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August 7, 2020

Volatility Reports 08/7/20 Stock Market

For the week 95% or more of the market content streaming in social media is bullish on stocks and on all risk assets across the board.

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From the top, here is the bottom line: Contrary Thinker has a few small short positions on and two of our aggressive trend following future’s hedge systems engaged – long scalping VX and short scalping NQ –  which have had no trades for the past week or longer (see track record posted in the group.) The following analysis is part of the “all clear” CT is waiting on to become more fully engaged on the bearish short side.

SVXY is the ProShares Short VIX Short-Term Futures ETF, which provides investors exposure to short VIX futures contracts. Put simply, investors who buy SVXY are short S&P 500 volatility futures. It is a leveraged way to trade long S&P futures without the assumed unlimited risk of futures, with more bang for the buck vs the SPY, etc.

Reflecting the growing mania for stocks is this market’s attempting to break out. The peak by the nominal indices on 2/12/20 was not confirmed by this basket of risk-takers, yet the climatic low was in gear. What is more important is that mini panic low broke L-T support, which now acts as long term resistance.

The rebound from the March low peaked 6/5/20 at the same time as the Dow but this speculators market is now in long term resistance. The market is drifting higher, and overbought, and in gear.  This part appears bullish on a short term basis.

The dynamics behind this market is like the backdrop of the averages themselves, with the TE#2 supporting a trend; and suggest strongly that breakouts (down) and trend signals (x overs) should get follow-through, independent of direction.  Today this unique view of the bull market is mid-range, sitting between the high side and low side of its I-T S&R zones, as well as being in L-T resistance. Also, I-T bands have collapsed on price. Just like the spike in %C high lighted by the green vertical lines – see next chart – denotes a coming run for the roses, one way or the other. As a trader follow the short-term break. As a long term risk manager, raise cash. Gold Miners may have one more bull run after a S-T correction, more on that later.

A breakout by SVXY would add impetus to the equity markets; and a breakdown would be a leading sign of investor risk to come.

While the CB’s have been able to crush near term volatility, medium-term volatility remains on a higher plateau. the next featured chart is the six-month VIX with one of our leading indicators posted with it.  As you can see the last two spikes in volatility were preceded by our fear index breaking higher, above its MA. Something we are waiting on among others, for the ideal set up.

To stay with the sentiment and what fits with the latecomers buying into the “short volatility” market, CNN’s fear and greed index have reached an extreme greed reading. This composition of the emotional makeup of market participants is now in gear with the extreme Call Option buying in both the Nasdaq and S&P markets, From a Contrary Thinking point of view, such extremes normally occur at periods of the trend change.

The sentiment behind the market as characterized by the following headlines should not be viewed cynically.

You can do the math in the first post.

The types of posts I am seeing over the last view weeks read like the next post. Chasing performance and looks similar to the peak in January 2018.

 

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free look runs out. 

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

August 6, 2020

MarketMap 2020 Issue #13

Change of trend time window is popping up from today the 6th into mid-August. It’s easy to take your eye off the ball if you are hung up on every tick up and down during the day and forget about when major change is expected.  These changes of trend dates (COTs) are notable when they cluster with other price based evidence, like TEM, OB/OS, and sentiment.

The first chart is shown here you have seen before, but we update the secondary peak on the right-hand side being this week.  The method used to create this chart is under wraps, and very different from the typical methods of calculating cycle peaks and throes. I plan to disclose the formula in an upcoming e-book.

MarketMap’s COT from late July into mid-August is clearly seen here; and the decline into December is in gear with the Bradley chart seen below.

 

The Bradley Astrology is well followed and has its merits. I take what it has to say more seriously when it is coincidental with the COTs my independent methods generate. The real-time high by the S&P in early June is copacetic with the Bradley peak in May.   As mentioned the peak this month and decline into the end of the year is foreseen here as well.

 

Early this year we high light the ten-year cycle overlay, the decennial theory. the scenario maps are based on history on 140 years.  The year “0” was expected to make a peak late in the first quarter – early in the second, and the market experienced a debacle. After a bounce into late summer early fall the tendency is for a lower market.  Lastly, the very long term low is not likely until 2021-2022. More on that as we go along. The key here is the 10-year cycle is in gear with what we said going into the year and what we expect in the current time frame.

If you’ve been visiting our Volatility Report private group over at LinkedIn, don’t let your access run out, sign up today.

Remember, small is better, just ask the dinosaurs. Contrary Thinking Behind Here. 

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

July 28, 2020

Volatility Reports 07/27/20 World Index net USA

The race to the bottom by the central banks will not end well. The shift from central bank puts as they are called that are “reactionary” to pre-emptive stricks on financial risk through unconventional monetary policy amplifies hidden short convexity. A market that is trained like Pavlov’s dogs.  A backdrop that leads
to tail risks that are near impossible to gauge.
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The world stock index, net the US market did not confirm the highs in 2018, 2019 or 2020. Here it the weekly chart with dates and a proposed EW count. Such a wave count on the backside of the ascending channel break leads Contrary Thinker to suspect a rapid decline from here. In EWT terms, this market is going into the 3rd wave of a 3rd wave.

Supporting the above bar chart work is our volatility model that measures the anxiety and tension in the market. The overbought or oversold condition of risk. On the right side is the I-T %BB-Oscillator measuring implied volatility at oversold levels. The chart-window in the middle is TEM on the same data reflecting a spike in %C and a new TE#2, suggesting a forceful trend. The EFA’s volatility data is sitting on support, a move above the high side of the zone would be a reversal and add more support to the bearish case.

when VXEFA does make its move above the high end of S-T support, the two long volatility – bear ETFs should be considered for a short to an intermediate-term play with targets in the I-T resistance zone, at least.

 

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free look runs out. 

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

 

July 27, 2020

Volatility Report 7/27/20 mini Russell

 

The evidence stacks up that the risk equity markets are on the verge of the next leg of decline.  In the face of  “preemptive” volatility suppression, there is no way the local or the world economy is going to grow its way out of all the debt. The only question that remains is who gets thrown under the bus?

The top chart shows all three-time frames with their EWT counts, the Russells failure to get back above L-T resistance at points [5], and (2) and the failure to get above I-T resistance at point 2 or (3). Regarding that failure, it was a class book retracement of 62% of a fifth wave extension to the beginning of that excitation, within the range of wave “iv” of lesser degree.  Lastly in EW terms, the daily bar reveals how the most recent rally by the Russell failed to hold above S-T resistance.

The key chart above from a dynamics point of view is the weekly chart that three weeks ago reached a Technical Event #2 that reflects a tension behind the market that supports an I-T dynamic trend. The vast majority of cases it is a leading indicator of such dynamics.  While long term the background remains on the brink of renewed panic, that is emotionally torn levels reached in March that have not been worked off that investors’ time horizon.  The trigger should be the daily bar, the S-T, which at the point of failure hit a TE#3. A situation that called the uptrend feeble, laboring, low volatility, and due for a change.

Supporting A new term trigger in long volatility is our volatility of volatility model TEM of the Russell’s implied volatility data has hit a near-identical configuration as it did in late September 2018, preceding the Xmas debacle. The chart on the right is the daily Russell VX that is in line with the daily bar of the Russell itself, that repressed volatility that is persistent but due for a change. The Russell VX is sitting on S-T and L-T support, its time for change to succeed or fail.

 

Unless there is a two standard deviation gap higher on the open today – 7/27/20 – the aggressive hedge system on the RTY will be engaged starting as always with a minimum lot size relative to your account size.

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Back Story

“Stupid And Ridiculous”: Rabobank Says The Fed Will Cause Everything To Come Crashing Down In Epic Ruin

Click here to view original web page at “Stupid And Ridiculous”: Rabobank Says The Fed Will Cause Everything To Come Crashing Down In Epic Ruin

Submitted by Michael Every of Rabobank

Could we please have the intellectual honesty just to admit the system as it exists today functions to give more money to ultra-rich people? This is no longer a ‘free market system’. Water does not find its own level. It is channelled through canals cut by an establishment, and some fields are watered very well and others left arid. This is not ‘capitalism’ as anyone teaches or models it, where money is made from productively investing in making things. It is speculative financial-capitalism, where money is made by watching money being made by central banks, which is then channelled into the stock of firms who often don’t make things. Given the homilies that central banks are now coming out with about inequality, one could even say it is even oligarchy excreting noblesse oblige. Yet perhaps it is even worse: central banks saying “Let them eat stocks.”

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free runs out. 

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

July 23, 2020

Contrary Thinker Rants

I am not setting out to write a critique here, I am simply posting what I see the majority of crossing my computer screen and seeing them for what they are, based on the first principles of our trade as well as understanding the consequences of a majority point of view at a market extreme by any historical measure.

Long time no talk Tom, but I can say this: I can certainly hold my Scotch better than him. Be that as it may.  Tom is not a forecaster,  he is a strategy developer. He has maned projects from historical event-based systems on high-speed sun computers to the sequential systems. The event-based systems he told me directly found nothing worth trading and I have a copy of the sequential that he gave me and in code with upgrades stopped working years ago.  In any event, he is bullish for the I-T it appears.

What will not change for the majority of the bulls, which is to our advantage, is their gross miss understanding of what volatility is. In their minds, it is either a non-offensive word used for a sell-off or an asset that has a value. Both of these are opposed to what it is which is the state of tension between expectations and reality.  So when I see the comments posted below, they are meaningless content. The person could have said the stock market is up 25% and crude oil is up 50% off their lows and been more meaningful. But this is somehow supporting her bullish outlook.

One of the first lessons you learn on Wall Street is the best performing mutual funds of last year will not be this year’s best. Another way of putting it is “don’t change the equity curve.” But in general, that is basically all you hear, read, and watch from too many analysts: how much the investment has gained and somehow that is reason to buy it or at least buy into the argument.  So it’s clear this content provider is bullish and excited about the markets.

But a key take away here regards the “rule of alternation” which our friends at Elliott Wave International made popular.  In the below statement, its the YTD that is key. While we all know everyone does not buy or sell on January 1, the calendar is our human way of accounting for things, especially money.

However, I first gained an understanding of alternation under Bob Farrell at Merrill and he used calendar demarcations when he discussed a prediction of change.  For example, after the lowest volatility year in history in 2017, our publication MarketMap2018 suspected a more changeable year in 2018; and we got a year with two major sell-offs. Furthermore, the sell-offs alternated, one in the first quarter and the second in the fourth quarter.

 

Top outside news events list by a major content provider is all bullish.

 

Just more of the same. I don’t want a medal pinned to my chest, but the information I provide is aimed to be educational, instructive, strategic and executable. Rather than a sales pitch about how “wow-wee-zow-wee” the market has been.

The last time I read about records like the one pointed out here was just prior to the peak in late January 2018, when the previous rally in the S&P and Dow did something similar.

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Back Story
Calibrating The Craziness

A pattern to which investors have become all too accustomed, the Fed pounced into action soon after stocks fell precipitously in March. And pounce it did. In a set of measures that were mind boggling both in terms of magnitude and breadth, the Fed sent a strong signal of its commitment to support markets. In addition, it kept rolling out new policies throughout the second quarter in order to quell any remaining doubt as to its intent.

In conclusion, this market has been far more resilient than I, and many other value-oriented investors, ever thought possible. Passive flows go a long way in explaining this phenomenon. They also suggest whatever craziness we have experienced can continue for some time. Fundamentals really don’t matter much in this environment and as result, stock prices have little information content.

 

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free look runs out. 

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

July 23, 2020

Volatility Reports 7/23/20 Long Bonds

Until inflation becomes an obvious problem to the bond market and the Fed, rates will continue to support the equity markets for the short to intermediate-term.
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Long Term government bonds have a current negative correlation with the S&P. Putting the longer-term outlook on hold, the near term presents a low-risk opportunity to go long the high-quality bonds. Bond futures and ETFs have worked off their period of panic buying with a sideways trading range. This high-level base has traced out a horizontal triable that projects a high rate of change advance starting in the very near term. The 30-year futures have started to break out already. The underlying tension is the markets are high, in that it supports a breakout that picks up a following based on our readings of volatility.  The weekly Technical Event Model is on a TE#2 from three weeks back. with the tidal system also pointing higher on the weekly chart, all of the evidence is bullish for the bonds. 15 to 30 point profit; risk failure back into new L-T support at 160 1/2.

Since the bonds have a negative correlation to the stock market and the risk market reaching extremes in bullish advisories and sentiment readings, a sell-off in the stocks will benefit the bonds, at least one last time before inflation becomes an issue.

The Vanguard Extended Duration Treasury Index Fund may also be a good play here, with a target range from 57 to 59. Stops would be a failure back into the new L-T support zone at 49 ( 3 to 1 or better). It too is supported by our volatility modeling.

Back Story 

“Powell Is Now Helpless”: Even A Modest Market Wobble Threatens To Devastate The Real Economy

“We’re not even thinking about thinking of raising rates,” declared America’s Fed Chairman, all but eliminating uncertainty about the Fed policy path through 2022. The S&P 500 had completed a historic recovery from the pandemic lows to trade higher on the year, its price utterly disconnected from today’s economic devastation.

 

 

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free look runs out. 

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

July 21, 2020

Volatility Reports 7/21/20 Fang Index

Panic Buying is Gripping the Premier Fang Stocks

On the 7th Volatility, Reports pointed out the occurrence of a TE#1, a backdrop of emotional buying. Furthermore, all of the below is in the context of the S-T tidal system flipping from long to short on the Nasdaq plus MarketMap’s annual fractal providing the big turn for the year this week.

The chart used today again shows the panic buying highlighted in red followed by a shallow correction. As a rule, 99% of the time a TE#1 leads to a “V” shaped bottom or an inverted “V” top following by a chipping range. The weekly bar sees the trend as moving into an old and low volatility background.

The weekly bar on the left uses our set of OB/OS oscillators, which is not used for the traditional divergence analysis. Rather the model looks for negative reversals at a top, when the oscillator makes a new high but the market does not.  The other sell signal is when one of the indicators is trending up and the other is diverting from the other indicator. This out of gear is a sign that momentum is about to change. The purple lines show the most recent sell suggestions.

 

The intraday chart of the FANG index shows an  EWT set up of five down and three up; plus it reveals a Gartley set up for a low-risk short opportunity.  The inverse ETF is a controlled risk vehicle to use.  Place a stop around the old historical high but above point “2”. 

The old high of the Fang index back in January 2020, just below 4,000 would be a target going into the end of the year.  That would put the inverse FANG at 50. The current price of 14 1/4 to 15 has a risk to new lows, out at 12.  A good risk to reward.

A number of the generals leading the Fang index are showing signs of “poor” buying. TSLA has made a climatic top. It has risk to 600. While I have heard many critics of the companies founder, he is a true genius who grounds what he does on the first principle thinking and I admire him. Be that has it may, the stock is toast here based on my first principle thinking, only time will tell.

volatility Reports have previously pointed out the peaking process of Netflix two weeks back and used the outside world’s back story of the companies compete. Especially now tih NBC/Universal getting into the field. What coincided with the launch of Peacock was the panic buying in NFLX both S-T and I-T and its first break of a support level at 501. Now the 480 to 476 area is pivotal, a break there should pick up a following.  The context behind the market supports a trending move, with a TE#2 on the daily bar.  The weekly bar has given a sell signal based on our OB/OS model.

Lastly, Google has made a climactic peak. Like the other generals, it made its highs on FOMO type buying with the OB/OS model giving a sell signal in the same time frame. A cross under 1527 should be the next bearish sign.

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

July 16, 2020

Volatility Reports 07/16/20 Nasdaq

Nasdaq Hyperbolic Peak, in place. What supports this idea is equivocation by so many advisors and analysts on what this market is doing, and their subject lines or intros being “questions.”
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I’m sure not many recall the peak in early 2000 by the Nasdaq composite. It ended a secular bull market from the low in 1974. A great bull move. I wanted to point out the pattern at this inverted V top. For one it broke the upper channel of the long term trend from the ’74 low. Such “throw overs” are equivalent to investors paying any price for these shares of stock. The type of emotional investing old money likes to see for profit-taking.

Contrary Thinker’s volatility model on the monthly bar seen here signaled the uptrend was old, persistent and ready for a change. Please note that after the high in January and a month of decline the recovery – bounce – took a few months on backing and filling on the low side of L-T resistance – blue line – that was coincidental to 62% retracement before the other shoe drop.

Here is a snapshot of the composite from the wave [4] low in 2002, which reveals a similar set up at today’s highs. the throw-over the upper channel and the TEM reading of old, feeble, and ready for a change on the monthly bar. That is the Technical Event (TE) #3.  What else is nice is wave (5) is 2.618 times wave (1) and wave (5) is related to the length of the previous correction, wave (4) by the Fib-ration of 1.381.

On an S-T basis, the daily bar is saying that the tension behind the market is ready for a trend change as well, with a TE#3. The key price levels that would suggest a lower market are shown in the data window.

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July 15, 2020

MarketMap 2020 Issue #12

Change of trend time windows is popping up from early next week into mid-August. MarketMap-2020 discusses the methods and reveal the dates in this report

MarketMap-2020 issues early in the year provided ContraryThinkers with a hint that a peak was going to happen in the early part of the year.  One of the cycles was working back from 2020 with the Fibonacci series.

I said: “…working back from 2020, subtracting the beginning of the summation series from the current time window pinpoints the years of all meaningful – tradable – peaks back to 1929. I have highlighted them in the above charts.

The major or corrective tops posted in 1929, 1966, 1987, 1999, 2007, 2011, 2015, 2018, are all in the series counting back from late 2019 and the year 2020. Among other reasons, the market began to put in a major top precisely two years ago.”  In 2018 and 2020 fits as a major top year and 2020 fits with the Decennial cycle. Thus far it is proved very true.

By the way, reaching back 144 years – from 2019-20 – it pinpoints the panic of 1873. This financial crisis triggered a depression in Europe and North America that lasted from 1873 until 1879. In the United States, the Panic was known as the “Great Depression” until the events of the early 1930s set a new standard.

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July 14, 2020

Volatility Report 7/14/20

“Give me freedom or give me death against King George III, not Covid19”

A few weeks ago in Volatility Reports, I pointed out one alternative of the current rally’s change back to a bear trend. I pointed to the “1973-74 parallel. On that basis, “the current rally would take four to five months off the March 23, 2020 low before a dull and slow bear market took hold making new lows in 2021.” That timing for that peak takes the market into a July or August peak.

Volatility Report 7/14/20

The other alternative and the desire of many to get it over quickly puts the market early in the 1929 or 1987 crash, the first 62% retrace the first S-T leg down.

Given the fast recovery – the wishful thinking – of normal circumstances in the face of a pandemic and some in leadership pushing the libertarian ideal of “give me freedom or give me death.” So reopen fast and get back to work was their mantra. The problem is that we were fighting to be a nation, not fighting a pandemic.

The low cycle expected around the 4th to the 7th was a non-event, the cycle inverted, as previously noted. The cycles for long bar days have some potential this week. In other words, from the open to the close the day range can be greater than 4%. These are the types of days we lay in wait for, as low risk and better than 4 to 1 opportunity.

However, these dates jump out of the history books for long bar decline days, from July 20 through August 3, it should be hard down. These particular days are anniversary dates of previous long bar selloffs: July 19, 21, 26, and 30. As long as traders are on the front foot, it does not matter which day(s) hit, but the period from July 27 through August 3, should be the period of the highest rate of decline.

There are a number of things that need to start lining up to put Volatility into our bearish strategies, which is a futures short selling scalping system. Monday’s UpThrust – head-fake or failed breakout- was a beginning. Our featured chart here shows the typical set up for this distribution pattern.

Similar to the above model, the point on the mini S&P chart below wave (2) was the climactic high followed by the distribution range. The rallies to the peak of wave “a” is the phase “B” in the Wyckoff model; and the rally and intraday reversal is the phase “C.” That suggests the range lows should fall today, with possible testing pull back to the low end of the range. That puts the S&P mini futures below 3,000. The Dow has a similar chart pattern.

The important intermediate-term volatility model is set up to support a longer-term trend. Excluding the Nasdaq and its futures are ready for a trend, a dynamic forceful one-way move. Once it begins there should be little in pullbacks or whip-saws. The Nasdaq is a different story and not bullish, but I will take it up in a second VR today. Plus the newsletter via email that covers our proprietary volatility model

Here is the S-T chart on the ES, the price levels in red, in the data window, are the S-T breakdown levels that should accelerate the decline, once broken. If you have short or bear strategies, this would be your signal. Contrary Thinker members can use this break, but there are more details in the next two VR’s coming out today.

Contrary Thinking begins here. 

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.

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