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March 14, 2024

Volatility Reports 3/14/24 Dollar Index Sample

The risk markets are fearless, so why is the play for safety holding up so well?

I have stated a few times that market analysis should not be done in a vacuum relative to all the other markets. That the correlations – while ephemeral, new ones drive out the old ones – will have an impact on the outcome of the particular market analysis and its forecast.

Well, the flight to safety is starting to show up with concerns being seen through the bullish performance of the gold market. Unlike the majority thinking that gold is a replacement for fiat currency namely the US dollar. Gold has always been the place to go for balancing out bear markets in stocks. Well, Gold is breaking  out of a multi-year base and looks much higher.

Today gold is being ignored with all eyes on Bitcoin and related AI. This is where the next major bubble burst will come from collapsing the entire crypto industry for the next decade or longer. However, under the radar, the US dollar continues to build its worldwide dominance and buying power.

Side bar: keep your eye on BLK, as a precursor to the demise of the bitcoin. See post in group space on the stock. 

So as in good bull market form, ignoring what the media is calling bad for the US dollar and exaggerating the good news, the USD index is in an ascending bullish channel since 2011, see the monthly chart above.

What the long-term chart also reveals is the Elliott Wave count proper, given that the best momentum numbers are always associated with 3rd waves. Unlike the bearish count by my friends at “International” have.

A new millennium of repeating patterns.

What increases Contrary Thinker’s expectations for a major top being made is this repetition that no one else has pointed out, yet. This concept of repeating patterns dates back to Edwards and Magee among others and how they happen to recur in threes. The featured chart shown here is an amazing example, where the previous major highs in stocks from the start of the new century worked out as irregular tops, taken many by surprise. Where the same pattern is unfolding now, which also will take the majority by surprise.

To go alone with this recurring pattern since 1999 we are given numerous but historically rare fifth wave extensions. Something we are seeing today in the Nasdaq 100 and here in the USD index.

For the green back the big picture is bullish with the intermediate-term and short-term outlook turning bullish in this time window.

Its good to be reminded that the long term business cycles have not been outlawed, that the Juglar cycle and the Nodal 18.6 year cycles refer to a contraction in business for the next few years. However, its the nearer term that many managers and traders are hanging fire over at the moment. In other words, when “risk is off” yet the speculations is in a blow off stage, the waiting is the killer.

However, leading intermarket clues are telling us the time is near. Most investment professionals will be surprised  as gold breakouts above 2,288 basis the near by futures and the USD like 2021- 2022 risk market bear a high rate of change advance is expected  by the US Dollar index.

Volatility Reports USD

 

The USD index broke out above I-T resistance in November 2021, preceding the 2022 bear. Before that dollar breakout the index had a close above its monthly resistance zone the week ending 2/14/20, preceding the pandemic crash.  This relationship – bullish dollar bearish stocks –  has been noticed by others. However, what they relate is the 103-104 level as being the trigger, which in general it is not. The price level for the trigger is dynamic.

Not the lone ranger in leading signals but a critical one.

For that intermarket signal to happen today, the buck would need to close above 105.36 this month. In April it will adjust lower. A close above 105.20 basis the Bollinger bands would do the trick. Risk managers would be following similar historical studies. If I uncovered it, others have as well. Without being presumptuous the “Volatility Reports” model is registering both long term and intermediate term context -setups- supporting the “pro-directionals” contingency: that a breakout will pick up a following in a hurry. (Refer to the above Elliott Wave chart’s horizontal triangle.)

Along with a bullish wave count and the setup or context opening the door for a massive rally in the dollar, the perceived risk oscillator seen in the above chart reflects the same extremely low level of fear of  bear markets seen for extended periods before the resumption of the uptrend in the dollar.

The confluence of technical elements calling for a change includes the simple observation, it is time for a change. Popular among cycle analysis is the 45 week period, which they expect to bring on a low in the current time frame, they like April 21, 2024. I have mentioned there are three Crawford attractors this year, that is a one of them. They see it as the sudden peak of enthusiasm for speculative profit, and a low in the USD.

However, recent history dictates the dollar will lead the bearish reversal that could kick off before April 21.

Both the cycles and astrological influences mesh with CT’s independent mapping process seen here in my exclusive chart. It suggest a low for the USD in the current time period (early to mid March) with its first major advance of 2024 into April 21,2024 when the majority of cycle based analyst see a peak in the speculative or risk markets. My fractal suggest a higher dollar into late April to mid-May with stocks retreating into a low of some scale.

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Country Thinking is about letting go of traditional ways of thinking, the commonplace that no longer serves you well in investing and trading. Building from the truth, from first principles the robust into anti-fragile. Many thanks to everyone that has supported this work over the years and thanks in advance to the new members for your consideration, I look ahead to working with you for the duration.

 

 

Great and Many Thanks,

Jack F. Cahn, CMT

Contrary Thinker since 1989,
Copyright 1989-2024

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March 14, 2024

Volatility Reports 3/14/24 Dollar Index

The risk markets are fearless, so why is the play for safety holding up so well?

I have stated a few times that market analysis should not be done in a vacuum relative to all the other markets. That the correlations – while ephemeral, new ones drive out the old ones – will have an impact on the outcome of the particular market analysis and its forecast.

Well, the flight to safety is starting to show up with concerns being seen through the bullish performance of the gold market. Unlike the majority thinking that gold is a replacement for fiat currency namely the US dollar. Gold has always been the place to go for balancing out bear markets in stocks. Gold has broken out of a multi-year base and looks much higher. More on that later.

Today gold is being ignored with all eyes on Bitcoin and related AI. This is where the next major bubble burst will come from collapsing the entire industry for the next decade or longer. Along the way a US dollar continues to build its worldwide buying power.

Side bar: keep your eye on BLK, as a precursor to the demise of the bitcoin. See post in group space on the stock. 

So as in good bull market form, ignoring what the media is calling bad for the buck and exaggerating the good news, the USD index is in an ascending bullish channel since 2011, see the monthly chart above.

What the long-term chart also reveals is the Elliott Wave count proper,

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January 9, 2023

Volatility Reports 1/10/23

The headlines read “Why does everyone think there will be a recession in 2023?”

To be blunt, who cares what they think?  The analysts that are leaning on the contrarian idea that what the little guy does the smart investor should do the contrary know how to talk the talk.

One of the key polls they use is from the American Association of Individual Investors.  AAII is a nonprofit organization with about 150,000 members whose purpose is to educate individual investors regarding stock market portfolios, financial planning, and retirement accounts.

I have to wonder if the AAII membership is self-aware of the above notion they are used like guinea pigs and considered dumb money; and if they are, how does that impact their answers to a poll?

After 2016 we all know that polls are not reliable but actions are more important. What has been seen in the actions of the same group is their equity (risk)  exposure has remained above its long-term average for the trailing 12 months. As such and they think the market is bearish, well that is dumb.

If you see the investment world from a long-only perspective and want a portfolio

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