leading risk taker’s market is just about finished here with its countertrend. The Bitcoin bulls can’t see past the end of their nose, but that is fine for those of us with vision and foresight.

I know for many some price-based analysis is just not complex enough, because it does not speculate about the whys and how comes and what the pundits contrive to be the meaningfulness of cryptos. While it’s simply a branding game at this point independent of their practicality, given the multi-millions spent on SuperBowl advertisements. So while they fight it out, one thing we know is that Bitcoin is the premier market for risk takers and traders. As such it is a leading indicator of risk taker’s mood.

That bullish mood is

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