May 2, 2022
If Providence is the basis of seeing the future, does it follow that the majority of vendors on Wall Street are atheists?
“We will only prosper if we relentlessly search for nothing but the truth, otherwise the truth will find us through volatility.”
MarketMap™ issue #12 outlined the scenario that persist since January 1, 2022. The topping process began in mid-May and many shares made their nominal highs in the second half of 2021 and with the Nikkei topping on 9/18/21 and the US averages peaking with the FAANG Index on 11/4/21, the Russell on 11/8/21, the leadership average NASDAQ 11/19/21, and the Dow and S&P 1/4/22.
Ahh, the world is not perfect and confuses some Perma bulls, please excuse the snarky comment, but if you are more than a manager of a mom and pop account for the long term and the thought of common stock or the market gives you a brain cramp, maybe you should be a buy and hold and learn to suffer through the max drawdown.
MarketMap™ called the two peaks in 2018, actually three inducing the secondary peak on 12/3/2018. MarketMap™ -2020 is called the top as well. Granted we saw the risk but did not think it would be the “shortest bear in history, but the best hedge is raising cash and avoiding the drawdown. MarketMap™ went off risk in mid-may 2021 and here we are today.
But if you think the bear market will be short lives just like the last three – the two in 2018 and the 2020 “shortest bear market in history.” you are wrong, dead set.
If you are an experienced and successful trader, you will understand that when you read educated and advanced market analysis, none of them come right out and tell their readers the bear will not end until the end of this decade. Why, because the industry promotes that “Bullish on America” point of view and they are bullish all the time. Bears are linked to recessions and that worries people about their employment and they don’t want to chase away that group that is at risk in the employment market.
You can read between the lines with a body of experience and knowledge to know what they are saying. But as fiduciaries, we should do no harm, protect our people’s capital and show them how to prosper without taking on great risk.
While MarketMap™ has nailed down the outlook for the next 6 weeks, the context of the averages is noteworthy.
The Russell is on a ledge and the next breakdown will lead to a high rate of change decline. Our Volatility model for the long term and intermediate-term both provide a springboard for that break to pick up a massive following. Both are signally a rule#2.
The daily bar is near a mini panic low, so a minor rally early this week will be short-lived, and Trade ideas on our provide Trader Exchange channel will use bearish strategies. The targets are noted in the middle chart, more on that as we get deeper into the week.
The three other major indices are set up the same way. The “Volatility Report” chart here does not reveal a clear low-risk bottom. All three of the indicators must be providing an extreme high in fear. On the contrary, none of them show that extreme. In fact, the NASDAQ supports carry over after a break.
I have annotated the S&P and COMPx with their downside targets.
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March 3, 2022
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.
February 24, 2022
The study of history plays an important role in all aspects of life including investing and trading.
Contrary Thinker’s publications are not about cheap talk. Our publications are about providing a research product from hours of work to your benefit, for a fee, full stop. No one wants to benefit from outside world events as negative as the pandemic was or Putin’s invasion of Ukraine. However, I do not believe in coincidences and have witnessed over my career the market (form) preceding outside world events (content), to be meaningful.
Clients following MarketMap™-2020 Issue#1, received an “off risk” advisory to raise cash and engage hedge systems.
Two years later, in all of the issues of MarketMap™ -2022, Contrary Thinker has made clear the risk of a major bear – when price and time analysis gave a clear “risk-off” signal mid-May 2022. Our advisory pointed out it was the train not seen that will kill you, and over the long term, the risk remains little noticed or thought of and it is a political one here in the USA. The events offshore are only a catalyst.
MarketMap™ -2022 Issue#2 is important to you, your investments, and your client’s investment. That publication pointed out a series of historical parallels