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January 18, 2021

Volatility Reports 1/18/21 Gold

Gold, the inflation hedge, and the bearish trade. What makes that 1/oz nugget worth $1,834.30?

Contrary Thinker is short the Gold via GLL

9/10/2020 15:47

GLL $30.45 $33.54 10.15% $55 Stop $28.00

Tidal Wave S-T Inverse ETF

This advisory remains bearish on Gold. The protective stop on GLL will be moved, and a second position is expected this week. Volatility Reports is looking for a period of waterfall price action from here going into March. Here is why.

The big picture is one that is super bearish on the metal. This is a very lonesome position for the metal, especially in the face of the forecast of renewed inflation, which I agree with in terms of the commodity indices. Too much money world wide chasing too few commodities (net carbon-based fuel) is the bullish play, not gold’s.  The outlook is bearish even in the face of geopolitical problems worldwide leading to national security threats, which Contrary Thinker expects and expects since the January peak of 2018. The problem with gold is it’s not a medium of exchange to buy commodities unless you are rich enough to own some. Given the shift to “real economic” growth – hence the 99% – the demand will be for “dollars” to buy stuff, so as pointed out previously, it is a matter of what currency you want your wealth in. Gold is not a currency, and it is a risk asset that is being advertised on TV.

The long term cycle has put in a massive double top that crested just past four sub-cycles of the 13-month or Juglar cycle (7.618 years), which points lower into mid-June.  Furthermore, the longer-term cycle may not makes its final bottom until 2023. For now, the longer-term wave structure in EWT terms suggests a downtrend below $1,200/oz.

As a sidebar, MarketMap-2021 Annual Scenario Planner Issue #4 will talk about the time windows for a long term low in the equity markets, which is not expected in 2021—more on that in MarketMap-2021. 

Gold’s market’s emotional background is similar to the big turns at 2009 low and the 2011 bull market high.  The trend changes were preceded by an extreme in selling (09) and buying (11), followed by a wide trading range. Such a change is textbook expectation after a panic event, when the Technical Event Model (TEM) hits a TE#1, highlighted by the red vertical line, in the next L-T chart.

The breakout of the horizontal triangle in June 2019 was all panic buying, FOMO.  It is rare for a panic extreme not to put in a sharp pivot, rather turning into an ongoing condition. But the volatility background cycled back into one of high tension – green vertical line – one supporting a change of condition that produced a range month opening at its low and closing at its high for July,

However, from the August peak – daily and weekly TE#3 calling the trend old and ready for change, the market drifted in a down channel reaching a new extreme Technical Event #4, calling for a breakout trading period based on the monthly bar. This background provides for some powerful price action where the monthly range is expanded past the most recent.

There are several ways to project Gold’s risk based on this background. The low side of CT’s smoothed Bolinger Bands sits at $1490/oz for the next 30 to 45  days, and the largest true range in the last six months should breakdown of the current channel, which projects the low side to $1550/oz.  Unless the monthly bar can produce a new technical event, and the $1500 area is not hit this month, a new taken can be projected by subtracting $250/oz from that January’s closing price. 

Except on a very near-term basis, the Intermediate (I-T) and Short Term (S-T) analysis support the bearish outlook.  The Alpha-Trend Tracking MA on the weekly chart is pointing down; the nominal wave count is “five” down, suggesting the larger trend is down.

The weekly bar on the left shows volatility background predicts a period that supports a trend. That TE#2 has not cycled to another extreme supporting the new Alpha-Trend Tracking sell signal in the second week of January.  The S-T chart on the right-hand side shows an EWT count that is a series of first and second waves of lesser degree. Such patterns lead to a forceful trend once the channel is broken.

As our most recent experience over the last five years, 2020 continued its theme of breaking records and experiencing “unprecedented” events. One of those rare events is TE#1 becoming a condition, not an event. Whereas normally – 99% of the time – the TE#1  provides “V” lows or inverted “V” highs but during 2020 in half, the cases have remained in the trend of highly charged emotional trend.

The S-T daily bar chart has TEM hitting a panic event six days back and the new lows Friday, putting the modeling back into panic.  Plus, CT’s Panic indicator, the yellow index, has hit a panic extreme. Under a normal theme, S-T traders should be looking for a  bullish trade here. But given the last five years of “record-breaking events,” and the research provided above, this analyst will stick with that outlook expecting the floor to drop out of gold sometime from now and the first part of February.

 

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

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 client’s 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

 

 

January 14, 2021

Volatility Reports Euro 1/14/21

The union of European states does not have the same underlying language or the same underlying culture.

Without such the Euro has an inherent emotional weakness to stay together in times of strife.

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January 12, 2021

Volatility Reports 1/12/21

The leading indicators for the stock market are ticking off the checklist.

Back on 12/30, the Bitcoin market was labeled a Bell Weather. It should be clear to advisors, investors, and traders that BTC and others are not StableCoin, something that can be used for a more secure currency one that can not be counterfeited. But given the volatility of the market, it is a risk asset. As such, it is a bellwether for other risk markets, it is not a hedge as advertised.

The key price level

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January 11, 2021

Volatility Reports New Bull Markets

The primary markets are pivoting in the same time frame as MarketMap’s COT time window due this week.

A short recap for the US dollar is posting up a low. The flip side of that is the Euro is reversing and about to resume its downtrend. The US long bonds are posting up a low as well.  As Volatility Reports pointed out in the December 30, 2020 Volatility Reports on the Bitcoin that:

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January 6, 2021

Volatility Reports US Dollar 1/6/21

USD In the 12/14/20 update

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December 21, 2020

Volatility Reports 12/21/20

Why take a 50% drawdown risk for the average annual return of 10%? Because major declines can’t be timed,  so they say.
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December 14, 2020

Volatility Reports 12/14/20 Recap

The traditional move late in the cycle is to buy offshore bonds in a stronger currency than the USD. This tact has worked over the last twenty years but that regime is changing.

USD makes a long-term bottom; one more decline to the low 90s is in gear and touch with the COTs due this week. The bar chart pattern is a horizontal triangle, which supports a thrust lower and a terminal move, not the beginning of a new trend.

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December 9, 2020

The Last Fourty Years Were an Outlier

Contrary Thinker deals in Time, your preparedness, not fear.

“Let me admit something. There is no Bond King or a Stock King, or an Investor Sovereign alive that can claim title to a throne. All of us, even the old guys like Buffett, Soros, Fuss, and me too, have cut our teeth during perhaps a most advantageous period, the most attractive epoch, that an investor could experience. Since the early 1970s when the dollar was released from gold and credit began it’s an incredible liquifying total return journey to the present day an investor that took marginal risk leveraged it wisely and was conveniently sheltered from periodic bouts of deleveraging or asset withdraws could and in some cases was rewarded with the crown of greatness. Perhaps, however, it was the era they made the man as opposed to the man that made the era.”

Bill Gross, Man in the Mirror April 12, 2013
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December 1, 2020

Volatility Reports Bonds 12/1/2020

Long Term Bearish Since Panic Buying Top on Long Term charts from March to August 2020. The dynamics are changing.

It’s been pointed out that the junk bonds are staying in gear with stocks even though they have not confirmed new highs for several years and continue to underperforming. I would still watch that group for a breakdown as a sign that risk assets are coming undone.

In the meantime, the amount of debt is not a concern to the fiscal policymakers in the wing, and fear is starting to break higher measured by the CBOE interest rate volatility data. In fact, contrary Thinkers volatility composite has tested olf support successfully and is moving higher, another sign that risk-taking is becoming extreme.

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November 30, 2020

Volatility Reports US Dollar and FX 11/30/2020

US Dollar

Intermarket relationships are ephemeral, valid for the short to intermediate-term at best. The imputed market wisdom is when gold goes up US dollar declines and while the greenback advances the precious metals go down. But since late September both markets are in a decline; and both into a decline of a major COT time window according to our MarketMap change of trend dates. With today being a key date, November 30.

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