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    Volatility Report (click title for full report)

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 LinkedIn Network

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 converge 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 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 & Trade Exchange

Expect an Encore

Yes, this is at least in part shameless self-promoting. Contrary Thinker is in its comfort zone when it comes to trading ITM long puts and calls. Obviously, the trading team, membership and I want you to have confidence in is accomplished and join.

This screengrab regards the recent trade on Tesla, which did well and I am one of the biggest fans of Elon, he certainly has the “X” factor. But the insider trading thing may bring him down.

Be that as it may, this analysis called the top tick of Tesla when it happened. The featured chart here shows on the monthly bar

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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

February 25, 2022

Volatility Reports 2/25/22

Headlines after the close Thursday “7 of the 11 sectors closed higher. Tech led, gaining 3.42%. Consumer Staples lagged, dropping 1.72%.”

The full-time providers of market information are all in unison after the recovery Thursday. A few point out how sentiment is one-sidedly bearish, which is bullish from a contrarin point of view. but all of them assuming they are professionals as they post this content full time, are bullish.

  1. Russell 2000 digging in at the AVWAP from COVID lows for the 2nd time this year. Along with momo divergence, finally getting some signs of a bottom $IWM
  2. Neutral Sentiment Plunges as Bears Move Back Above 50%
  3. The big difference between today’s reversal and the reversal on the 24th can be summed up in one word… PANIC!  We saw it today, but not on the 24th.
  4. S&P 500 Information Technology 1D  Bullish divergence is displaying at support.
  5. Investors Intelligence Bulls minus Bears is now at 1.2%, nearing those extreme pessimistic levels where we’ve seen bottoms in stocks since the mid-90s, with the exception of 2008.

Also, one thing that has become such a glaring insult to a trained market analyst, strategies and trader is the spitballing that is chronically posted, and to what end is unclear. But #3 above, there was no panic yesterday, not even a mini-panic.

What the good ones know is it’s the consensus of the purported professionals on how one builds a contrarian case.

Also, the bulls are in retreat. Here is a chart posted with the head lines “RSP holding the line.”  The RSP is Invesco’s weighted S&P ETF. But what is clear is how the index broke support, and now he has had to retreat to the next “bar chart” horizontal line. The keyword is the bulls are in “retreat.”

The brief MarketMap™ -2022 Issue#7a sent to members before the open suggested the lower gap open into our COT time window could lead to a reversal on Thursday or Friday.

Yesterday on the opening weakness 1/2 of the bearish option positions took profits and a number of the ETFs some had better than 25% profits and a few laggards were disposed of off.(see Trade Markets App.)

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

Bottom Line and Strategies going into today:

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February 19, 2022

Volatility Reports 2/22/22

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February 17, 2022

Volatility Reports 2/18/22

Don’t get caught in the slope of hope.

The Superbowl baby bitcoins promoting their brand of cryptos rings similar to the Dotcoms paying megabucks for Superbowl advertising space in the 2000 Superbowl, the last time the Rams won the big game.

BTC is the risk-takers market of choice, it is not a hedge. In fact, I saw a headline after it rallied on Tuesday that it was in response to Russia withdrawing troops. So the content providers are not sure what role it plays. 

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