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    Climatic Action by Leading Stocks

Across the board the generals of the bull market made climatic tops and all unraveled in a similar fashion, all of which call for a period of profit-taking as the kick-off into a bear, in terms of price and time

Published on: Sep 6, 2020 @ 17:56

Unlike most of the bears that are always hedging their comments, this is the start of a new bear market with meaningful lows not expected until 2021 and 2022. But CNBC is promoting the following: ” If a mindset shift is looming, El-Erian suggests market players should look out below. “We could have another 10% fall, easily … if people start thinking fundamentals,” El-Erian predicted.

Contrary Thinker does not envision another “shortest bear market in history.” Rather something that takes the markets something more fitting of the actuarial tables. More on that in the next MarketMap 2020 looking at the timing of the major lows and the price levels. In general, a bear market is 35% over 18 months.

Here is what was similar, which you will see on all 15 stock charts

  1. Panic Buying on the monthly bar, signaled by the volatility model reaching an extreme TE#1
  2. The trend following system – three across-under – by the Smooth Moving Average, the Smoothed CMB index, and the Smooth RSI
  3. Failure of the market to hold its S-T and I-T breakouts with a failure reversal closing below their new support zones
  4. Failing to hold their fresh 52 week highs, then closing the week with a loss, is a sign of distribution into climactic action
  5. Clear five-wave structure in the initial decline, calling the larger trend lower; and some of the moves to new highs were post triangle, therefore terminal
  6. The short-Term volatility model supports a high rate of change trend, so the trend sell signals should pick up a following.

The Last two charts are simply to reinforce our message from the most recent Volatility Reports that implied volatility was giving warning signals and now is beginning to trend towards a bull market in fear. The last chart particularly shows how the market peaked on fear like the February 2020 top followed by a decline.

Could the above be wrong with every one I read and hear bullish or modestly bearish, sure? I give it less than a 5% probability of not being correct.

…more to follow

 

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
Copyright 1989-2020

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