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CT Journals
breakdown
October 22, 2020
JP Morgan Warns Trump Can Win
Art Merrill said that I filled the vacuum left by the legends, from Bolton to Lindsey and Gould. He was too kind.
But this quiet achiever does not miss much in the markets. Nailed the low in 1982 based on Joe Granville’s work while he missed it, he was just not doing his own work. I got the major top 1987 and got back in during the last quarter of that year while ETI lost its discipline.
Short Volatility ETF’s tide has turned. New Sell signal with good track record projecting a down market for the next six to eight weeks.
Here is what no one else is seeing. Long stocks based on “implied volatility,” mathematical formulas that value all put and call option valuations into an index, and a futures market trading it. This CBOE index and the Volatility index futures became an ETF investment vehicle that is perpetually short the futures.
Because the Volatility Index has a downward bias because the stock market is almost always going up, therefore it is a synthetic price index of the S&P or the Dow, etc.
Well, I have called the trading range since the peak of January 28, 2018, the bull market in fear. It is not a slur on the Perma-Bulls doing their job. Rather, this short VIX ETF has not confirmed the peaks since early 2018, thus reflecting higher prices in perceived volatility or the fear index as it is called.
When the SVXY ETF is viewed through our Tidal Wave system the strategy is now on a new I-T sell signal (see chart). This system, when correct, is correct in a big way. How that a sell signal is in place, a move to the recent low and below the low side of S-T support at 36.13 should get carry over targeting to the first level of the I-T support zone at 30.31. That is a risk over the next six to eight weeks of 16%. An equal move by the Dow would be a target of 23,562.00
What is most important here is why a breakdown should pick up a following? That is what is the background dynamics. I did not show the weekly bar of SVXY but its TEM – our volatility model – is signally an extremely tense background where frustrations will follow the direction that clearly shows its a pro-directional movement.
Another reason why from the January 2018 peak the great bull market ended and the bull market in fear began is the recent breakout by perceived volatility above its eight-year base. Following the breakout, the based was tested and the higher level of “fear” held, which is easy to see in Contrary Thinker’s featured chart. Furthermore, the smooth CMB index and the smooth RSI are both trending higher on our Anxiety index, suggesting that a reassertion of the first quarter spike of the market’s anxiety is imminent.
Bottom line, I-T bearish Stocks worldwide, including Asia, I-T bearish bonds all ratings, bearish on gold/silver, bearish on crude oil, Bullish on the majority of commodities outside of carbon fuels, and bullish on the US dollar. Lastly, Contrary Thinker called the peak in the bitcoin and called its break and collapse to $4,000; and I earmarked it as a leader of risk assets leading the stock market lower. That relationship has changed, it is still a risk asset and will follow the equity markets lower. More on its expected FOMO peak shortly.
Sometime in the first quarter of 2021 will be a time to gather RS leading stocks and ETFs for a rally into April/Map. For complete details, if not a Contrary Thinker member, get your order in early for MarketMap 2021 Annual Scenario Planner.
LinkedIn Group Vistors, we appreciate your taking the time to have a review of our work, I feel we should have impressed you positively over the last two to three months.
Take advantage of these prices available only to our network, become a Contrary Thinker today before your access runs out.
JPMorgan’s Kolanovic Has Another Warning For Those Expecting A Crushing Biden Victory
Last week, we published an article detailing a warning from JPMorgan’s top quant Marko Kolanvoci to all those expecting a landslide Biden win (and by extension Blue Sweep) in which he showed the recent changes in voter registration data and their possible implication for state outcomes. In a nutshell, the JPM strategist found that there had been a sizable increase in Republican voter registrations in key battleground states compared to only modest increases in Democrat registrations…
The time is now. You know me, Contrary Thinket its Volatility Report, its MarketMaps-2020 and Algo Systems. All through the professional group network of LinkedIn.
LinkedIn Group Vistors, we appreciate your taking the time to have a review of our work, I feel we should have impressed yours positively over the last two to three months.
Take advantage of these prices available only to our network, become a Contrary Thinker today before your access runs out.
Great and Many Thanks
Jack F. Cahn, CMT
Contrary Thinker since 1989,
Copyright 1989-2020
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.
— 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
October 22, 2020
Crude Oil Tracing out a Bearish Wedge
9/14/20 “the intermediate-Term outlook remained bearish on the oil.
Today ditto. The wedge pattern shown on the 90-minute bar implies a thrust coming out of that formation, very typical. After a number of false starts we witnessed, this decline has the structure of an impulse wave, which suggests it is in the direction of the larger trend. I will leave trade plans to the trader, we have an Algo to use. however, it should be clear that a minor move above 40.34 would run a few stops. If that failed to pick up a long following jumping on the failure with short sales make sense. More below…
The data window contains daily data on the left of the next chart provides the high and low bands – for both S-T zones and CT’s smoothed Bollinger bands – to use as entry triggers. Why play the break, because it is just not the horizontal triangle above that supports a breakout getting a following for the day if not longer. Both the daily bar and weekly bar have TEM signaling the crude market is tense, frustrated, and ready to move one direction with only minor pullbacks. The chart on the right has the I-t support zone – the light blue dashed lines – pegging the high side of support at 36.38 and the low end of 33.76, a reasonable target zone in the next few days.
Another set of indicators I use in Volaltiy reports is the %BB-VX on the implied crude volatility index. You can see the last three times the indicator reached extreme lows setting up a top because the option traders saw little risk in being long, a solid contrary indicator. To the right is the hard data itself that is coiling up in a triangle signaling a thrust out of the base. Here a straight line moves higher by OVX is a panic move of selling. OVX is ending a trend, this sideways trend highlight by TEM’s rule #3. It simply says the trends is old dull and due for a change. It says nothing about dynamics, all of that is seen from other methods as outlined above.
What one can do is to use the breakout levels by OVX to engage on the short side of the futures, via your own trade plan or the aggressive scalper, our strategy designing groups provide just for this purpose.
Yesterday’s decline made $1,600 for the systems, net, net. You can see by the weekly numbers that tell you its P&L prospers most from the straight-line moves, like the week ending Friday the 25th. I will engage this system today for the wave three declines, at least, the next one to three days.
If you are a discretionary trader you should be able to see the plan off the next chart, with the smooth B-bands, regular will work, and Turtle parlay would be to add a contract after each day trade margin profit and trail a percent of that amount as your trailing profit stop.
Long Term avoid Crude and related, it is a dead industry, the new generation will be the “Green New Deal” and Nat Gas may be the bridge fuel. While all of my competitors use Relative straight analysts incorrectly. contrary Thinker will keep membership appreciate on the cream that rises to the top.
LinkedIn Group Vistors, we appreciate your taking the time to have a review of our work, I feel we should have impressed yours positively over the last two to three months.
Take advantage of these prices available only to our network, become a Contrary Thinker today before your access runs out.
Great and Many Thanks,
Jack F. Cahn, CMT
Copyright 1989-2019
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.
— Pricing is subject to change without notice. My indicators and strategies can be withdrawn for private use without notice, at any time.
— Contrary Thinker does not refund policy all sales are the finale.
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
October 19, 2020
Fourth Quarter Chart Gallery Primary Markets
October 19, 2020 Recap
The bull markets are done, dusted, and bronzed
Bonds: As I go to press the bonds are testing the 174 12/ to 171 28/ I-T support zone, sitting at 174 1/. The context, the tension in the background from an I-T point of view supports that if a break occurs here of support, the next target is L-T 144-152. The tidal cycles and trends following the system are short and continues to support the downturn as seen on the next chart in the gallery. The cycle is down, the MA crossover is down, the smooth CMB index is down and the smoothed RSI is down.
From an Elliott Wave point of view, the secondary peak in August was the end of the I-T counter trend wave (2), which leaves the long government bonds on the brink of the best part of a trend, wave three.
Euro Dollar, from a secular point of view the very long term bull market that ensued after its creations is in a long term correction of the mistakes it was founded upon. From the Brexit to Greece and others, the theme during debt contractions is “separations,” and that does not bode well for a union of states that do not have a common language.
But more to the point, the featured chart of the weekly euro tells a bearish story. The tidal wave system is good at catching trends and is giving early warnings with two of the indicators used. the systems is long until the SMA cross over happens, which should happen this week imagining a small amount of decline. I suspect that the system will flip this week.
The next two charts support that bearish idea. The weekly and daily bar has TEM signaling a high degree of tension that supports any new trend following the entry signal. Plus the daily bar shows a completed head and shoulder top based on traditional TA, including the breakdown and the pullback that test the neckline and fails to reassert the uptrend. There is nothing more bearish than a failed bullish signal and the reversal of the head and shoulder top qualifies.
A break below 1.16 calls for 1.14, the low side of I-T support zone. L-T support does not come in until 1.10.
USD
FYI: The U.S. dollar index started in 1973, and today is a basket of six currencies – the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. The euro is, by far, the largest component of the index, making up almost 58 percent (officially 57.6%) of the basket. The weights of the rest of the currencies in the index are – JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), CHF (3.6%). During the 21st century, the index has reached a high of 121 during the tech boom and a low of 71 just prior to the Great Recession.
In the last update, I pointed out that the buck made an L-T size panic size low late-August to early-September, just the opposite of the risk markets. Where the later all made panic buying tops. That in and of it self is the market telling investors where to find safe investment. Contrary Thinker is very long term bullish, the reasons don’t need to be rehashed here.
Rather the focus on the four window chart screen capture tells traders the Tidal Wave system is already long and I-T background supports more trend. With that in mind, there are a few key price levels that would trigger more upside. From 93.96, if taken out should lead to a move to 94.28. This zone is just S-T resistance. The big move is above 94.80, the most recent intraday high. A move above that level is an Elliott Wave five up and has two key implications. One is the larger trend is up, however the end of wave 4 overlaps wave 1, which is a “no-no.” As such the unfolding trend is a series of first and second waves putting the dollar index in a third wave, that part of the trend structure delivering the majority of the trend. If the market breaks out next stop 96.00.
Contrary Thinker does not see the Fed adopting a more dovish policy compared to the ECB, BOJ, or even BOE. It’s about conserving wealth and buying power for the wealthy 1%.
Crude Oil, It is difficult to imagine inflation without oil and unleaded petro spiking in price. There is no commodity compositive index that does not have carbon-based markets in them, and all measures of inflation have this cost in their formula. Whereas the shift into the “Green New Deal” is being taken advantage of by investors as I feature in the next chart. It demonstrates an eight-year big base building period and the recent breakout test and follows through trend into a period of panic buying. This is one of the markets to monitor during the coming decline in the stock market for relative strength and meaningful lows to begin buying this group.
Whereas, if it was not for the jawboning by the powers in the current administration, the crude market should collapse. the next chart shows a horizontal triangle with bearish implications. Of course, it could break to the upside but after failing to move above L-T resistance on April to August rally, the reversal from that point has the market on a Tidal Wave system sell signal.
The background tension both I-T and S-T calls for follow-through once a price trigger it hit. What else is key is our in-house %BB-VIX on the Crude’s implied volatility the last two times in signaled risk-off, the market made a tabletop. A move below 39.24 followed by a break of 38.43 should be enough to pick up a following of sellers. Contrary thinker expects a test of the lows made in April.
Contrary Thinking Starts Here
Great and Many Thanks,
Jack F. Cahn, CMT
Contrary Thinker since 1989,
Copyright 1989-2020
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.
— 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
October 8, 2020
Volatility Report 10/8/2020
Twittersphere Market Forecasters Continue with Unbalanced Point of View
The continued siting of 80% up volume days since the 9/23/20 low does not show up on the S&P averages, not the indicator or the system. As they say “garbage in garbage out.”
There is more, the unbalanced pronouncement that the S&P Advance /Decline summation index made a new high, is misleading to the public when seen in a vacuum as being bullish. The problem is the S&P average did not make a new high. If it does not, as is the rule of failure has it, they are dealt with harshly. So, a reversal without the new high will lead to a high rate of change decline.
October 5, 2020
Back Stories 10/05/2020
Zoom-Zoom-Zoom
Markets Rally On Optimism Trump May Be Discharged As Soon As Today
In addition to optimism over a covid vaccine, optimism about the economic recovery, and optimism about a fiscal stimulus, we can now add another category of “optimism” cited by traders to justify overnight futures ramps (at least for the next few days): optimism Trump will be discharged from Howard Reed hospital any day now, perhaps as soon as today, and then stage a full recovery. Sure enough, on Monday US index future bounced after doctors said Trump could be discharged from Howard Reed imminently, while sentiment was also lifted amid tentative signs of progress on a new fiscal stimulus.
Late on Sunday Trump released a series of videos in an effort to reassure the public that he is recovering (following by a frenzied tweetstorm on Monday morning), although his condition remains unclear and outside experts warn that his case may be severe. Trump also surprised supporters outside Walter Reed with an impromptu drive through, even as it earned him a fresh round of anger by liberal commentators.
Contrary Thinking Starts Here
Great and Many Thanks
Jack F. Cahn, CMT
Contrary Thinker since 1989,
Copyright 1989-2020
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.
— 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