MarketMap-2020 Issue #16
September 18, 2020
September 18, 2020
Cycles began to flip over on Wednesday as the market realized and continues to find its form over the next five to six weeks.
Our table of Change of Trend Dates (COTs) has been updated with new data. One is from a friend of mine that is also a respected competitor, the other new column on the right comes from a new study based on Lunar Nodes first propagated by financial astrologer Louise McWhirter work in the early 1900s. Her 18.6-year cycle is already part of our longer-term work but I have reduced it to the short term because I found it produced dates that clustered with other independent cycles.
What the big take away is from the above table is the peak thus far hit on 9/2/20, which happened right on cue with the cluster from 9/2 to 9/6. In the current time frame is the next cluster of COT dates that have consistently pegged stock market highs. From 9/13 into today is the date window a high pivot is expected. A few new added features in the table. the Annual One Day decline, date when a long bar decline that equals what can be considered a good annual rate of return happens in a signal day.
The market had a long bar decline on the 3rd and the 10th, with another expected today or Monday. A mini panic low – aka long bar decline – can be expected on October 2, +/- the range of the COTs, from September 24-October 3. I would be looking for more bull market in fear selling to kick in early October. The period of 9/2 through 11/13 (far right column) should be a period that brackets off the majority of this bear leg lower.
For your long term, scenario planning here is the long term decennial cycle overlay provided by our friends in the UK Dogs of the Dow. While the overlay is based on date back to 1896 there are differences when looked at the individual years. So Contrary Thinker does not use this in a vacuum-like anything else. With that in mind, a low late this year should lead to a bear market rally into April May 2021 when the “Sell in May and Walk Away” rule will work after having a year off. Until there is a major bear market low earmarked by all of its features, the ten-year cycle suggests mid-2022 before getting back to long term investing in risk assets.
The chart here of the Nasqaq 100 futures demonstrates a few factors. The left-hand window one can see the COT low expected on 9/2 inverting. Inversions are not an excuse they are a signal to expect an acceleration in the other direction. In the same chart, the MA cross under on the 3rd sell signals confirmed by CT’s CME index and Smoothed RSI. You can also see the tidal cycle flipping from up to down with the red down arrow.
The right-hand window reveals the market’s failure to hold S-T and I-T support, a bearish clue. and again the Tidal cycles flipping to down three days ago. TEM today is a new TE#4. A condition we have not seen for a white, where range expansion is expected. In other words, breakout strategies should get carry over. So a break of range or new MA cross under signals gains in the probability of working out. Starting today and looking into next week, the daily ranges should challenge 400 points.
The key level for a break lower is 10,788.00
Volatility Reports have pointed out how the US markets (here the cash S&P is used) peaked on the monthly bar reflecting panic buying, irrational buying. Buying that is not grounded in reason that is easy to flip. With that behind the market, the weekly trend following system is giving early warnings – highlighted in “pink” in the right window, where we have all four of the trend following indicators of the trend following system crossing under. This is an I-T signal. The I-T background of the cash S&P is a new COT that tells the trader the sideways trend over the last two weeks is old and due for a change.
Key levels are clearly presented on the following chart with resistance starting at 3397 but main supply at 3429 to 3471. A move above these prices would change the trend to flat, for now. On the other hand, and in keeping with our bearish scenario, a move below 3306 would be the early warning that a key level like 3882 will be tested. This is a L-T support price.
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Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
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