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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

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA
92264 USA. 760-459-4681 OR

25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889

— 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.

— 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

— Privacy Policy, we do not share your information with third parties. Full policy details here. 

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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February 25, 2024

Volatility Report Don’t poke the bear 2/25/24

“Tell me lies, tell me sweet little lies”

According to F. Diane Barth, a psychotherapist, people want to be lied to. Its common she says, “I have learned that it is not unusual for people to believe someone, even when they have substantial proof that the are being lied to.”

A few examples according to her, “include parents who believe that their children are not taking drugs, even after finding a stash in the child’s sock drawer; lovers who insist that their partner is faithful despite unfamiliar underpants in the laundry; and business partners who believe that financial losses are for some unexplained reason other than that their best friend is stealing from them.”

So when it comes to the markets does truth come in degrees?  The promise of high tech and AI is true without question, but when.  As users of high tech as opposed to dumb terminals how do you find it? Personal experience is a good place to start.

Security wars

I give anyone that uses a computer a launching pad here by mentioning popups, drop down and anything that auto filles when your cursor runs across it but there still is a few pixels remaining for you to see the content you are working on, so I will leave that one to you. Rather its the how safety will be the main factor that kills off this round of high tech battle for a monopoly.

From iPhone to desk top and laptop the cross checks and triple checks takes up hours daily. Plus how did the four number pins grow precisely at the same pace as the tuition we paid to get those high tech degrees?  The four digit pin is now “more than 8 characters long, use lower case, upper case, a number, and a special characters, and can not use a word or date associated with your account details.”  Not to mention that the standards varies – can that be a thing? In other words what is acceptable to one broker or bank or online vendor. What a PR disaster if there is a security leak.

Nvidia is clearly in the lead on the CPU/AI front but who would have thought a company known for its gaming GPU could make that jump.

The push to win, to have your idea, your answer to the problem as the one accepted and dominant among most users is a path by nature full of competitions. The use of VPN saves money, protects my pc gives me access to real time broadcast from the USA when offshore with good performance. It encrypts my line from what location I choose.

Don’t need McAfee, Windows defender, don’t need spyware, don’t need. Yea…no… now the banks think I am a hacker and Stripe has account locked out because they don’t recognize my IP address. Its more than the conflicting applications creating more problems that is too benign of a condition being created.  The i-Gens are in full greed mode doing battle to make sure their solutions become primary solutions.  Its an old way of thinking being used anew for predominance over your machines.

Progress will never change, ever. Its form will always remain the same only its content will vary. When it comes to the equity markets, its progress will always be the same and its participants will always be the same.

So, why do we continue to believe the lie, even when we have rational and substantial evidence that its a fairy tale today, a fantasy, a real time science fiction that will fight it out for its right to “party.”

If you do not pursue the truth about the markets volatility will be what you find.

Thursday I mentioned at the end of the day a near-term high was expected. That still is the case. A blow out roaring twenties advance form here is not the call. More of the chop that started at the end of January, the wedging out of a high.

However just like 2023, my volatility model (TEM) supports a trend here and the wedge could be a 1-2 series in EWT, both support the blow out idea. Plus, some Astro-analyst expect a blowoff into mid-spring. On the short term check into the LinkedIn group daily.

So, there you have it, we do have price, time and context supporting a high rate of change advance from here. CT’s mapping would expect it after the next near term low, that is after the next one day “btfd” decline into 2/28 followed by a roaring bull into June-July.

Trading wise I have lots of cash and I am waiting. I know 2022 that was a baby bear, but we kill-it made $1mil on $100k. When the real one gets here, I will be ready until that time, little trades, and small % of account positions. Its the waiting that is a killer.

What the market gave us in 2022 was more than a bear to trade

I remain bearish here based on my price studies , my Astro and mapping work, and contrarian sentiment here. The bravado and hyperbolizes are at a fever pitch. I mean this “market is in a league of its own,” right?  Well not really, been there done that since the 1972 high to date I can count four, today would be the fifth.

And like other bubbles people ten to twenty years from now will be buying their gold, their bitcoin, their crude oil knowing the boom has to happen again.

Plus, no one will believe a bear when it gets here in full living color. They will have no idea that anything could happen like it did to the Nikkei Dow over 20 years ago. This historical market created in 1949, is just now getting above its 1989 highs and the majority of companies that made up the 225 have long gone.

p.s. That was when I made my second fortune, Nikkei put warrants; and god bless my clients from that period.

My most successful clients ask questions, point out problems. As a results they are the best informed and help make this market advisory one of the better ones OFF “Wall-Street.”

No matter your time in the business you are always learning and always seeking ways to improve. AI is all the rage for that reason, it is not a closed system, its a learning system.

So what happened in 2022 that made it a good trading year for bears.

I don’t find a need here to explain why anyone would trade to profit from declining prices. But is a dirty job and someone has to do it, many financial pros cannot based on the industry we are in, policy restrictions plus the phobia programmed into it.

One of the answers for CTs is here. The first chart used here is the bear market of 2022. CT called the top in November 2021 and started its bear trading campaign.  That was based on all the areas you read about today from Contrary Thinker, price, time, context and contrarian sentiment.  But one thing CT did not look at as a “timing” thing, was the level of VIX. However, for the duration of the bear it remained above 20. VIX is the implied or perceived risk index. Its not about trend direction its a gauge of fear that the market is going to go lower, a condition of the market. This is why the element of “context” is needed in ones forecast.

For us in 2022 it meant carry over when the market sold off, persistence of trend, pro directional, lower gap opens, how ever you’d like to describe it, the higher VIX did us well (see my numbers below.)

That she did and no this was not my first rodeo, but it was good to be back in the saddle of long only high delta options game.  I feel the numbers are adequate. I did did not need to be that active, as in too many trades.  Better trading is built of less activity but being aggressive when the market is in that panic mode, our models TE#1.

For now the trade ideas are broadcast from a WhatsApp community but we are talking to app developers for a WhatsApp type of app just for the trading community. The Trade Exchange app is trash.

In any event, looking at the market for the past two years, the VIX tells the story of one of the key missing ingredient’s for Contrary Thinker’s bear trading campaign. Please have a look at VIX from April of 2023 to date. You will see how perceived risk (psychology) has been repressed below 20. For all the reasons sited above this is not the ideal context for bear traders.

The short term trends would not be any help, because it is not direction alone that makes the profit but HOW the market gets there. A downtrend full of “fits and starts” and higher failed gap opens, the “changeability” of the trend from one day to the next, makes it fruitless. Without the carry over, the best a bear can do is stand aside. BUT…

Waiting it not good for commerce

People want the action, they hear the same sales pitches every day always being pushed to execute it now, it is today. That is the way of commerce and especially in the financial industry. It’s hard when brought up in a culture based on the protestant work ethic. To be seen doing nothing people think you are lazy right?

On top of that 99% of the industry, we are all programmed to be transactional, it is hard to lay off not to trade after reading all the excitable and nerve tingling information plus the nightly news. But as the brief below tells us “you do not have to trade.”

The problem for publishers of market analysis like journalists is they have to get your attention, keep your attention, get you to buy the product. No one buys good market research with “ keep your powder dry the great trade is next month.”

Blind bets are forced antes made by players to the left of the dealer in flop-style poker games.

Why are there blind best in poker?  If not, a player can sit there for as long as he likes and not play. He can wait to try to catch a premium hand before he makes a bet, a good bet.

In “forced ante poker you have one of the clearest examples of the impact of money on the player. Forced by the “rules of the game.”

If the player antes $100.00, and he is dealt a “5,” and “7” unsuited low cards and someone raises the bet before the flop – draw cards – the odds of him winning or losing are the same. The money has no impact on the odds. 

However, human nature will push him to “defend his blind bet.”  Not so much in this example hand of a “5” and “7” unsuited, which have about zero odds of winning. But what if the player had been dealt a pair of twos?

What would be even worse if he had experienced this before, a big bet that “5” and “7” hand once before where he got lucky and won big? How what is his posture? He may be prone to make a “bad bet.”

Placing “defensive bets that have little chance of “catching” a good card or cards to win is going to lose and break the your bank over the long run.

The poker player needs to know what the premium hands are, which ones “stand alone,” that can win without any help from the draw or flop cards. The same holds true trading the markets.

Trading futures, ETFs, high delta options or any other risk market is the same, in that the market does not care about your money and your money has no influence on the odds of a long or short entry winning. 

All trading strategies are event-based models. Contrary Thinker produces technical systems, mechanical strategies and dynamics forecast that are 100% price driven where each entry signal is a good bet.

  Money stops are a necessary evil, a wrapper the trader brings around the strategy to protect his capital.

No matter how much the industry wants you to trade, no matter how much the media touts to get your attention onto the momentary news cycle there is nothing in the rule book that say’s “you have to trade!” There is no blind bet or ante.

I am sure that many traders who hear it said that the best form of risk control is not to enter the market think it’s a joke. 

In reality, the best investors/traders in the world from the start of legendary traders to the legends of today like Trout, Jones, Soros and Druckenmiller do exactly that to control risk. They wait until the condition is “perfect” for their trade plan and once into that “perfect trade” they leverage up and leverage up aggressively, just like the Turtle trading method.

Once you understand this, you know that you should not be impacted by the last trade’s outcome. Even if you did not hang on long enough on a winner or stayed too long with a loser, take money out of the picture

Contrary Thinker “stick with your strategy, focus on the process.”

MarketMap™ 2024 Scenario Planner #7 (maps on segments) and Volatility Reports 2/26/24 in production.


2024 will be a great year.

 

Great and Many Thanks,

 

Jack F. Cahn, CMT

Contrary Thinker Since 1989,

Copyright 1989-2019

Capital Managers and Professional Investment Advisors visit: www.ContraryThinker.com

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA

92264 USA. 800-618-3820 or 25/1 Poinsettia Court Mooloolaba, QLD Australia 4557 614-2811-9889

— 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.

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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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