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October 28, 2020

10/5/20 Major Market’s Recap for LI

How soon they forget Contrary Thinker’s headlines.
Today 9/3/2020, the markets are flashing “DANGER,” and no one is paying attention, NO ONE.
Today 9/10/20, the majority continue to find a rationalization for more bull market.

Yet a full month later, the boogie-man-month of September is done and dusted, hence an all-clear for the bull market. Contrary Thinker sees the next range day lower that exceeds 4% without an intervening new high etching in stone that the market is in a long term bear market.  The Summaries below support that expectation and the Chart Gallery to follow.

—-

As a general observation of all the primary markets, they all peaked on panic buying in August – based on the TE Model. Such action, as previously observed, is easy to stop and will be flipped at least back to the point where the highly emotional buying began. However, given the age of the uptrends, the flip, the reversal should take prices very much below that point.

US Stock Indices

Our focus over the last few weeks is on when to expect an acceleration of the bear market decline that posted its ATH on 9/2/20 for the majority indices. But, the Dow’s high was posted back on February 12 with the low pivot March 23 rally “failing: to make new highs. Keyword FAILURE

“MarketMap2020 Issue #17” dated 9/29/20 said, “Coming into this time window, both MarketMap and Volatility Reports has put advisors, managers, and traders on alert, that any rally, unless it was a momentum surge, would stall and the bear market will reassert itself.” I went on to point out that “The rally over the last two trading days were not A/D surges,” and that is the case per this update.

Bonds

After a prolonged period of distribution, the 30-year government bonds are following the lower-quality bonds lower with a break below trend lines. S-T support at 175 8/ should not provide much help, the next stop in October is the 17412 to 172 28/ zone for I-T support. The long-term target remains from 144 – to 152, which takes the market below the end of the Elliott Wave (4), a bearish sign.

The I-T Tidal wave system is short from five weeks ago, and its trend-following filter is trending lower. The S-T version of that is trend lower now as well.

TEM is the most critical element going into the week of October 4, with both I-T and S-T calling for a high rate of change decline. This has been in play as a leading signal for the last four weeks. At the end of last week, S-T has cycled back to a new TE#2 for the third time. This market is ready to break.

USD
The buck made an L-T size panic size low at the end of August-early September. That was, at the same time, the risk markets were making their panic highs. From that point, the market-tested lows building a base before its recent breakout run. The Tidal Wave cycle made a low last week, and its trend filtered strategy turned higher, causing an outright buy, which Contrary Thinker supports.

The base was tested early last week and held, followed by a rebound, a bullish occurrence. TEM is in no man’s land. In other words, it does not supply any new information. Hence the s-T uptrend is expected to sustain without much in terms of dynamics. The most previous high of 95.60 should act as resistance.
Contrary Thinker is long term bullish.

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.

Euro Dollar

It is the mirror image of the buck. Since its major bull market peak in 2008, the downtrend is a new secular bear market. From its peak in early 2018, the decline is being corrected by a minor recovery in the face of the majority of Yanks that favor the Euro and somehow connect that to gold. But that is a sideshow.

The euro’s I-T Tidal systems are still long from 1.1290; however, the leading indicators, CT’s smooth RSI and Smooth CMB index, have both posted warning signals. The SMA is rolling over as well but has not crossed over.
Underlying implied volatility is flat, not showing much, and CT’s model also sees dull action in the near term. Range trading from 1.17 to 1.18 is expected in the near term.

Crude Oil

It is easy to say that the carbon energy complex, like crude oil, looks super bearish, and there is nothing wrong about taking advantage of what is easy. The start with the implied VX for Crude oil made a stunning breakout on Friday, a sign of the fear and anxiety that is gripping this market.

That break was above CT’s smooth upper Bollinger Band, and what is key here is that the set up that preceded the breakout was a Technical Event #2. When this happens, the probability is high that there will be follow-through in the direction of the break: a bearish sign, a strong bearish signal.

CT’s intermediate-term %BB-VIX is coming off an extreme no fear condition and is breaking higher, another bearish sign from “implied volatility.”

Crude is in the last throw of a bear market that will test “zero” again and place a final panic low. I will add that the price of crude and other forms of carbon-based energy will never recover again. In other words, no new cyclical bull market of any considerable gain as the focus will continue its shift to the “Green New Deal.”

Political parallelism, ninety years ago, two 45 year cycles, five nine-year cycles,  brought about the Presidential election of 1932. On November 4, 1932, in the middle of Republican President Herbert Hoover’s term, he lost in a landslide shortly after the start of the Great Depression, and the Republican Party suffered substantial losses.

The Fourth Party System is the term used in political science and history for the period in American political history from about 1896 to 1932 that was dominated by the Republican Party,

Wealth-X: World’s Billionaire Population Jumps 8.5% to 2,825

Click here to view the original web page at Wealth-X: World’s Billionaire Population Jumps 8.5% to 2,825

The global billionaire population and their combined wealth both increased strongly, reversing the previous year’s decline, according to a Wealth-X report released Tuesday.

The number of billionaires known to exist around the globe reached 2,825 last year, 8.5%, or 221 increase from 2018. Their combined wealth rose 10.3% year-over-year to a total of US$9.4 trillion, according to Billionaire Census 2020, Barron’s reported, citing research by Wealth-X.

 

If you are not a Visitor at the “Volatility Reports” Group on LinkedIn, you do not qualify for this offer.

 

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 26, 2020

10/26/20 Volatility Reports

The bear market is expected to confirm this week via long bar decline days

World Stock Averages both U.S. and European markets experienced a down week. The Asian markets were mixed with the Hang Seng and Shanghai Composite making secondary highs, pivoting to make new two-week lows in the same period, a bearish configuration. 

The ATH posted on 9/2/20 and the secondary high posted on 10/12/20 held thus keeping the bearish outlook in place. In the report on the 19th, I pointed to the grey column on the right of the Change of Trend (COT) calendar because it highlighted the time frames when an acceleration of the trend is prone and long bar days become more likely. The expectation is to see 4% lower range days or greater in the Dow/S&P and 6% down range-days or greater in the Nasdaq is probable.

The majority of market content providers in the Tweeterphere for the last three weeks touted an advance to decline surge of some formulation, when in fact there was none, full stop and there was no massive confirmation of new highs by the major averages. Funny, from the peak that Contrary Thinker predicted in late January 2018 the Dow made new highs but the Dow Transports did not, an old fashion Dow Theory sell signals. Today the bulls can’t focus on anything else but – even with it being three years later – the Dow Transports making new highs. The problem is the Dow Industrials have not confirmed, which is another old fashion Dow Theory sell signal.

The price-based background is being dominated by the Long Term panic buying that occurred at the peak in all of the markets from bonds to gold to stocks. After a TE rule #1 – a panic event – is followed by a choppy market. It is a “V” or inverted “V” change of trend (COT) bottom or top 99% of the time ( see Four Rules).  

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October 19, 2020

Volatility Report 10/19/20

As an observer of the markets and the economy, I know there are no absolutes, but every good idea has its time. Back 40 years ago neo-liberal economic theory was right for its time and was accompanied by a rising tide of socio-cultural optimism. Today that era has come to an end and it can now be truly called “voodoo economics” and will be corrected over the next 40 years.
What goes hand and hand with that  Macro change is the market in the time window to revisit and finish correcting the problems and issues left unresolved in the first quarter downturn. Remember the “shortest bear market in history?”

When the market made its low on March 23,

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October 5, 2020

10/5/20 Major Market’s Recap

How soon they forget Contrary Thinker’s headlines.
Today 9/3/2020, the markets are flashing “DANGER,” and no one is paying attention, NO ONE.
Today 9/10/20, the majority continue to find a rationalization for more bull market.

Yet a full month later, the boogie-man-month of September is done and dusted, hence an all-clear for the bull market. Contrary Thinker sees the next range day lower that exceeds 4% without an intervening new high etching in stone that the market is in a long term bear market.  The Summaries below support that expectation and the Chart Gallery to follow.

—-

As a general observation of all the primary markets, they all peaked on panic buying in August – based on the TE Model. Such action, as previously observed, is easy to stop and will be flipped at least back to the point where the highly emotional buying began. However, given the age of the uptrends, the flip, the reversal should take prices very much below that point.

US Stock Indices

Our focus over the last few weeks is on when to expect an acceleration of the bear market decline that posted its ATH on 9/2/20 for the majority indices. But, the Dow’s high was posted back on February 12 with the low pivot March 23 rally “failing: to make new highs. Keyword FAILURE

“MarketMap2020 Issue #17” dated 9/29/20 said, “Coming into this time window, both MarketMap and Volatility Reports has put advisors, managers, and traders on alert, that any rally, unless it was a momentum surge, would stall and the bear market will reassert itself.” I went on to point out that “The rally over the last two trading days were not A/D surges,” and that is the case per this update.

Bonds

After a prolonged period of distribution, the 30-year government bonds are following the lower-quality bonds lower with a break below trend lines. S-T support at 175 8/ should not provide much help, the next stop in October is the 17412 to 172 28/ zone for I-T support. The long-term target remains from 144 – to 152, which takes the market below the end of the Elliott Wave (4), a bearish sign.

The I-T Tidal wave system is short from five weeks ago, and its trend-following filter is trending lower. The S-T version of that is trend lower now as well.

TEM is the most critical element going into the week of October 4, with both I-T and S-T calling for a high rate of change decline. This has been in play as a leading signal for the last four weeks. At the end of last week, S-T has cycled back to a new TE#2 for the third time. This market is ready to break.

USD
The buck made an L-T size panic size low at the end of August-early September. That was, at the same time, the risk markets were making their panic highs. From that point, the market-tested lows building a base before its recent breakout run. The Tidal Wave cycle made a low last week, and its trend filtered strategy turned higher, causing an outright buy, which Contrary Thinker supports.

The base was tested early last week and held, followed by a rebound, a bullish occurrence. TEM is in no man’s land. In other words, it does not supply any new information. Hence the s-T uptrend is expected to sustain without much in terms of dynamics. The most previous high of 95.60 should act as resistance.
Contrary Thinker is long term bullish.

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.

Euro Dollar

It is the mirror image of the buck. Since its major bull market peak in 2008, the downtrend is a new secular bear market. From its peak in early 2018, the decline is being corrected by a minor recovery in the face of the majority of Yanks that favor the Euro and somehow connect that to gold. But that is a sideshow.

The euro’s I-T Tidal systems are still long from 1.1290; however, the leading indicators, CT’s smooth RSI and Smooth CMB index, have both posted warning signals. The SMA is rolling over as well but has not crossed over.
Underlying implied volatility is flat, not showing much, and CT’s model also sees dull action in the near term. Range trading from 1.17 to 1.18 is expected in the near term.

Crude Oil

It is easy to say that the carbon energy complex, like crude oil, looks super bearish, and there is nothing wrong about taking advantage of what is easy. The start with the implied VX for Crude oil made a stunning breakout on Friday, a sign of the fear and anxiety that is gripping this market.

That break was above CT’s smooth upper Bollinger Band, and what is key here is that the set up that preceded the breakout was a Technical Event #2. When this happens, the probability is high that there will be follow-through in the direction of the break: a bearish sign, a strong bearish signal.

CT’s intermediate-term %BB-VIX is coming off an extreme no fear condition and is breaking higher, another bearish sign from “implied volatility.”

Crude is in the last throw of a bear market that will test “zero” again and place a final panic low. I will add that the price of crude and other forms of carbon-based energy will never recover again. In other words, no new cyclical bull market of any considerable gain as the focus will continue its shift to the “Green New Deal.”

Political parallelism, ninety years ago, two 45 year cycles, five nine-year cycles,  brought about the Presidential election of 1932. On November 4, 1932, in the middle of Republican President Herbert Hoover’s term, he lost in a landslide shortly after the start of the Great Depression, and the Republican Party suffered substantial losses.

The Fourth Party System is the term used in political science and history for the period in American political history from about 1896 to 1932 that was dominated by the Republican Party,

Wealth-X: World’s Billionaire Population Jumps 8.5% to 2,825

Click here to view the original web page at Wealth-X: World’s Billionaire Population Jumps 8.5% to 2,825

The global billionaire population and their combined wealth both increased strongly, reversing the previous year’s decline, according to a Wealth-X report released Tuesday.

The number of billionaires known to exist around the globe reached 2,825 last year, 8.5%, or 221 increase from 2018. Their combined wealth rose 10.3% year-over-year to a total of US$9.4 trillion, according to Billionaire Census 2020, Barron’s reported, citing research by Wealth-X.

 

If you are not a Visitor at the “Volatility Reports” Group on LinkedIn, you do not qualify for this offer.

 

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

 

 

September 18, 2020

MarketMap-2020 Issue #16

Cycles began to flip over on Wednesday as the market realized and continues to find its form over the next five to six weeks.

Our table of Change of Trend Dates (COTs) has been updated with new data. One is from a friend of mine that is also a respected competitor, the other new column on the right comes from a new study based on Lunar Nodes first propagated by financial astrologer Louise McWhirter work in the early 1900s. Her 18.6-year cycle is already part of our longer-term work but I have reduced it to the short term because I found it produced dates that clustered with other independent cycles.

What the big take away is from the above table is the peak thus far hit on 9/2/20, which happened right on cue with the cluster from 9/2 to 9/6. In the current time frame is the next cluster of COT dates that have consistently pegged stock market highs. From 9/13 into today is the date window a high pivot is expected. A few new added features in the table. the Annual One Day decline, date when a long bar decline that equals what can be considered a good annual rate of return happens in a signal day.

The market had a long bar decline on the 3rd and the 10th, with another expected today or Monday.  A mini panic low – aka long bar decline – can be expected on October 2, +/-  the range of the COTs, from September 24-October 3. I would be looking for more bull market in fear selling to kick in early October. The period of 9/2 through 11/13 (far right column) should be a period that brackets off the majority of this bear leg lower.

For your long term, scenario planning here is the long term decennial cycle overlay provided by our friends in the UK Dogs of the Dow. While the overlay is based on date back to 1896 there are differences when looked at the individual years. So Contrary Thinker does not use this in a vacuum-like anything else. With that in mind, a low late this year should lead to a bear market rally into April May 2021 when the “Sell in May and Walk Away” rule will work after having a year off.  Until there is a major bear market low earmarked by all of its features, the ten-year cycle suggests mid-2022 before getting back to long term investing in risk assets.

The chart here of the Nasqaq 100 futures demonstrates a few factors. The left-hand window one can see the COT low expected on 9/2 inverting. Inversions are not an excuse they are a signal to expect an acceleration in the other direction. In the same chart, the MA cross under on the 3rd sell signals confirmed by CT’s CME index and Smoothed RSI.  You can also see the tidal cycle flipping from up to down with the red down arrow.

The right-hand window reveals the market’s failure to hold S-T and I-T support, a bearish clue. and again the Tidal cycles flipping to down three days ago. TEM today is a new TE#4. A condition we have not seen for a white, where range expansion is expected. In other words, breakout strategies should get carry over. So a break of range or new MA cross under signals gains in the probability of working out.  Starting today and looking into next week, the daily ranges should challenge 400 points.

The key level for a break lower is 10,788.00

Volatility Reports have pointed out how the US markets (here the cash S&P is used) peaked on the monthly bar reflecting panic buying, irrational buying. Buying that is not grounded in reason that is easy to flip. With that behind the market, the weekly trend following system is giving early warnings – highlighted in “pink” in the right window, where we have all four of the trend following indicators of the trend following system crossing under. This is an I-T signal.  The I-T background of the cash S&P is a new COT that tells the trader the sideways trend over the last two weeks is old and due for a change.

Key levels are clearly presented on the following chart with resistance starting at 3397 but main supply at 3429 to 3471. A move above these prices would change the trend to flat, for now. On the other hand,  and in keeping with our bearish scenario, a move below 3306 would be the early warning that a key level like 3882 will be tested. This is a L-T support price.

Visitors at the “Volatility Reports” Group in LinkedIn need to opt-in as a subscriber before their free look runs out. We apologize if you find you are not able to access the group or blog, consider being a Contrary Thinker 

 

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

 

 

September 10, 2020

Recap of major markets

Today 9/3/2020 the markets are flashing “DANGER” and no one is paying attention, NO ONE. Today 9/10/20 the majority continue to find a rationalization for more bull market.
Recap of major markets, click to enlarge charts
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June 10, 2020

Monetary and Political Policy Blurred

Presidential Election Polls Preceding the Election will Predict the Stock Market, and all the polls are firming up going into the summer. Today it looks like a landslide favoring Biden, and because the Fed and Treasury are in Trump’s Pocket the Markets are now political and they (fed banks) will dump their holdings to protect themselves as it becomes clear the polls are right.

Today’s money is different because

  1. Unlike the pre-neo-liberal era when there was an industrial nation with workers, times have changed. According to Australian “MISES WIRE ” When the advanced nations had strong industrial cores, the periodic expansions of credit and their subsequent sudden contractions led to observable booms and busts in the classical sense, since the production of labor-intensive consumer goods dominated production overall.” Full Article 
  2. When the neo-liberals – including Reagan, Thatcher and Clinton –  liberated financial controls in the mid-eighties, London’s Big Bang, and the repeal of America’s Glass-Steagall Act of 1933, it allowed commercial banks to fully embrace and exploit investment banking activities.

 

Gold is for toss-up states updated 6.11.20 

His key points are if the Fed couldn’t exit from the extraordinary monetary policy it launched in 2008 or 2018, how does anybody expect it to exit from the extraordinary monetary policy on hyperdrive that it is engaged in now?

Federal Reserve Chairman Jerome Powell even admitted that the central bank has “crossed a lot of red lines,” but he insisted he’s comfortable with the actions given “this is that situation in which you do that, and you figure it out afterward.”  That is growing caution to the wind, for the market. 

But now enter politics at best and maybe corrupt politicians, the arm twisting began during the 2018 mid-terms. Donald Trump likes low interest rates, and he doesn’t hesitate to let the world know. And to the point, let the Federal Reserve chair, Jerome Powell—know about it.  Trump has publicly intimated the firing of Powell if he doesn’t get the message. Moreover, the White House press said Trump privately suggested that Powell wanted to “turn him into a Hoover. This did not stop until March 10, when Powel was still focused on combatting inflation and a bubble. No Pressure hey?

As a side note, there has been a long term debate if the Fed favors the banks and wall street not the public and the economy, with their focus on inflation. The logic of which ends with the conflicting goals of finance and the economy, banking vs workers.

Since 1980 it has been a balancing act but the diminishing bargaining power of workers resulting in the widest gap between the mega-wealthy and the poor being the greatest on the globe. It is this more recent rising economic inequality that is being called the second Gilded Age.

(The Gilded Age is defined as the time between the Civil War and World War I during which the U.S. population and economy grew quickly, there was a lot of political corruption and corporate financial misdealings and many wealthy people lived very fancy lives.)

The conflict as pointed out above is when the Fed raises interest rates, job creation declines, and the ability of workers to obtain their fair share of economic growth is undercut. A monetary policy that is accountable to working people would likely be less accepting of unemployment and more tolerant of potential inflation.

But the jawboning did not end with Powel, on March 17th  Trump told the Treasury to go big. According to the Times, “We want to go big,” Mr. Trump said at a news conference at the White House, adding that he had instructed the Treasury secretary, Steven Mnuchin, to introduce measures that would provide more immediate economic support than the payroll tax cut holiday he had been promoting.”

Leading to The U.S. Treasury’s official figure for the debt of the federal government on May 27, 2020, is $25.6 trillion. So how does the government unwind its portfolio?  How is the debt resolved?  Taxes? Devaluation of the currency?

Here are the market facts, since 1900, the direction of stock prices in the two months prior to Election Day has predicted the winner 89.3% of the time- that would be from September. However, Sam Stoval at S&P did the same study and found “Looking at S&P 500 prices since 1900, he found that the market action between July 31 and October 31 has correctly forecast the outcome of the presidential campaign 82% of the time.”

So the change of political regime discounting begins in July. It did so in 2016 have a look. However, the work we did and published here show peaks happening in the current time frame.

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. 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.
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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