October Surprise Chart Gallery
The Tension before the Panic is Thick Enough you can cut with a Knife
The chart of the short volatility futures ETF has not tracked the new highs by the major indices as is typical of the fund. What it does show is on the weekly and daily bar a high level of tension measured by TEM. It is true that the longer a trading range persists the larger will be the breakout when it occurs. The same applies here, with short VX futures locked in a range since July and now the daily bar has registered a TE#2 calling for a trend is on the near term horizon.
NB: the S&P, FANG, and China charts contain hedge investment ideas.
Going into the late summer early fall Ct has expected this TE#2 set up to break lower. While we know that Volalaity is direction neutral and the breaks have been to the upside in the S&P and NQ. However, what has changed is everything has hit a major peak on panic buying. The Bonds as noted topped first on an L-T TE#1 in early March, followed by GFold’s panic buying into an L-T peak August 7 and the major equity markets September 2.
Coincidentally the US dollar index made a panic selling low on the same date, September 2, 20202.
The nest few charts show the S&P, Fang, and Nasdaq comp and Chinese index all setting up for a short sale or the purchase of bear ETFs. The Rusell – the small-cap – may still have a little work to the upside left.
What is important for Contrary Thinker members to keep in mind is the given the background our work suggested a replay of the decline this past March, where the COT dates of October 1 +/- a day or two was expected to be an acceleration point like it was in the early spring. Instead, it did not invert and posted up a day or two tradable low.
CT’s synthetic price charts provide a mixed view. The fragility index has been a Chop-O-Matic, for the past few trading days and is on a buy today. %BB-VIX looks and acts like the major peak in the first quarter of the year and that continues to be the expectation, into the end of the year.
The two changes of trend COT date charts call for a smash in the current time frame and the final COT panic low to be like 2018 being late in December of 2020 before a potential of a trading low.
The Copper chart is worth watching from an old traders’ rule of thumb, that a bull market has a copper roof. In other words, the metal forms a top and leads the bull market in common stocks lower.
Contrary Thiker predicted the bonds would lead the stock market lower and that break has now occurred and bonds hedges on in place.
Great and Many Thanks,
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
Capital Managers and Professional Investment Advisors visit: www.ContraryThinker.com
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 clients 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