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May 9, 2022

Volatility Reports 5/9/22 Risk Assessment

Fidelity Investments TV Spot, ‘The Planning Effect: Future Generations’

Feature this scene: A couple enjoys a gathering with loved ones. An ad reader comes in to explain that the event represents how it feels to have financial assurance and a wealth plan with the right balance of risk and reward will get you there.

Traditional thinking by the industry purporting risk and reward are somehow a balancing act. The higher the risk the higher the potential reward, which is a bunch of tripe While I can’t expect everyone I contact to understand this, not everyone sees like Paul Tudor Jones or George Soros or Stanley Druckenmiller.

But, I can expect a few of you to get it, break out of the envelope the industry has made for you to understand you can take 10% of your investment account – for one tactical example – invest it with timing in low-risk high reward trades. Make 300% plus on that 10% of your account therefore 30% on your entire account, beating the market’s average buy and hold return of 11% per year where you will need to ride out bear markets.

Select trading ideas on your smartphone that finds lower risk higher reward trades with the above policy in mind.  Only $10/month plus incentives for winning trades that exceed a predetermined threshold.

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May 2, 2022

Volatility Reports 5/2/22

If Providence is the basis of seeing the future, does it follow that the majority of vendors on Wall Street are atheists?

“We will only prosper if we relentlessly search for nothing but the truth, otherwise the truth will find us through volatility.”

MarketMap™  issue #12 outlined the scenario that persist since January 1, 2022. The topping process began in mid-May and many shares made their nominal highs in the second half of 2021 and with the Nikkei topping on 9/18/21 and the US averages peaking with the FAANG Index on 11/4/21, the Russell on 11/8/21,  the leadership average NASDAQ 11/19/21, and the Dow and S&P 1/4/22.

Ahh, the world is not perfect and confuses some Perma bulls, please excuse the snarky comment, but if you are more than a manager of a mom and pop account for the long term and the thought of common stock or the market gives you a brain cramp, maybe you should be a buy and hold and learn to suffer through the max drawdown.

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April 17, 2022

Volatility Reports 4/18/22

“This is it make no mistake where you are..”

While the bulls could try to pull an Easter bunny out of their hat, the Contrary Thinker does not see their ability to do that here.

The top chart of the SPY has the diffusion index under it which measures the new numbers of new 52-week highs vs new 52-week lows.

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April 3, 2022

Volatility Reports 4/4/22

Everyone remains bullish, it’s literally in every Twitter Facebook, and LinkedIn post.

Social media post content and full-length articles remain bullish. One out of ten headlines or titles is a “got to buy something” suggestion; even the bears are buying utilities. The notion of having to be invested all of the time has not abated and until it does the pool of late money buying “something is wide and deep for pockets of big profits to sell into.

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March 28, 2022

Volatility Reports 3/28/22 “The Bust”

How can something come from nothing? Or what happens when a one billion dollar industry goes bust?

The Dot.Com Industry did it, 22 1/2 years ago when that industry chased up the advertising cost on the SuperBowl broadcast to make a “brand” for themselves. All of that led to a bust.

The dot-com bubble was a rapid rise in U.S. technology stock equity valuations fueled by investments in Internet-based companies in the late 1990s. The value of equity markets grew exponentially during the dot-com bubble, with the Nasdaq rising from under 1,000 to more than 5,000 between 1995 and 2000. Today the Crypto Industry has done the same thing and worse it has produced an industry with no economic benefit and produce what they call an asset – something with value – out of thin air.

Blockchain technology is not revolutionary and disruptive except in the sense that it has taken to a whole new level the gullibility of just not the public but the professionals that have fallen in behind it. This new industry is nothing more than a meaningless marketing term representing an overhyped concept.

Unlike the smartphone and other high-tech gadgets, the world of crypto is living on a dream on the left-hand side of “the chasm.”  There are many reasons why they will call fall into the chasm. One is volatility which makes it impossible to regard Bitcoin and other cryptocurrencies as useful for anything other than speculation. NOT a replacement for a fiat currency as they have promoted from day one.

Besides being too changeable that the merchant would have to have such a wide bid to offer spread to cover their risk the market will not accept it until it becomes STABLE, which is not going to happen, until after the crash, when markets go flat after a dead cat bounce.

Furthermore, the big tout was limited supply vs the worldwide float of fiat currencies. Two key problems with that are the crypto factories do not have the full faith and taxing power of a government to back up their so-called coins. Plus there is no limited supply as there are opportunists every day making these things out of thin air to the extent that there are more than 10,000 cryptocurrencies in existence, and more coming every day.

All over social media and financial news, they are throwing around the idea of contrarian like it’s so easy to be one, while the bullish following on BTC&Co is cult-like and they are holding on for dear life, either to the pseudo investment or to their opinion.

All the “line drawers” that call themselves analysis in the Tweetershphere are rabid about a breakout they see in this market. Rather, the breakout is a little post triangle break that is finishing a simple correction retracing a Fibonacci 38% of the decline.

What is keen about the advance is the time factor is for a reversal today and for cycles to pull the market lower into a minor low mid to late April. 

It’s a phenomenon I have seen since the gold and oil boom in the early 80s and investors and traders – after they crashed – were still holding on and wanted to buy more twenty years later. At the beginning of the 1980s, inflation was a “way of life” and was never going to go away, never.  How the long cycles impact the markets. Today the crypto cult is even ignoring the downtrend and the underlying facts that they are actions are based on greed, and nothing rational.

The bigger problem is what happens when a billion-dollar industry goes bust?

“…both fiscal and monetary policy has painted America’s economy into a corner, a corner that has no alternatives that are positive to bail out the market and the economy when the next down cycle occurs.”  There will be no soft landing. 

So the cycles from the 2020 crash are now translated out a few years, they kicked the can down the road. But the Fed seems determined to bring things “back to normal.” Yet everyone knows that the market does not care about that. Crammer confirm that on his CNBC

I just watched a 3-minute video of a Crammer rant self-contradicting himself along the way and he’s happy with the bear market being over and what everyone is focused on “greed”.

From Covid19 in China, the Fed’s more hawkish rate policy, the price of oil, and the rate of inflation plus the war in Ukraine. The Russian threat of escalation. But the market since the invasion started on the 24th of February does not care.

So what are we missing? BTC&Co going bust.

Key stocks on the monitor list as leading indicators of the industry getting ready to puke are

The key market players are listed in the report with their revenues, sales, and strategies are Advanced Micro Devices Inc., NVIDIA Corporation,  Intel Corporation, Microsoft Corporation, Coinbase Ltd.

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Country Thinking is about letting go of traditional ways of thinking, the commonplace that no longer serves you well in investing and trading. Building from the truth, from first principles the robust into anti-fragile. Thanks in advance for your consideration, I look ahead to working with you for the duration.

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

March 20, 2022

Volatility Reports 3/21/22

Meaningless Facts

Without context analogical inferences have little meaning. From the get-go, analogies have a handy cap of no grounding in first principles.

So, after 2 ½ months of a downturn, the majority of retail types are grasping at straws confusing time periods and purporting long-term implications from short-term models.

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March 10, 2022

Volatility Reports 3/10/22

 

There are a number of trade ideas you can gather from this chart.

I have confidence in my work here and with overall cycles going into their second half, which is typically a period of pro-directional action. That is one day is lower the next day is down and the following day is down, into a mini climatic low. Long bar days are expected, greater than 4%.

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March 3, 2022

Volatility Reports 3/3/22

We are all traders of Volatility

The primary source of performance for capital managers is (1) asset selection and (2) short volatility or short correlation exposure. When the asset groups’ diversification converges on one (1) all that remains is being “short volatility” for the majority.  Selection does not matter. In other words, capital managers are long everything! Hence it is not a shock that the majority underperform during a crisis.

The emergence of the components for variance swaps to hedge is just one example of a bull market in fear since 2008-2009 but also it requires the use of “market timing” to be effective.

Without getting into the methods of “short variance swaps” the bottom line is “Regardless of the asset class, the true source of alpha seems to be moving between short and long volatility exposure—the volatility risk process and not the underlying asset.”  Artemis Capital Management

In other words, the method that can achieve Alpha the industry commercializes as unfeasible is market timing!  If you buy into that propaganda by the industry, you are reading the wrong newsletter.

The first chart featured today reveals a number of important factors. With that in mind, here is some background backing up a number of Contrary Thinker’s assertions.

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March 1, 2022

Volatility Reports 3/1/2022

Leading Indicator

the leading risk taker’s market is just about finished here with its countertrend. The Bitcoin bulls can’t see past the end of their nose, but that is fine for those of us with vision and foresight.

I know for many some price-based analysis is just not complex enough, because it does not speculate about the whys and how comes and what the pundits contrive to be the meaningfulness of cryptos. While it’s simply a branding game at this point independent of their practicality, given the multi-millions spent on SuperBowl advertisements. So while they fight it out, one thing we know is that Bitcoin is the premier market for risk takers and traders. As such it is a leading indicator of risk taker’s mood.

That bullish mood is

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February 28, 2022

Volatility Reports 2/28/22

Vice-President Kamala Harris said in her meetings with European leaders, this is “a defining moment” for the future of the world.

The impact of the collapse of the Russian economy is being used as an excuse for the bear market around the world. Rather as Vice President Harris puts it well as a defining moment. How will western-style democracies and western values hold up? In the study of BIG HISTORY, the academics see the current period as a threshold, time will tell.

With that said, my best advice to advisors, investors, and managers is not to be swayed by headlines. The media only sees them as excuses for what the market is doing and it will not be until the end of the trend that the truth is understood.

In the short MartketMap Issue#7a I said that “After the mini panic low 3/23/2020, there was an ADV/DEC ratio buy signal along with an Upvol/DownVol ratio surge buy signal with the long bar days.

However, from the low on 2/24/22, which many of my competitors called a panic there was no such buy signal. Rather the high/low diffusion index on both major markets continued to show distribution. Our featured chart shows the indicator here still holding above 1.00 telling investors there are more new lows than new highs. this indicator is not the only “bearish” indicator in play now, Contrary thinker does not work such tools in a vacuum.

The charts also give clues on a number of issues. The SPY chart shows how old support is not resistance, high lighted in blue; and that price level is coincidental with the Gann 1×1 trend line cross-over. From a trend following point of view, the SPY has broken below the smoothed Bollinger Bands and continues to trade below it, suggesting the trend is down.

From an EWT point of view, each leg of decline is only a first wave, setting up a one-two series, which is almost always the lead up to a waterfall high ROC trend. In this case a downtrend. Last Friday’s rally appears to be a one-day wonder into new resistance, high lighted in blue.

Just as bearish is the NASDAQ comp with a clear five wave structure leading to a wave [1] end on 2/24/28, right in line with MarketMaps COT calendar.

In MarketMap™ 2022- Issue 7a I explained why Friday’s rally was typically a one day wonder:

“One of the elements of a bull market, especially in the early stages, there are one-day long bar declines, shakeouts that at most suggest a 10% correction. they happen 99% of the time within a few days of a high pivot.”  I went on to say that,

“The inverse is true of a bear market, that near a low pivot – especially one that is being called a panic when there is no evidence of a panic – a one-day wonder is a natural occurrence to shake out the weak hands and keep the Perma bulls compliant.

Contrary Thinker’s expectations are the same. Both time and price suggest that without a bell ringing panic extreme, there is more decline.  I stated that “A minor recovery is expected into March 3-6. From that COT high the decline remains on track for a low in mid to late summer and panic in May is possible.”

Any recovery early this week will be used to add back closed-out mega-profits from late last week plus new bearish ideas.

The decline from here should last two trading weeks with the second week prone to long bar declines, something that exceeds 4%, which has not been seen yet.

Check-in with Trade Exchange for new ideas, they hit there first. An updated user doc is forthcoming.

Are you getting your investment advice from memes? Leave the public domain. Are 30 years of successful experience worth $10/month? Use this URL and put it in your pocket – smartphone and other handheld devices.

Trade-Ideas? Just $10/month for all of them! Use your smartphone here, clip and paste: https://tradeexchange.app.link/jack_cahn

Great and Many Thanks,

Jack F. Cahn, CMT

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 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.

— Contrary Thinker does not refund policy all sales are the finale.

–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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