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November 9, 2021

Volatility Reports 11/9/21

What do we know? What are the facts that are undeniable?

We know that since the Reagan revolution 45 years ago the power regime changed. With that, the fiscal policy of the United States changed. With the 1980 election came a very long-term break from Rooseveltian “New Deal” fiscal policy. By the election of 2020, the major change was clear from the “New Deal”  to the new “Gilded Ages” pro-business laissez-faire now called neoliberal, aka new liberal. What also changed from 1980 to date is the configuration of the house/senate and the president’s parties. Gridlock has been the configuration of governmental power in the majority over the last 40 years.

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November 2, 2021

Volatility Reports 11/2/2021

It’s not the train you hear that will kill you

In my early days, the talk use to be that a good market analysis got off wall street to get away from the pressures of the industry so he/she could form an objective point of view. Well from Gainsville to Sedona many of taken that advice. If distance matters, well living half the time in the land of Oz, the down under, should put me in a superlative environment. Well yea, ok maybe.

But a nearby journo Mark Saunokonoko, a print, online journalist, and feature writer published by the Australian 9News Network “Ten scenarios that could rock the world in 2022.” Where Mark did a good job isolating none market events, outside world events, that could have a dramatic impact on the 13-year-old “Great Bull Market”  Here is his list, my thoughts, and a few others you may have to put your ear to the ground to know something is coming.

He has grouped the ten possible threats this way: ”

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October 27, 2021

Dynamic New Trade Posts

Dynamic Trade Page – Full View Spreadsheets

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October 4, 2021

Volatility Reports

Wedging out a top and TEM both daily bar and weekly bar support an HROC trend.

high beta index trade idea

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September 29, 2021

New Trade Ideas

Top Ten Positions

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September 27, 2021

There are more than 6,500 cryptocurrencies in existence as of September 2021. The bullish case is not based on a limited supply, it’s a matter of branding.

Bitcoin is the bellwether of risk-takers
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September 27, 2021

Volatility Reports 9/27/21

Historical Thresholds are Rare, Hence Money Managers, Investment Advisors, and Economists Tend to Operate and Think in Crowds.

They are comfortable that way justifying why they take risks with the objective of beating the average return of the S&P when max drawdowns are always possible based on their own rationale that no one can time the market?

Instead, let us see what is the market saying as of Friday.

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September 22, 2021

Volatility Reports 9/22/21

Monday it was pointed out that “cycles are lower into the next COT due early this week, the 20th”

To be clear MarketMap – 2021 issue#14 said, “Here is the key if the market blows clear through that date and without any traditional TA calling for a low plus the new TA dynamics timing supporting a forceful trend, the odds will favor the new bear market into mid-October.”

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September 22, 2021

Volatility Reports 9/22/21 CGX and EEM

Typical trend following content is beginning to flood the social media tracks with all the reasons why one should be bearish on the Shanghai Dow.

The execution of our bearish positions began in March 2021 and was filling out in July. Our bearish positions are now up over 50% +/- and we are only halfway there; and will double down on the break (see execution table below.)

While the negativity is over the top, it is clear that at least an I-T cyclical peak has been established in the PacRim and emerging markets; and from China to Nikkei risk is 30%

The top chart is the monthly bar of the…

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September 12, 2021

Volatility Reports 9/13/21

The Rule of Alternation Tells Us to “Expect Something Different” That is one of the many first principles advisors, managers, and traders know but it does not tell us “when.”

But this ebb and flow, this process from motion to rest and back is demarcated. The when is after natural or human-made divisions in time, as the calendar week-month-quarter or the accounting period when the books close, or anniversary dates when cycles begin and end.

So, after the lowest year in volatility -according to the media – 2017 was it; and what proceeded was a change, with a 13% correction in nine trading days from January 26 to February 9, 2018. Followed by a near 20% correction in the fourth quarter of the same year. Something different indeed.

Today, nearly the last quarter of 2021 we have a similar background. Our social media friend Charlie Bilello posted the following stats:

“The S&P 500’s maximum drawdown this year is only 4.2% (closing basis). Going back to 1928 only 3 years have had a smoother ride than 2021: 1964 (-3.5%), 1995 (-2.5%), and 2017 (-2.8%).”

Based on the Rule of Alternation – after 300 days (10 months) without a 5% correction – investors and traders should expect something different after a financially repressed stock market.  But I will throw another factor into the equation. While 2021 thus far has been a low drawdown year, it does not compare to 2017, which was a true low volatility bull market, because 2021 has an undertow of spiking volatility as the first featured chart points out.

The chart is the trailing P&L of our affiliate TMT long-only VX futures scalping system. When the underlying index VIX advances it reflects perceived concern and fear of changeability – normally the changed that is feared is of a decline. However, while the chart reveals the long volatility profit runs when the S&P witnessed corrections and a bear market, it also shows a trend of profits in 2021 with only minor declines with the majority of profits coming from the fear of missing out in the bull market driving spikes higher in the VIX.

This understanding is in gear with Contrary Thinker’s observation that over the last 5 months the advance has been marred by fear buying as measured by the Technical Event Model (TEM) on the month bar. Charts are shown previously on all the majors including the Macro sector Fang Index.

This is also in agreement with the Google Alerts following keywords like “FOMO” and “Stock Market” among others that have spiked to extremes over the same period as seen in this chart from Global Market Perspectives.

Lastly, in recent issues, I have displayed charts of the Skew index reaching historical highs. This index is based on perceived tail risk by big money players. In other words, with their “ear to the ground” they hear a known – unknown coming at the markets and possibly a black swan event, an unknown – unknown.

Staying with the underlying context of the markets the next four window chart tells the story of the current readings of the historical volatility of perceived volatility for each market on a short term (S-T) basis. That jumps off all the charts is the Technical Event Model reaching an extreme rule #2. These signals – setups – as a rule, precede breakouts with carry-over or trends. And here I am talking about breakouts in volatility, in other words, “fear is about to go into a trending mode since that is what the CBOE data measures.

Based on the above, for traders and hedgers that have scalping Algos with Turtle Style contract sizing – esp if filtered by TEM – now is the time to be engaged.

The bottom line in the Volatility Report dated 8/23/21 stated: “The rally into today’s COT is expected to fail and the downtrend that began on the 16th will be capped off on the 23rd and 24th going to an “out of the blue” bear market. iCahn Hedge is engaged, more on that in the last two hours of trading.

Dates Net $26rt per contract No of trades Win Rate
9/10/2021 $6,056.00 6 83.33%
9/7/2021 $314.00 4 50.00%
9/6/2021 ($196.00) 1 0.00%
9/3/2021 ($112.00) 2 0.00%
8/31/2021 ($1,540.00) 4 0.00%
8/26/2021 $3,660.00 7 85.71%
8/24/2021 ($202.00) 2 0.00%
Account Size $7,980.00
$100,000.00 7.98%

The Dow is always our focus as it is a household name and most widely followed. Plus we have data going back to 1889.  What is important to see on the daily Dow chart is the peak came in on the 16th of August, the exact date in the COT table; and the secondary high hit on September 2, the day before a high tide event was expected and early in the week of high COTs. The chart shows this market just not failing to keep up with the S&P but being rejected but intermediate-term resistance followed by the breakdown of its wedge pattern and its lower channel line.

Another daily bar chart of the Dow shows a truncated fifth wave high. It’s more than another way of saying it failed to confirm ATHs with the S&P and Nasdaq, it broke an EWT rule, as such – if it is a failed fifth wave – the old school EWT boys will be jumping on this with massive selling this coming week.

The chart also uses Gann angles to point out target areas for this first phase of decline. Each zone is highlighted in blue and the price levels are cross-checked with CT’s Gann’s excel sheet that projects targets, where the focus is only on the 360-degree target nothing in between. Contrary Thinker likes to see the 360-degree projections nest with the angle crosses seen on the chart. 32,000 should be a walk in the park by Friday.

If you recall how bear markets are structured, if the market does has a long bar day of greater than 5% – a place where banks and funds have their trend following bands that kick in – shortly after the ATH, it is only a correction. If it is a bear (by definition greater than 20%) it will unfold with longer bars following a geomatical expansion.

Historically, the market does not go into any form of panic – aka long bar days greater than 5% until a month after the peak. The Dow is there now, so the pace of the decline is expected to pick up this week. The next meaningful COT is Monday the 20th, but that series of COTs works it way out to the end of the month, September 27. What is key – assuming the above scenario is correct – at the end of this week or over next weekend, CT needs to see where TEM is along with its Panic Index and on all time frames along with an EWT count, with the expectation of an S-T bounce

Trade-Ideas are the same.

Any of the positions that were stopped out does not mean the position is wrong it means the goal is to keep losses small. All of the positions will be reentered. Last week as noted I doubled up on long USD/JPY and short EUR/USD.  More on positions and new entries and re-entries to follow.

Don’t get caught looking the wrong way.  Don’t think all the social media contacts are friends providing solid advice for free. Wouldn’t you rather have four quarters than one hundred pennies? Value who you work with.

The new you is going to cost you. For starters giving up the old you. Join our group without question. 

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