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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 of 33,145 being tested again. If it fails, the next stop is the big round number of 30,000. The daily bar uses our trend-following methods with tidal extremes are its triggers to enter and exit. The S-T trend is now moving lower with Bitcoin tidal cycles flipping on January 22 +/- a day.

The last count was that BTC leads the stock market by five days, which points to the 13th or 14th as a high pivot a the beginning of a decline. That date fits with the work published in MarketMap-2021 issue #3.  Stay tuned for a short sale and hedge ideas.

CT is watching the US dollar to confirm a low and a new uptrend is in place and the leading Technical Event Model – both historical and implied volatility – is also showing some early signs of a tradable, if not a major top, in the US stock markets. 

Bonds continue to probe for a low. The daily bar hit a panic extreme and the panic index is near sold out. Ss-T support runs down to 162. Longer-term risk is 137-151 for this year.

I suspect at least an S-T ( days – week or two) of working off the emotional sell-off. New shorts will be put on after the expected consolidation.  the big question is will the bonds act as the traditional counterbalance for a declining stock market.

Since the contrarian point of view is to achieve that protecting it will come from investing in one end of tail risk, which means being long bonds and long stocks is a losing combination, long term. More to follow on that as well.

 

Back Story

Digital Poker Sites Say ‘95%’ Of Players Demand Payouts In Bitcoin To ‘Enhance’ Winnings

“As bitcoin powers back toward all-time highs unseen since late 2017, traders around the world are wondering: who exactly is driving this rally? Many probably assumed that the retail Robinhood traders who invaded the stock market this year have also found their way to trading crypto, and that’s probably a fair assessment.

But to sustain this type of a move, larger institutional players are necessary to ensure that demand never slackens, or else the volatility for which the pioneering cryptocurrency is infamous could come roaring back. Well, a reporter with Bloomberg who apparently set out to identify some of the big players in the market has made an interesting discovery: For years now, digital poker websites have been a constantly growing source of demand for the cryptocurrency, since customers often prefer to cash out in bitcoin, instead of USD, or some other currency.”

Click here to view original web page at Digital Poker Sites Say ‘95%’ Of Players Demand Payouts In Bitcoin To ‘Enhance’ Winnings

Volatility Reports 1/12/21

“…But as customers growing increasingly comfortable with bitcoin as a means of payment, they’re figuring out how to exploit many of the poker platforms’ policies for their own benefit. While Winning Poker Network tries to convert all bitcoin into fiat as quickly as possible, Nagy said, sometimes it gets “stuck” when bitcoin prices drop sharply. “When Bitcoin drops or does something significant, inevitably, we have people send us $100,000 or $200,000 in Bitcoin, because it’s the fastest way to liquidate it,” Nagy said. “And we are kind of stuck with it.””

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 6, 2021

Volatility Reports US Dollar 1/6/21

USD In the 12/14/20 update VR was expecting “one more decline to the low 90s. The market provided that and a little more.  The signs of a major low setting up is the L-T condition of panic in the sell off over the last six months.  Nine times out of ten a panic context is an event, not an ongoing condition. Yet the stock market during the February-Market decline in 2020 registered such extreme readings. In fact, on the weekly chart, the Dow remained in panic mode for four weeks into the “V” major low.

The weekly bar on the dollar index has reached an extreme of old age. A feeble yet persistent trend that is due for a change. In the current time from with prices being in a cluster of support for all time frames, the buck is on our watch list for more signs that a low is in the place.

The following chart shows the I-T tidal force system is short with the market oversold, being below its L-T moving average. Below the bar chart is our %BB oscillator on implied volatility providing signs of a move to the safety of the dollar.

Back Story is the broad and overwhelming consensus among the Bulls from Brokers in New York to the Mutual Fund Factories in Boston that rest on the demise of the dollar.

Contrary Thinker sees an inflationary bust and the preservation of wealth in the USA. 

Membership includes “Market Map – 2021” and  “Volatility Reports” 

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

 

 

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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November 30, 2020

11/30/20 Volatility Report Recap

The new decade, the new White House, the old White House undermining the incoming, an influx of inexperienced investors plus measures of market fragility equals major changes

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November 18, 2020

Volatility Reports 11/18/2020 Stock Indices

Lots of bullish bravado in the social sphere

When the markets ran stops on Monday 11/9/ all the Short-Term charts hit an extreme in volatility modeling, a rule#1. This suggests that the market will not make much progress from that point. Rather it will move into a trading range or a pivotal reversal in the other direction.

The pattern for the small caps – the Russell – is 1-1-1, a panic buying extreme on all three-time frames.  Hence

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November 16, 2020

Volatility Reports Bonds 11/16/2020

Bonds Long Term Bearish Trend Picking up Speed

Secular trends don’t turn on a dime, but they started at the end of 2017, the year of the lowest volatility in the market’s history. Since that date, even in the face of the need for increased sector rotation to outright market timing and long volatility investments, the sentiment repeats the same has to be a bullish narrative that began with QE1. But in the next forty years, we will witness a major shift that began in 1980 and is ending now. This does not mean everything is bearish, it means that strategies and timing, and time horizons will need to change.

The trend back to normal will be

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