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    CT Journals

November 29, 2022

Blog for the week

PDF to Blog 12-5-22
November 21, 2022

Volatility Reports November 21, 2022

VIX data does not suggest the daily wide swings in the stock market. Over the last 30 days, S&P 500’s minimum gain on an up day is 2% (rounded).

What the data reflects is more precise than the widely used put/call ratio. Today that statistic is just not a bear/bull ratio because there can be calls on leveraged bear (short) ETFs. Even if they have made changes in the ratio calculation, it is thought to reflect the mentality of risk-averse risk-takers compared to futures traders, as such it is the little guy that is assumed to be dumb money.

Well, the data used in Contrary Thinker’s fear and greed oscillator is more than the current perception of risk in the stock market today, looking out at various lengths. We also use the UVXY and others, which is a portfolio of S-T volatility futures. UVXY is ProShares Ultra VIX Short Term Futures ETF, long volatility futures. For a hedge fund, the cost of carrying a hedge is the value of that portfolio decreasing.

From an Alpha-achieving point of view, it is the process of moving to long volatility, that achieves Alpha, not the longer term carrying the position. The index has a slow-down trending bias because the stock market is known to be bullish most of the time. However, the index spikes to higher levels. Today the low 20% range suggests these investors see little risk of a volatility breakout. So, on the other hand an uptrend in the index is more like a spike leading the stock market. Back when Covid19 made the mainstream media the index spike to over .85.

With that in mind, a bear market always has

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November 14, 2022

MarketMap™ November 14, 2022

“The US Securities and Exchange Commission and the Justice Department now investigating, remains of FTX “

Bill Clinton’s Treasury Secretary Larry Summers making Enron comparisons
Back Story Contagion from the Crypto

THE WOLF STREET REPORT: Where’s the Contagion from the Crypto Implosion?

 

Here is a sample of the headlines.

The fix is in, there is only one Intermarket relationship that matters to the bulls and that is the USD against the world equity markets. While all eyes are on the dollar staying below its breakdown point, other relationships are being overlooked by the majority. For example, the inversion of long-term rates with the shorter-term.

Their study of the dollar relations is cited at best, looking back at 2017 as their model that says “when the bastion of safety is down” its risk on for stocks. Their research is front-end loaded. They forget the dollar bear in 2008 along with the world financial crisis or the dollar bull during the neo-liberal Clinton stock bull market.

Inter-market relationships, come and go. But this one has set up an influx of a liquidity pool for the smart money and big money to sell into.

So the news is good, inflation is under control, the Feds are going to pivot, and the dollar is “risk on.”  Now it is all clear, the game is the bulls to lose. They have all the analogies backing them up. They even pulled out the old Philly A’s trick, because if the Phillies had won the world series it would be a bearish omen, dead set. But they did not mention that an original NFL team, the LA Rams, won the Super Bowl as crème de la crème of bullish analogs. I guess they remembered the G-men beat the Pats in 2008, a nasty exception.

So what can go wrong?  “All you need to know. $UUP $DXY $USD” if you listen to the public stream?

“…One of the biggest developments this week was the breakdown in the US Dollar. The US Dollar Index dropped 4% this week, marking the worst week since 2009… that broke the uptrend line that has been in place for the majority of 2022. The strength in the US Dollar has been putting pressure on stocks and risk assets all year, so this is exactly what the bulls have been waiting for. “

Here is CT’s chart of the US dollar index showing the ruler trend line everyone is excited about its break. However, the long-term and intermediate-term trends are up; and the best the bulls can hope for in the “USD indicator vacuum” is a high-level trading range from 104 to 114.

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November 9, 2022

Volatility Reports November 9, 2022

“Time changes everything except something human which is always surprised by change”

Since the correlation has caused a big stir in the financial networks, everyone sees the 1-to-1 relationship between the USD and the ten-year notes as having a negative relationship with all risky investments. After one fella about creamed in his pants with the excitement regarding the discovery and the desire to go back to 2017 the question remains “what are they going to do and how are they going to know when it changes?

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