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April 17, 2021

Volatility Reports 4/19/2021 FANG+

The way the head goes, the body goes.

When I coached Jr. High School football in the states, one factor that was drilled into the offensive lineman’s behavior was to drive the head in the direction front-rower wanted the defensive player to move. The same holds in the stock market averages. The way the leadership goes in the market will follow in time.

Furthermore, as mentioned on these pages, the bigger the profits, the larger will they fall when trend-following systems kick in.  Contrary Thinker uses the Fang+ index as described here to keep track of the leadership in this cycle, the one that began on March 9, 2009.

The NYSE FANG+ index is equal-weighted. At launch, five core FANG stocks, including Facebook, Apple, Amazon, Netflix, Alphabet’s Google, plus another five actively traded technology growth stocks — Alibaba, Baidu, NVIDIA, Tesla, and Twitter.

The first chart in our featured gallery is the FANG+ index clearly showing a non-confirmation of a new high putting it out of gear with the ATHs by the Dow and S&P. Such a set up leaves the “Generals”  open to grave failure, and failures are dealt with harshly by investors and traders.

The middle window clearly reveals a similar top being made now on a Technical Event #3, like the primary high pivot 2/16/21 (a COT from MarketMap’s cycle’s table). Such a condition suggests the market background is feeble and due for a change. As you can see, the market’s potential secondary high is being rebuffed by Intermediate (I-T) (monthly) resistance starting at 7,023.00. Taking out last week’s lows of 6,862 would be a bearish sign.

Furthermore, the breakdown would gather a following because the I-T volatility modeling supports follow-through on new breaks or trend following signals. Tidal wave – without trend filters – has given a sell signal, as seen in the middle chart. The intraday chart on the right depicts a completed EWT pattern of a second wave rally irregular flat, which has ended.

The markets this week and into the end of April will be asked several demanding questions. For one “can you make a new high?” If so that event sends Contrary Thinker back to the drawing board; however, a new trend following cross under signal would be affirmative for the bearish camp. The same for a break below last week’s low at 6861.00.

Plus, a review of the components of the FANG+ index tells a story of pending weakness across them all, except for one or two on the outside.

To be brief, keep in mind the MarketMap-2021 longer-term scenario planner, if you are a visitor, Contrary Thinker suggests the eBook of MarketMap-2021.

Keep in mind that last week was an S-T change of trend time window where CT was looking for a change from up to down or sideways. Now the trend should turn decidedly lower,  with the next week or two to be lower.

An astute observation came across my inbox

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December 16, 2020

Volatility Reports 12/16/2020 FANG & Nikkei Dow

Horizontal triangles present holiday opportunities.

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November 19, 2020

Volatility Reports 11/19/2020 Pac Rim Equities

The Pac Rim will need to prove itself during the expected worldwide bear market to achieve Alpha longer term.  Contrary Thinker sees it getting that opportunity going into a cyclical bear market now.

The consistent information provided by the Technical Event Model gains in credibility daily. The meaning of TE#1 and #3  is clear as a reliable COT time windows. The long term – monthly bar – of GXC – the ETF traded here that tracks a broad, cap-weighted index of Chinese shares of all cap sizes – shows this clearly. The three TE#3 – in the vertical light blue lines – calls the market’s trend labored, becoming old, feeble, persistent, and due for a change. Unlike TE#1, because of its “persistent” and low volatility nature, there can be some lead time, yet it puts advisors, investors, and managers on the front foot.  So while everyone I have read is marveling at the break to new highs, its background suggests there is a lack of vigor.

Furthermore, when you understand the context first the rest of the technicals fall into place.

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