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CT Journals
breakdown
January 2, 2021
What Contrary Thinker Told its Membership
The One Factor that Trumps the New Market’s Giddiness
Published on: Jan 22, 2020: “All measures of market sentiment are at highs or extreme highs, from put/call ratios to CNN’s greed index, you name it. The outside world’s focus for this outright giddy disposition and talk of a potential “melt-up” in equity values focuses on the following four elements…” Read it here.
Set up by the mini Russell provides engagement today
Published on: Feb 18, 2020 “The background is near ideal for the Rusell to begin a rapid decline into March. The long and intermediate-term volatility background is fearless TE#2, supporting a break or trend following a move that will get carried over. The daily bar shows last Friday being a failure to hold its breakout on the regular bar and a close below “new support.” Such negligence is a sell signal, and its background supports an expansion of the high to low range.” See the charts here.
February 12 Historical Top
Published on: Feb 24, 2020 “A peak here in mib February has its own pattern, as discussed in the previous MarketMap. I will comment on the future as the market extends its decline past the first full week of March if it retains the character of a bear market beginning, not a correction in an ongoing bull…”
“…The bottom line is a decline in MarketMap’s next calendar COT date of March 9-10.” See the brief here.
There is no outside world, there are only people, a society, and the market
Published on: Feb 24, 2020 Everyone knows why they just don’t know when. Except for Contrary Thinker that knows when the “fragility” of the market exist and warns its clients; every day since Contrary Thinker’s MarketMap-2018 said the first risk-off signal on January 26, 2018, the finger was firmly pointed at no ability to foster a “soft landing” when the time comes. see the charts here.
The new decade of market timing is here after 13 years of being out of favor. Get ahead of the trends. It’s inexpensive to join and expensive to discard for any reason.
MarketMap-2021 Annual Scenario Planner provides historical parallelism based on 160 years of data, repetitive extra market events and their effect on markets, tidal cycles peaks and lows, market cycles for predicting time frames for lows, and astrological cycles to isolate cresting cycles.
Volatility Reports fine-tunes MarektMap’s longer-term scenario planner for the implementation of hedges and long positions. The research publication uses advanced price based systems buy and short bias signals, traditional Technical Analysis, and new volatility modeling for market dynamics timing, including sectors and newer ETFs.
Both publications share curated news media to add backstories that fit with the ongoing market-based research.
Great and Many Thanks,
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
Copyright 1989-2018
Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264 USA. 800-6183820 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
NO WARRANTY / NO REFUND. Contrary Thinker MAKES NO WARRANTIES, EXPRESS OR IMPLIED, On ITS PRODUCTS AND At this moment EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CBI BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY PORTION OF ITS PRODUCTS
December 4, 2020
Long Volatility Inching Toward Go
Attention: Long only VX futures breakout scalping systems without on/off risk engagement has produced a triple for the year, thus far.
This highlights the change in the market’s condition that began back in early 2018; where long volatility began to outperform long-only investments, aka short volatility investments.
Volatility Reports has intimated that the local stock averages are wedging out a top that should carry over into next week when a number of meaningful COTs windows happen. During that stretch, the group will be looking for TEM ( our volatility modeling ) to provide clues of a high pivot among other signals. The tact we try to take requires waiting for the ideal set up. Low-risk high reward, getting in too early is the rough bit.
Hence Volatility Reports prefers to see a reversal off the second L-T panic low in the USD. Bearish sentiment is widespread on a variety of methods for the US buck. The next chart shows the underlying shorts that provide potential buying power.
November 3, 2020
Trump Says a Biden Win Will Crash the Stock Market. Let’s Hope So.
Not considering the thin market manipulations before the markets open to pick up a following of optimism to support the incumbent, the markets are waiting and by all internal pictures, it’s on edge.
Trump Says a Biden Win Will Crash the Stock Market. Let’s Hope So.
Evan Vucci/AP Photo
“In my neighborhood in Scranton, not a whole hell of a lot of people owned stock,’ Biden noted at last week’s CNN town hall.
Donald Trump has been falling back on a standby talking point that is more revealing that he probably knows. At last week’s ABC town hall, and repeatedly for months, he has said that a Joe Biden victory in November will cause the stock market to crash. Ordinarily, this is attached to a reference to Biden’s plan to tax the wealthy, though not always.
For someone with pretensions to being the guardian of the forgotten man and woman, appealing to them on the basis of the stock portfolios they don’t own seems misguided. The top 1 percent have half the stocks, and the top 10 percent have 84 percent of all stocks, and that percentage is rising. “In my neighborhood in Scranton, not a whole hell of a lot of people owned stock,” Biden was able to say at last week’s CNN town hall, and it was an easy way to take up the mantle of populism.
But if we scrutinize the question a little more, and ask whether a Biden victory would cause stocks to fall, we actually get at what Trump’s statement is really about: an implied threat from the capital class to make no changes to the status quo.
Generally speaking, predictions about the presidency and stock market policy are quite silly. Paul Krugman infamously predicted that markets would tank after Donald Trump won the presidency in 2016. Presidential policy can be useful for the economy, but the stock market has nothing to do with that. The market is just a means for enrichment for a thin class of investors, who are betting on expectations for future corporate profits.
Now, Biden is calling for changes to tax policy in ways that will at least create a short-term sell-off in stocks. He wants to treat capital gains and dividends as ordinary income for households above $1 million, sharply increasing the tax rate. He also would eliminate the so-called step-up in basis for capital gains, which wipes away massive increases in income for the heirs of people like David Koch when they die. Presumably, these changes, once enacted, would take effect on a certain date, and in that interim period people would sell stocks to take advantage of the lower tax rate on their capital gains, and buy them back after they’re up and running. So if Biden’s tax plan is enacted, there will be at least a mini-crash.
Biden also wants to increase the corporate tax rate from 21 percent to 28 percent, about halfway back to where it was before the Trump tax cuts. You see the pattern of who is actually affected by these changes: wealthy Americans and corporations. Like it or not, Biden’s team has vowed not to raise taxes on anyone making under $400,000 a year. Undoing the Trump tax cuts’ disproportionate benefit for the upper class and corporations actually offers a way to raise $3.8 trillion over the next decade by doing only that.
In the long run, of course, decent economic and especially public-health management in the coronavirus crisis would be the best possible outcome for the economy and the stock market. But I don’t think the investor class is thinking much about the economy, or anything other than keeping their personal party going.
Currently, the Federal Reserve is propping up asset values in stocks and other markets through a mass corporate bailout program. This has pulled the capital markets even further away from the actual economy, becoming a hermetically sealed package unto itself, a world where no coronavirus or economic struggle exists. The implication of Trump’s threat that a Biden win will crash the stock market is that any puncture of that hermetically sealed package will cause righteous anger on the part of investors.
Check, for example, the activity in options markets, where traders are hedging their bets in case of a mass sell-off in November. This has veered sharply from a month ago, as the realization of Biden’s mostly favorable electoral position has solidified. Corporations are being asked to take on more cheap debt now, in advance of the election, on the assumption of, well, a crash.
That expectation of volatility could just be due to the potential for a truly hazardous post-election period. But importantly, it’s coming from the same people who would stand to lose under Biden’s tax policy. Traders and investors would be paying the higher taxes on their activities, as would investment banks that take in high fees from the explosion of corporate bond sales. They all are effectively signaling that they will throw a tantrum in order to influence policies that would affect them. And they are actively preparing themselves with hedges to soften the blow of short-term losses that would proceed from carrying out what in some contexts you would call a capital strike.
Traders and investors, as well as investment banks, are effectively signaling that they will throw a tantrum in order to influence policies that would affect them.
You might say that stocks must go down in order to create a more equitable society, but I would pitch it this way: The economy is over-financialized, with executive performance too tied to stock performance, with corporate outcomes too reliant on financial engineering, with companies too focused on manipulating stock prices and rewarding investors rather than on creating products people want. That financialization has been built up through policy accommodations to capital. And any attempt to break that channel will trigger a furious pushback, up to and including economic sabotage.
When Trump says that Biden will crash the stock market, he’s saying that Biden will end the policy of allowing investors to use financial machinations to get rich in the Wall Street casino, and that he will ensure labor takes more of the profits. Trump might have more faith in that possibility than I do! But he’s unwittingly outlining a change that is necessary for a country that allows everyone to prosper.
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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
November 3, 2020
Market Internals Election Day 2020
“buy the rumor sell the news”, “buy the recession sell the recovery”
Did you ever wonder why traders say that? Are they merely words, hip, trending with no substance? Maybe one reason is smart money needs a liquid market to buy and sell into, respectively. Because dumb money thinks the market is the economy.
The public becomes brainwashed by the media both network and social promotion with the intuitive line of good news for the economy is good news for the market moreover the market factors in the news, the market is a discounting system. Otherwise, how can the market be explained? Well, the market is not a discounting system.
November 2, 2020
MarketMap2020 Issue #18
November 3, 2020
I know that if you have been with me for some time, I expect a significant swing high or bottom. I look for the opposite of the news media. At major highs, expect good news. A significant big swing low, the report will be dire.
This past week’s headlines were excellent: The US economy grew at a record pace in the third quarter, increasing at a 33 1/2% annual rate recovering about 2/3 of the ground lost earlier in the year due to the economic collapse from the pandemic shut down.
Moreover, most media headlines remain focused on Corona virus-related and how a double-dip recession is in the cards. That seems to be the backstory for the decline from September 2. Still, Contrary Thinker does not believe it will be blamed for the dramatic deterioration expected coming after today’s minor one day rally.
Regarding bad news, Contrary Thinker does not believe there is going to be negative news for the economy that will lower the market. Things are recovering.
Instead, the “big top” that began February 12, 2020, is the expectation of a constitutional crisis and political conflict not seen since 1860. That was our lead story on January 23, 2018, when we warned our people of the pending correction.
Today while the news media covers this potential of a disputed election, the Trump administration is threatening. Yet, the market pundits are not considering such drama impacting the markets.
Also, there is no white knight in the wings. The Federal Reserve Board has outright said that they want inflation to increase; that is a financial result, not an effect on intangible shares. The point is the Feds focused on the economy real economy, not the stock market; hence they are not going to come in to rescue the stock market during a sell-off again; their focus is on their real economy. Furthermore, not during the election season, which may drag on into January 20, 2021.
The exact reason Powell stops a return to normal is starting a new round of QE was the Trump factor, which is dead or at best dying.
Our cycle work is the same or remarkably like the setup that we had back in late March of 2020 when the market capitulated on March 23. Granted, the peak on February 12 projected its cycle for the year, which the Fed busted. But that left the work by the market left unfinished. It also begins a new Event-Based Cycle based on the Tidal high peaking with the Dow and S&P September 3, 20202.
That event-based cycle amount others calls for a downtrend into the end of the year. From November 9 into November 14, 15th show up as the more extended bar period we expected last week, including panic low. However, the POST panic low is not expected until the end of the year, at the soonest.
The same way the period from 10/23 through 10/30 saw a sustainable decline period, the next similar period runs from 11/8 through 11/14 with a panic low on 11/13 plus or minus a day. Last week Contrary Thinker expected a long bar day of greater than 4% to confirm the bear market. While it is not as likely this week, if there is a declining range day of 4% or more, it still kicks off the series of HROC decline.
I have reprinted a part of the MarketMap from March 27, 2020, to cement Contrary Thinker’s scenario going into the first quarter of 2021; and the risk of 36% plus from current recovery levels.
Decennial Theory (MarketMap-2020 Issue#6)
Issue #1 of Market Map 2020 points out the recovery of the first year of a new decade that contains the start of most year markets. Furthermore, from the year 1860, recessions have had their start all with an outside event trigger. In 1860 it was the civil war.
|
Year |
DJIA High | DJIA Low | % Decline | The interval from High to low | Months |
|
1890 |
5/17/1890 | 12/8/1890 | -22.6 | 205 |
6.8 |
|
1900 |
9/5/1899 | 9/24/1900 | -31.8 | 385 | 12.8 |
| 1910 | 11/19/1909 | 9/25/1911 | -27.4 | 675 |
22.5 |
|
1920 |
11/3/1919 | 8/24/1921 | -46.6 | 660 | 22.0 |
|
1930 |
9/3/1929 | 7/8/1932 | -89.1 | 1039 |
34.6 |
| 1940 | 11/7/1940 | 4/28/1942 | -32.5 | 537 |
17.9 |
|
1970 |
12/3/1968 | 5/26/1970 | -35.9 | 539 | 18.0 |
| 1990 | 7/16/1990 | 10/11/1990 | -21.2 | 87 |
2.9 |
|
2000 |
1/14/2000 | 9/21/2001 | -19.9 | 616 |
20.5 |
20202020 |
2/12/20209/2/2020 |
Avg = 7/23/2021Avg = 3/29/2022 |
Avg = -36% |
527 |
17.6 |
| Average w/o outliers | 517 |
17.2 |
The above table shows the damage done in these years. I have averaged the number of profits taken – percent decline – and averaged the time spent in the bear mode throwing out the shortest and the longest. These numbers are very much in line with all bear markets over the last 120 years.
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
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 22, 2020
JP Morgan Warns Trump Can Win
Art Merrill when I interviewed him for the MTA thought that I filled a vacuum left by legends like Bolton and Gould. At the time I only had a cursory knowledge of them and today I know Arthur was a very kind man.
But as a quiet achiever – today’s Contrary Thinker – I don’t miss much. It started in 1982 based on Joe Granville’s methods I nailed the low while Joe missed it. He reminded bearish, was just not using his own work. I ticked the major top in July 1987 protected my clients and got back in during the last quarter of that year while the household name whose method was used remained dogmatically bearish, go figure.
Today!
My methods are Short Volatility ETF’s, the tide has turned. A fresh sell short signal happened with a good record projecting a down market for the next six to eight weeks. Yes, short-short volatility! If you don’t understand, it’s not too late.
Here is what no one else is seeing. Long stocks based on “implied volatility,” mathematical formulas that value all put and call option 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 – 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, because of the background dynamics. I did not show the weekly bar of SVXY but its TEM – our volatility model of the market dynamics- 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 (first quarter of 2020) 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, discount will end, and must be part of our LinkedIn group.
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.
If you are not a Visitor at the “Volatility Reports” Group on LinkedIn, you do not qualify for this offer.
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…
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 continue 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 outlook, from a secular point of view, the very long term bull market that ensued after its creations are 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 does not have a common language.