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September 18, 2022

Volatility Reports Crude Oil 9/19/22

Contrary Thinking is not about being contrary just for the sake of being contrary.

 

Sometimes you have to run with the herd and follow the trend. Looks like Fidelity is sounding a tad bearish. One of their leading managers posting in the public domain, “The fact that low beta (utilities) and late-cycle (energy) sectors are leading (showing superior relative performance ) tells me that this is not (yet) a new bull market.”

The parenthetical is my needed explanation, as bulls always think that going down less than the average means “leading.”

Is $60 a barrel from here before the end of the year possible?
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September 15, 2022

MarketMap™ September 15, 2022

When you have the enemy on the run, in retreat, you must pursue them relentlessly.

Volatility means big swings up and down. The news media has picked up that word as its euphemism for a market decline. However, it is volatility that is the trader’s live blood as opposed to the lack thereof for the bull-only long-term investors that simply buy and hold.

If you have looked at enough daily bar charts with the 200-day simple moving average you will see that when prices are above it, the changeability of the market is low, it’s steady as she goes. However, once the market drops below the 200 day that is where all the action is for traders.

This featured chart provides a textbook example of what two very different long-term opportunities look like.  The stats that are always quoted are from the 1950s,stating: “the S&P 500 has fallen >4% in a long bar 55 times.  49 of those times happened beneath the 200-day MA.  As you can see, before 1950 the same truth applied, as 90% plus of all long bar days happen beneath the 200-day.

This Macro change in the context of the market dictates if one invests or trades (both long and short). If you are so indelibly programmed to think only in terms of investing, the next ten to twenty years will be a depression for you.

MarketMap’s primary cycle chart suggests the next meaningful low,

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September 6, 2022

Nature of a Bear Market, Panics, Long Bar Days

October gets a bad rap for being the jynx month for the stock market. When in reality some of the best buying opportunities happen in that month.

The problem with that statement, while in general very true, is everyone is looking for a buying opportunity in October (like they say “leave in May and come back for Halloween treats.”) Thanks to one of the Contrary Thinker’s traders who pointed out NDR’s chart shown here, you can see the seasonality. The content provider sharing this chart was in the most recent past posting bullish research from his various sources. But the point is to consider the source and their axe to grind and read, read, read to get a good sense of herd mentality.

What the stock pickers are saying for example, with their strong stock buys is a retreat to buy “Qualcomm: Wait For Another Bottom In September.”  Because now out of the blue they all believe that most of the time September sucks, they were in denial until now. On the other hand, cynics will say what happened to the all-time high in Ned’s chart? It shows an ATH in August, that did not happen hence there is something wrong or they will see the exceptions line 2015,17, and 18 among others, and stay with the market programming of BTFD now.

Be that as it may the suggestion of the one-year chart – while much different from CT’s MarketMap™-2022 does capture the I-T outlook being predicted by Contrary Thinker and fits MarketMap™ 2022. 

Furthermore, for September to suck in the majority there has to be a high pivot of some proportions in July/August.

In my experience that is the reality for the vast majority of years with few exceptions, especially exceptions during low volatility bull markets.  But let’s take a look at a few stats because the secular nature of the market has changed, which has lots to do with cycles. I will just say 20 years on the bull and 20 years off the bull.

The best example for those of us “young at heart” is the twenty years of the bull market from 1949 to 1966-69, when the Dow hit 1000 for the first time. That double top was followed by a traders market for twenty years (17 years) with the breakout in 1982. See Gallery charts #1 and #2 below.

For the “Greatest  Generation***”  the high at 300 for the Dow on September 4, 1929, was at the end of a twenty-year bull market that started from the panic low in 1907.  The 1929 top was followed by a twenty years trader’s market – have a look at chart #3 in the Gallery.  The big takeaway here is the fear of a bear market is only for those who are long only and do not understand trading or how to “time” entry and exit.

While everyone and I do mean everyone sees the high on 9/4/1929 not being exceeded again until 1954 as being the worse of the worse bear markets to the extent they see it as an aberration and do not put the data into their analysis. Or they see it as one big bear market aka downtrend and too volatility to be seen as anything else.  But they are missing the great trading markets – both up and down – until the post-WWII “secular” bull market began in 1949. In 1950 the market become “superhuman” and no need to consider the past data of the pre-moderns.

See chart #3 in the Gallery, showing clearly, rallies of 52%, 10%, 27%, 31%, 40%, and 91% without even considering the bull market of 1934-37 of 127%. More on this in MarketMap™ Special Issue (see below.)

How many great trader’s names came out of this period of the 1920s to the outbreak of the war, to name a few: Gann, Livermore, and Wyckoff, and even today’s greats are known for their short selling and trading capabilities like Soros, Rogers, and Druckenmiller.

Ok sure we all can’t be great, but we can pursue that excellence, yes!

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So, the primary crashes in October that cause fear – as everyone knows – are 1929 and 1987. But that should not be the case, as mentioned above. What great opportunities, two opportunities. What gives? Is it some sense of false sympathy some investors feel about profiting from someone else’s losses?  Did you know that J Edgar Hover hated the Kennedy family because he thought old papa Joe was anti-American for making a fortune selling short the 29  through 1932 market?

Without short sellers, who would be there to buy when it all looks like the end of the world?

MarketMap™ Issue #20 and Special Issue “Nature of…” Member access required

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