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    Recap of major markets

    September 10, 2020

September 10, 2020

Recap of major markets

Today 9/3/2020 the markets are flashing “DANGER” and no one is paying attention, NO ONE. Today 9/10/20 the majority continue to find a rationalization for more bull market.
Recap of major markets, click to enlarge charts

Bonds:  Like the bitcoin, gold, and silver panic buying high, the bonds were the first to make their FOMO peak back in March after seven months of emotional or poor buying, which was pointed out at the time. The expectation after such an event is nine out of ten for a sideways choppy range, that works off that condition setting up the next cycle.  As a rule, this kind of irrational buying is easy to flip. so after a period of distribution investors should expect these accesses to be corrected back to where they began.  That level runs from 144 – to 152, which takes the market below the end of the Elliott Wave (4), a bearish sign.

If we take the Fed chairman at his word, the real economy is his focus vis-a-vis 2% plus inflation and improving employment. Why? Because full employment is no longer an inflationary concern. The stock market is no longer their focus the real economy is their objective.

Use the breakdown levels to entry bear strategies or add to the existing short positions. I-T trends are pointing lower, tidal forces cycles are pointing lower and the background supports an I-T dynamic trend. So a break below 173 and the neckline should get carry over.

Euro Dollar:  Since its major bull market peak in 2008, the downtrend is a new secular bear market, that is being corrected today. The dollar bashers are retail and they are out in numbers gaining confidence in the counter-trend, the first leg of which has run its course.

US Buck: Began a new secular – very long term – bull market in 2011. The recent correction is counter-trend, which found support in both I-T and L-T support on a mini panic washout and extremely high bearish sentiment. Even the analyst that see the low are backing off the bullish outlook for the buck as it may impact negatively their bullish outlook for stocks.

Crude Oil is breaking out of its bearish wedge. I do not think I heard one content provider say that the wedge was anything but a continuation pattern bound to resolve itself to the upside. While longer turn Contrary thinker is bullish on “inflation” in the short to intermediate-term the rally in Crude appears counter-trend and the rally in the commodity indices looks like the first leg up of a new bull market.

While Crude is a main component of the commodity indices, I have real doubts that it will be a leader, as carbon fuels are dead leading to the bridge fuels like NatGas, Solar, and Wind.

Gold The long term outlook remains unclear but the ner term action should clarify that. The following chart is being used for that and for a short term quick profit opportunity short the market via a trend-following moving average system. Ironically, if the market breaks lower, the long term outlook becomes more bullish. But more on that later.

What is clear here is how the horizontal trading range is being picked up by TEM with the TE#2 signal that is in effect for eight days. This trading range is about to break, and CT is looking for a break to 1760.00. Even if the S-T is bullish, the near term has one last pullback to mid-range to set that up.

The intraday chart highlights how Contrary Thinker implements a strategy, refer to the annotations in the chart.

 

Historical Action

For whatever reason, this chart was used by a content provider to prove the public was trigger happy to jump into the bear (inverse) ETFs to use as his “contrary opinion” proof that a top can not be in place. The fact is that institutional types and capital managers use ETFs and ETNs that includes major banks, hence the billions of dollars and high daily volume. This is just not the bastion of the “small investor.” I don’t think the mom and pop type investor or even the guru want to be on Twitter have a clue what they are.  The point is the volume spiked going into the “shortest bear market” of all time – as the media liked to call it.

Today you can add my clientele to the current spike.

In the previous report where I pointed out the dramatic and bearish reversal by the Fang stocks plus five. A signal that is rare and bearish when 52-week highs are immediately followed by a 5% plus decline. A pal of ours on CNBC shared the following chart where he highlights the same occurrence by the Nasdaq 100 itself, a bearish signal.

 

Public point of view for contrary thinking. Based on the old fashion “odd lot traders” or the pink sheet traders that play penny stocks. When you see a surge of interest is slicing shares and long out of the money call option buying, the bullish frenzy is high, and time to raise cash and look for bearish opportunities.

The above chart speaks for itself. However, the next chart reflects how extreme the amount of time value is being spent buying low delta call options. WOW.

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Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
Copyright 1989-2020

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— 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.

–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

 

 

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