CT Journals
MarketMap
September 15, 2022
MarketMap™ September 15, 2022 #19
When you have the enemy on the run, in retreat, you must pursue them relentlessly.
Volatility means big swings up and down. The news media has picked up that word as its euphemism for a market decline. However, it is volatility that is the trader’s live blood as opposed to the lack thereof for the bull-only long-term investors that simply buy and hold.
If you have looked at enough daily bar charts with the 200-day simple moving average you will see that when prices are above it, the changeability of the market is low, it’s steady as she goes. However, once the market drops below the 200 day that is where all the action is for traders.
This featured chart provides a textbook example of what two very different long-term opportunities look like. The stats that are always quoted are from the 1950s,stating: “the S&P 500 has fallen >4% in a long bar 55 times. 49 of those times happened beneath the 200-day MA. As you can see, before 1950 the same truth applied, as 90% plus of all long bar days happen beneath the 200-day.
This Macro change in the context of the market dictates if one invests or trades (both long and short). If you are so indelibly programmed to think only in terms of investing, the next ten to twenty years will be a depression for you.
MarketMap’s primary cycle chart suggests the next meaningful low,
September 6, 2022
Nature of a Bear Market, Panics, Long Bar Days
October gets a bad rap for being the jynx month for the stock market. When in reality some of the best buying opportunities happen in that month.
The problem with that statement, while in general very true, is everyone is looking for a buying opportunity in October (like they say “leave in May and come back for Halloween treats.”) Thanks to one of the Contrary Thinker’s traders who pointed out NDR’s chart shown here, you can see the seasonality. The content provider sharing this chart was in the most recent past posting bullish research from his various sources. But the point is to consider the source and their axe to grind and read, read, read to get a good sense of herd mentality.
What the stock pickers are saying for example, with their strong stock buys is a retreat to buy “Qualcomm: Wait For Another Bottom In September.” Because now out of the blue they all believe that most of the time September sucks, they were in denial until now. On the other hand, cynics will say what happened to the all-time high in Ned’s chart? It shows an ATH in August, that did not happen hence there is something wrong or they will see the exceptions line 2015,17, and 18 among others, and stay with the market programming of BTFD now.
Be that as it may the suggestion of the one-year chart – while much different from CT’s MarketMap™-2022 does capture the I-T outlook being predicted by Contrary Thinker and fits MarketMap™ 2022.
Furthermore, for September to suck in the majority there has to be a high pivot of some proportions in July/August.
In my experience that is the reality for the vast majority of years with few exceptions, especially exceptions during low volatility bull markets. But let’s take a look at a few stats because the secular nature of the market has changed, which has lots to do with cycles. I will just say 20 years on the bull and 20 years off the bull.
The best example for those of us “young at heart” is the twenty years of the bull market from 1949 to 1966-69, when the Dow hit 1000 for the first time. That double top was followed by a traders market for twenty years (17 years) with the breakout in 1982. See Gallery charts #1 and #2 below.
For the “Greatest Generation***” the high at 300 for the Dow on September 4, 1929, was at the end of a twenty-year bull market that started from the panic low in 1907. The 1929 top was followed by a twenty years trader’s market – have a look at chart #3 in the Gallery. The big takeaway here is the fear of a bear market is only for those who are long only and do not understand trading or how to “time” entry and exit.
While everyone and I do mean everyone sees the high on 9/4/1929 not being exceeded again until 1954 as being the worse of the worse bear markets to the extent they see it as an aberration and do not put the data into their analysis. Or they see it as one big bear market aka downtrend and too volatility to be seen as anything else. But they are missing the great trading markets – both up and down – until the post-WWII “secular” bull market began in 1949. In 1950 the market become “superhuman” and no need to consider the past data of the pre-moderns.
See chart #3 in the Gallery, showing clearly, rallies of 52%, 10%, 27%, 31%, 40%, and 91% without even considering the bull market of 1934-37 of 127%. More on this in MarketMap™ Special Issue (see below.)
How many great trader’s names came out of this period of the 1920s to the outbreak of the war, to name a few: Gann, Livermore, and Wyckoff, and even today’s greats are known for their short selling and trading capabilities like Soros, Rogers, and Druckenmiller.
Ok sure we all can’t be great, but we can pursue that excellence, yes!
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So, the primary crashes in October that cause fear – as everyone knows – are 1929 and 1987. But that should not be the case, as mentioned above. What great opportunities, two opportunities. What gives? Is it some sense of false sympathy some investors feel about profiting from someone else’s losses? Did you know that J Edgar Hover hated the Kennedy family because he thought old papa Joe was anti-American for making a fortune selling short the 29 through 1932 market?
Without short sellers, who would be there to buy when it all looks like the end of the world?
MarketMap™ Issue #20 and Special Issue “Nature of…” Member access required
July 28, 2022
Bear Market Historical Chart Gallery
The Nature of Bear Market, Panics, and Long Bar Days
When it comes to what a bear market is investors and traders don’t hear much. They may read that a decline of 20% puts the market in the bear market territory. but that is about it.
Professional advisors, managers, and traders need to know the signs of a major peak, and the personality of the decline as it goes through its phases. We need to know what to expect, how to differentiate early between a bear and a correction, where panics fit in with the long-term decline and all bear markets don’t look like 1937.
Here is a chart gallery of bear markets from the 1929 event to date. Analysis of each chart to follow with an excel file download containing all the data for bulls and bears from 1900 to date.
If you are not a Contrary Thinker, here is your chance to access this report and chart gallery, the excel file, and six months of membership which includes MarketMap™ -2023 and all issues of MarketMap™ -2022 to catch you up in one fell swoop.
Chart Gallery Below
July 11, 2022
MarketMap-2022 Issue #15 Scenario Planner
A falling S&P compared to declining fear of risk is cognitive dissonance.
Therefore, when sensory overload hits with the sudden realization
that accounts are underwater panic selling will follow.
Hard and fast rules based on success and failure
Two related topics that I want to touch on here. One is the rule that there is nothing more effective to capitalize on is an entry signal that fails. The below screen capture depicts several examples of that hard and fast rule. Any reliable system can be used. Here it is buying low tide (red dot) and flipping to sell and sell short high tide (high dot.)
It’s easy to see the failure coming off the high pivot on April 13. Taking out the cycle low was a trigger point propelling prices lower. Given the downtrend, the low tides have provided nice reversal points as the same event hit in May. The most recent low tide was more of a wipe saw, but they held. The most recent series of tidal highs have been on the money.
The high pivot on June 28 was more than a high tide, it was also a combination of geo-cosmic events, of which there are more on the way this second week of July, more on that below. So based on this logic, the late June high is important on a Short-Term basis.
May 30, 2022
MarketMap #13
Ignore at your own risk, I could not be more serious in the conclusions of my research
Pulling money out of risk and putting it into short-term savings for the next few months to see how it goes is worth a “little embarrassment” if the Contrary Thinker’s advice is wrong.
P.S the risk of a missed opportunity is a false equivalent for proper risk management.
Eight Weeks Down According to History the Market is Bearish
Aniversary Dates
May 6, 2022
MarketMap-2022 The Scenario Planner
The GOP is CRAZY! and the Dems are a pack of limp wrist Betas
This lack of civility and the widening gap in American political norms hangs like the sword of Damocles over the markets and our way of governance.
In the market map issue #3 which was published in mid-January of 2022, we pointed out that when the Dow made seasonal peaks between the December 11th and January 15th bracket it had similar outcomes in terms of market behavior. We pointed out that during that 12-month period following the peaks the market behavior – the scenario of the market – was remarkably similar to each other from high pivot to selling panic and from the top to the ultimate low. In the three market parallels used here, there is a strong sell-off in May and June with an ultimate panic low in mid-October. That low in the fall of the year is associated with a national security event.
We also pointed out that those three tops were followed by national security threats that the market did not know how to deal when the events happened. And that this seasonal top pattern was a twofold caliber because there was an event in October of the year of the December-January peaks and there was another national security event that put pressure on the markets in the following year between August and October.
While there were other examples historically, we focused on the modern events that traders, analysts, and advisers could relate to and they are 1961, 1973, and 2000. If you refer to the COT (change of trend table) you’ll see that we highlight anniversary dates that occurred in these three parallel seasons. The 2018 experience was very close to meeting the seasonal envelope projected but its top was outside the bracket on 1/26/18.
Contrary Thinker sees the pattern being significant in 2022 based on its own history and other unrelated methods that suggest the same scenario. So, we’ll take a look at each in some detail.
In 1962 there was a high rate of change sell-off in May and June with a mini panic low on May 28th, 1962, and again on June 22nd. These two-anniversary dates are on the near-term horizon and today’s expectation is for the market to be 25% lower from here and enter a panic condition. Traders should be looking for we should be looking for those long bar days from opening high to closing low on those days exceeding 4% to 5% which on the Dow is about 1500 to 2000 points.
Next week the current tidal cycle opens up the likelihood of such long bar days to begin.
The form the markets are likely to take is a 1930s type trading market where in effect you have big swings going down 70% and then bouncing back 50%. These big swings will be great for good market timers. There are a number of reasons for this scenario, but one is clear and loop side. That is after 21 years of buying the dips and holding long stocks for the great bull market where market timing became a nonexistent thing with few knowing really how it works, the next ten to twenty years will be dominated by this group of specialists.
Alternately if the market turns out to be like the nifty 50 peaks in January of 1973 followed by the worst bear market since the Great Depression um at the time that bear market was one of the dullest low volatility declines in history and only had one countertrend rally at the end of eight months of 20%. Otherwise, it was really a dull decline we don’t think that’s going to be the case looking forward, because we’ve just exited a decade of very low volatility conditions, especially in 2017.
But I want you to pay attention to the key conclusions here of the December 14th through January 15th tops in that from those highs you can count
