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July 6, 2021

Volatility Reports 7/7/21 US Dollar

Demand for the USD from all corners of the world is expected to increase with economic opportunities created by Biden’s “Build it Back Better” plans.

Contrary Thinker is bullish on the buck since its double bottom in 2014. Along the way, I have pointed out that the Euro was a farce based on numerous sovereign nations forming a union because their proximity would not overcome their differences in culture and language and leadership. The central bank for the EU has its own QE issues to deal with and a lack of economic recovery hangover because of the austerity measures they took after the WFC. To date, they are still trying to catch up.

But that is the speculation behinds the bearish Euro bullish Dollar outlook. What is more important is what the market is saying.

The features three window screen grab shown here moves from left to right, long term monthly bar to intermediate-term weekly bar to short term daily bar.  The red shaded area is the sell-off into August of last year, reaching a panic extreme. When TEM hits Rule#1 like that, it calls for a flat, choppy period to follow. The proverbial dead cat bounce after a panic sell-off. When TEM hits rule#1, 90% of the time or better, expect a low to be in place, and the market builds a new base.

Like a panic top, it is a change of trend, and the emotional pain that short positions are in will give them the impetus to flip out of their positions. The emotional selling started at 94. Thus the market will move to this area now without much problem. Why now?

My volatility model – TEM – for both the weekly and daily bar have cycled to new extremes that suggest a trending move will pick up a following on the next breakout or MA crossover. The latter has happened on the weekly bar, and my AlphaTracking MA gave a standalone buy signal three weeks ago.

However, what is more, important is the S-T daily bar is on a fresh and leading TE#2, setting up the spring for a breakout. I have included the data window in the chart so traders can see the breakout levels. A move above 92.80 is bullish, and as stated above, a move to 94 should be easy.

While the relationship between Gold and the USD has typically and very publically been one of negative correlation, it is not a necessity. Furthermore, a strong dollar does not put the bash on commodity-based inflation. Regarding the latter, the demand for raw materials priced in dollars is not the same as monetary-based inflation, which all the gold bugs and inflationists can talk about.

Bottom line and current working positions and suggestions.

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May 28, 2021

Volatility Reports 5/28/21 USD

The FX log jam is breaking.

Part of my checklist for an ultimate peak in the risk markets was for the ultimate risk market to peak and fall on its face. The bitcoin did so, and it did so based on our outlook 4/16/21. Nice call Jack, even though I say so myself. The decline thus far in the early stages of a new bear market, sell rallies long term,  if a day trader is careful buying dips now as the panic low is about worked off may continue to work before the trading range comes to an end. But more on that in the next BTC commentary.

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May 12, 2021

Volatility Reports 5/12/21

If you did not read the post from 5/7/21, I suggest that you do, and I will not repeat it here. Instead, focus on the leadership of the bear markets. https://contrarythinker.com/volatility-reports-5-7-21/

The Dow and the S&P are the stalwarts of the old yet great bull market and showed cracks yesterday right on cue with MarketMap’s COT date expected on the 11th +/- a day.  CT will wait for at least a few hours before we jump on the short side regarding the old guard.

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May 7, 2021

Volatility Reports 5/7/21

It is this last bit that the majority do not get. Rather it’s all about the forecast. The methods and systems often repeat enough that it can not be, by chance, some random event. It’s a simple understanding – like life insurance or a casualty insurance underwriter – to expect losses. The actuaries expect some people to die young. Trader Vic Sporandio teaches the idea of “actuarial thinking” in his approach.

Regarding the market, when we have an “ideal” set up over the long term, the big gains will more than outweigh the small losses. That’s why P.T.Jones and Stan Druckenmiller have outstanding returns. They wait for their perfect – ideal – set up that provides a 25 to 1 opportunity to risk where they can be wrong ten times in a row and still nail it in number 11. Add on top of that Turtle Contract/Share sizing, and you have Alpha.

Too many, if not 90% of investors, managers, and traders hear or read the rationale behind a market or the story behind a stock, all of which are to buy, bullish, for the assets to go up. It’s always happening now because the industry is programmed that way. If not by the sales hyperbole, it’s by the transactional nature of the industry. It’s all about the sizzle, not the steak.

Whereas being able to read the market language provides the analyst and his advisory group of clients and capital managers the steak.

With that in mind, here is the scenario based on a combination of MartetMap 2021 Time Factors and risk assessment with Volalaity Reports dynamics timing.

The Russell 2000 sets up as the low-risk entry because it is on the right-hand side of the ATH or 52-week high pivot. That allows a near buy stop placement. Also, the Volatility Model is telling a story that the RTY is ready for a waterfall trend, a high rate of change directional trend.

The close Thursday at 2238.50 puts the market above these triggers clustered around 2325-2329. Obviously, a day trader would have his bands on the short bars. Here it is on the daily bar for an S-T trade.

The following chart of Russell’s implied volatility reveals a few items that are meaning full. One is the seven-year base and breakout of volatility in February and March of 2020.

The recent 2021 suppression of its volatility testing the seven-year base and holding. Contrary Thinker can also see the potential Bull Trap with RVX ready for an S-T short squeeze. To be clear, Contrary Thinker does not expect a crash from the high, and there may be a mini panic low in late May. the above

The Time Factor

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May 3, 2021

MarketMap-2021 Annual Scenario Planner Issue #10

Too many laugh when they read ” Sell in May and Walk Away.”

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April 30, 2021

Volatility Reports 4/30/21

Trade the Break

Short Term the stock indices set up for a run, for a day or more. TEM on the three indices shown here provides the context for a forceful trend in the direction of the next break or trend following signal. To be clear, failures to break or to hold support should pick up selling as well.

The charts give an idea of where breaks, failures/reversals, and breakdowns would be triggered. The S-T tidal system is long, as indicated by the blue arrow. As pointed out inverted cycles are normally rapid affairs. So a breakdown here would be a long bar on the day, if not today then early next week. 

The next chart highlights Short Volatility Futures funds. They have just finished off a period of panic short selling. The VX inverse ETF – SVXY – goes up as the price of VX declines.

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April 28, 2021

Volatility Reports 4/28/21 World Index net the USA

Bears are trembling with fear and falling like flies. Bear ETFs are making new lows while their bullish counter ETFs are still 5 to 10% off their ATHs.

From our Contrarian vantage point, that is a good thing and supported by the rest of the world either not confirming the highs set by the S&P or finishing off their advances from the March 2020 low in Long Term (L-T) panic buying as highlighted in my first featured chart.

The chart helps the longer-term trader put the market into a completed cycle perspective. What started at a panic selling low from October 2008 to May 2009 to a panic buying high from January 2021 to date. The World Index, not including the USA, also by various ETW counts, has completed a cycle as well.

This top chart portrays it as an irregular topping process, which implies two things. One, the secular bull market is still intact once the correction is over. But – and you knew there was a but coming – the next leg down is a (C) wave, which is the same form of decline as the first quarter 2020 decline. Moreover, it is of a larger proportion with risk from the 2021 resistance zone shown from 504 to 578 to the support zone for 2021 that runs from 207 to 278 or 62%—a fib-ratio to boot.

The next featured chart shows an alternate pattern, an expanding triangle, which puts the market’s March low in a 4th wave position and makes the advance from the March 2020 terminal, the end of the secular bull from 1974, or the 90-year cycle low of the 1930s.

The post triangle rally was a neat 1.618 of the triangle’s width, putting it right on target today.

Lastly, the Technical Event Matrix (volatility modeling) provides the same clues that a panic – irrational – buying period is putting a major top in place. CT’s volatility of implied volatility shows that the background is at an extreme level of complacency, measured by %BB-VIX (left-hand window).

Not good if you are on a pub crawl with your trading buddies and caught up in the trend is your friend mentality.

The vertical lines highlighted when the last extremes were reached at both tops and bottoms and that the same setup is happening in the current time frame.

 

Regarding the “Time Factor,” MarketMap-2021 Issue #9 will be out by the end of the week. In the meantime, refer to the map shown below for members only.

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April 27, 2021

MarketMap-2021 Issue#9 Gold/USD

JG Wentworth Tells it like it is: “It’s My Money & I Need It Now.”

or

In Jerry Maguire’s words, “Show me the money.”

Immediate gratifications never go out of style. Everyone is a day trader, a scalper, even if they have a long-term investment time horizon. 

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April 25, 2021

Volatility Reports 4/26/21 Bitcoin

A top is in place, and a more decline is expected.

Volatility Report of 4/16/21 did not mix words when it said, “The volatility background provides a setup for a 30% to an 80% fall in the next 30 to 45 days.” That forecast was based on both our timing method and our dynamics model. Our current work expects the decline to pick up speed, not based on some wild guess to get publicity. Rather Contrary Thinker’s methods, which include the curation of social media content all of this is excited about the “new game” on the street and speculating about what it is going to do next and why. All of which comes across as “… throwing it at the wall to see what sticks.”

For the EWT petitioner, the decline unfolded in a nice and neat five-wave structure, calling the larger trend down. Thus far, the decline has only been 25% in a week, which is certainly not the makings of a currency unless the vendors have a wide bid/offer spread to cover their risk and dispose of the digital currency at the time of the transaction. That statement can be expended to all the cryptos as not being a substitute for money.

I would add that it will not look much like a hedge when the profit takers are done.

The breakdown level of 58k was taken out on the open. After putting in a near term now at 47.5k, the remainder of the initial targets remain 45k, 39k, 33k, and 25k. The legend of Bitcoin will not go away for the next 20 years. The smoke dream of pennies into tens of thousands was last born in the late 1920s, and the hat cycle is repeating. The question is how many banks – which to all accounts and headlines came to the game late, will have deep enough pockets to hold for the very long term and still maintain client reserves. 

It is worth repeating that Contrary Thinker sees BTC as the front runner of ALL “risk taker’s” markets. It is the bell-weather. So goes BTC, so goes the Dow Jones, the S&P, and the world indices.

The featured chart inserted below shows part of our time factor research. The 1 year and a quarter cycle – 65 weeks- began cresting back in January of this year. As with all bullish cycles, it is right hand translated, skewed to the right for its nominal price high, which gives it little time to make it to its cycle low due in June or July.

The bottom line in the face of all the sky is falling Hennypennies, the US dollar is the world reserve currency, and nothing will change that except that the alternatives will look even more fragile. Since the Plaza Accord, the death of the dollar has been the rallying cry for any publication trying to get a readership. After 40 years of neo-liberal currency debasement, the green back-ended its secular bear market in 2011. Today the USA is on the verge of real economic growth, and the demand for dollars for infrastructure will push the USD higher. Plus,  offshore currencies will find their way into this growth, into US capital.


Get the next three issues of MarketMap-2021 – for the time factor. Take the 45-day subscription trial, which includes the eBook of MarketMap’s 2021/22 cycles, the Special Report “Traits of a Market Panic” to make a Fortune PLUS eligible for a long-term discount when you subscribe. 


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 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

April 22, 2021

Volatility Reports 4/22/2021 Aussie Buck

Signs of “reinflation” are clear. One of them is the Aussie buck leading the way.

What is also clear is the AUD had finished its first leg up in EWT terms, with a five-wave structure in a nice and neat ascending channel. That channel has been broken and a potential head and shoulders top is tracing out the right-hand side of the pivot.

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