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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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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

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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 16, 2020

Volatility Reports 12/16/2020 FANG & Nikkei Dow

Horizontal triangles present holiday opportunities.

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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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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 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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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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