July 27, 2020

Volatility Report 7/27/20 mini Russell

The evidence stacks up that the risk equity markets are on the verge of the next leg of decline.  In the face of  “preemptive” volatility suppression, there is no way the local or the world economy is going to grow its way out of all the debt. The only question that remains is who gets thrown under the bus?

The top chart shows all three-time frames with their EWT counts, the Russells failure to get back above L-T resistance at points [5], and (2) and the failure to get above I-T resistance at point 2 or (3). Regarding that failure, it was a class book retracement of 62% of a fifth wave extension to the beginning of that excitation, within the range of wave “iv” of lesser degree.  Lastly in EW terms, the daily bar reveals how the most recent rally by the Russell failed to hold above S-T resistance.

The key chart above from a dynamics point of view is the weekly chart that three weeks ago reached a Technical Event #2 that reflects a tension behind the market that supports an I-T dynamic trend. The vast majority of cases it is a leading indicator of such dynamics.  While long term the background remains on the brink of renewed panic, that is emotionally torn levels reached in March that have not been worked off that investors’ time horizon.  The trigger should be the daily bar, the S-T, which at the point of failure hit a TE#3. A situation that called the uptrend feeble, laboring, low volatility, and due for a change.

Supporting A new term trigger in long volatility is our volatility of volatility model TEM of the Russell’s implied volatility data has hit a near-identical configuration as it did in late September 2018, preceding the Xmas debacle. The chart on the right is the daily Russell VX that is in line with the daily bar of the Russell itself, that repressed volatility that is persistent but due for a change. The Russell VX is sitting on S-T and L-T support, its time for change to succeed or fail.

Unless there is a two standard deviation gap higher on the open today – 7/27/20 – the aggressive hedge system on the RTY will be engaged starting as always with a minimum lot size relative to your account size.

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Back Story

“Stupid And Ridiculous”: Rabobank Says The Fed Will Cause Everything To Come Crashing Down In Epic Ruin

Click here to view original web page at “Stupid And Ridiculous”: Rabobank Says The Fed Will Cause Everything To Come Crashing Down In Epic Ruin

Submitted by Michael Every of Rabobank

Could we please have the intellectual honesty just to admit the system as it exists today functions to give more money to ultra-rich people? This is no longer a ‘free market system’. Water does not find its own level. It is channelled through canals cut by an establishment, and some fields are watered very well and others left arid. This is not ‘capitalism’ as anyone teaches or models it, where money is made from productively investing in making things. It is speculative financial-capitalism, where money is made by watching money being made by central banks, which is then channelled into the stock of firms who often don’t make things. Given the homilies that central banks are now coming out with about inequality, one could even say it is even oligarchy excreting noblesse oblige. Yet perhaps it is even worse: central banks saying “Let them eat stocks.”

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Great and Many Thanks,

Jack F. Cahn, CMT

A Thinking Man’s Trader Since 1989,

Copyright 1989-2018

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