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    Volatility Report

June 24, 2019

The Good Bad Attitude, Contrary Thinking

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June 11, 2019

Contrary Thinker “beware of froth, its time to sell and hedge.”

At the end of May, the old guard was crowing about the completion of a head and shoulders top. Cramer and associates plus a chorus of perm-a-bulls started to become bearish when the market gapped lower. I pointed out that traditional TA could not make that call with a higher chance of success than 50/50 because the break would not get carry over without consideration of the context behind it.

I pointed out that the short-term background had the market’s May decline labeled old, laboring and due for a change on June 2, and the breakdown of the head and shoulders was a trap. And now the man who would be a guru says the market is frothy. Well, he is right, but he is still a perm-a-bull. Here is what he was quoted as saying:

“…watch now CNBC’s Jim Cramer said Monday it’s a tough time to put new money into stocks, even as the market posts gains. The Dow Jones Industrial Average added more than 78 points Monday, the S&P 500 expanded 0.47% and the Nasdaq Composite moved up 1.05%. Cramer said investors […]  Click here to view original web page at Cramer: Beware of froth — ‘it may be too late to put new money to work’

Well, there may be a leak in my membership, which is talking to Jim’s TA, that can be fixed. However, all of the primary stock market averages on Monday hit panic buying extreme. My Technical Event Model reached a rule #1, an extreme that calls for a change of trend because of emotional buyers are easy to flip.

The chart here also reveals that time cycle flipped on the Dow ( and others ) to the short side at the low – the odds and other risk/reward stats for this 100% time and price based strategy is on the left-hand side, and there is no money management used. It’s purely technical.

With the markets in a state of panic buying, aka FOMO, and cycles pointing lower into the end of June, ContraryThinker believes that Cramer is right that the market is frothy. However, it’s just not the short term, it is also the Intermediate and Long Term context that supports the downtrend from late April.

June 10, 2019

Stanley F. Druckenmiller “We Are In Worse Shape For A Recession Now”

CNBC Exclusive: CNBC Excepts: Billionaire hedge fund manager Stanley F. Druckenmiller on CNBC ‘s “Squawk Box” Today WHEN: Today, Friday, June 7, 2019 WHERE: CNBC’s “ Squawk Box ” The following are excerpts from the unofficial transcript of a CNBC EXCLUSIVE interview with Billionaire hedge fund manager Stanley F. […]

Stanley is someone who takes what the legends know literally, as opposed the 99% of all the social media garbage you read, esp on Facebook and Twitter.  More on that in a moment.

However, January 18, 2018, Market Map told you what  Mr. Drukenmiller is saying now, no harm no foul stocks have done nothing since that date!

And in the   January 23, 2018, in my MarketMap 2018 update, I said ” …the market is in a cluster of time windows likely to lead to a high pivot price, confirmed by a sizable decline %5 plus – established by our big swing (multi-month) systems sell (taking profits) and sell short signals before the end of the month. ” Just three days from the first of three peaks in the topping process.

In the February 12, 2018 publication I said

“The scenario was for the failed new high in late August early September, but as the January COT date was early by ten days. Now it looks like the peak will come at the end of the calendar month leading to a sell-off into mid-November.”

In the Volatility Report dated September 24, 2018, posted this table with dates for the peaks; and the maximum for the Dow was 10/3/2018. I concluded that brief expecting:

I concluded that “Single day risk measured by the Dow is 2000 points and risk going into November is at least 4,000 Dow points.”  Over the three months, the Dow gave up 5,240 points into December 24, 2018.

This topping process has been a gift, with the third peak hitting as a failed new high by the Dow.

Volatility Report dated April 23, 2019,

I laid it out this way ”  Traders should be on their toes for signs of a pivotal high going into the next change of trend window ideally on May 6 +/- 2 days but the leading edge on the 29th of April. Next Tuesday. Until that time, low volatility.”

The various significant indices peaked from April 29 into May 1 for the NASDAQ  and declined 7%, into a Short term low pivoted on the first working day of June.

“From an EWT point of view, the decline from the late April early May peak may have just now finished off its first S-T leg down, allowing for a retracement of .236 to .382. ”  I said on June 2, but the rally has been a high rate of change affair that my volatility model – TEM – supported for the three months downtrend at the time. However, the rally did not match the kick off surge back at the beginning of 2019. The type of momentum surge that Marty Zweig discovered to lead to more advancing markets. But this June rally has failed to live up to  same big “internal bullish ratios.”

The Bulls have one more day to give it a go because the markets are up against it now. Regarding Stanley well: 

What you learn from the great ones is good risk management is not to take a risk. Again 90% of managers hear that has rhetoric, just words. Where in, it is the truth that any good card player will tell you, if you don’t have the cards to win, don’t bet on the “if come.” And when you are on a winning hand, you go for the juggler.  Just ask Stanley, who is now in cash or kind.

p.s. I am not a social kind of person, subscribe to the service. Here is a half price offer, I’m desperate the market is booming!

 

May 30, 2019

After a series of bullish failures cycles flip to short side next week

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May 21, 2019

Oil prices rise on news that OPEC could extend production cuts

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May 7, 2019

Wall St. analysts believe the retail sector can withstand US-China trade war issues

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April 8, 2019

Volatility Report April 8, 2019

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March 29, 2019

The Art of War

The best sources of ideas that should be incorporated into everyman’s investment and the trading plan comes and goes like adolescence fades. They ebb and flow along with the long very social-cultural mentality behind the markets.

The Art of War by  Sun Tzu

THE OLDEST MILITARY TREATISE IN THE WORLD and one referenced by Vladimir Putin regarding his annexation of Chiema. When he accomplished his goals without a gun being fired.

The study of military strategy finds identical usage in poker and trading. The lowest risk / highest reward approach in strategies and tactics used in poker and trading is not any different than the general’s approach to war. The best of the best manage their capital as if it was a battle, one that promotes the idea of only funding positions that have a high probability of winning, and once into that position to leverage up maximize profits.

 

Here is a concept used on the battlefield and made successful by King Frederick II of Prussia. It is called the “oblique order attack.”

The oblique order is a military tactic whereby an attacking army focuses its forces to attack a single enemy flank. However, the general concentrates the majority of his strength on one flank and uses the remainder of his troops to fix the enemy line.

The strength flank would then create an angled or oblique formation, and attack the strongest flank of the enemy with a concentration of force.

Once the critical flank was secure, the commander would wheel the troops 90 degrees to roll up the enemy line -this is what I call getting all your strategy’s ducks – setups – in a row – and the angled formation would continue to advance to crush the opponent.

The echelons not involved in the assault served the important function of holding the rival army in check by remaining defensive and threatening, thus offering protection to the attacking echelons by keeping the enemy force occupied.

It’s how and when investors and traders engage their systems based on risk and reward forecast. The majority don’t get this for many reasons, one is the transactional indoctrination they get from all sources.

So while building systems on robust methods are the preferred approach, the strategies all still have great periods and drawdowns; and these periods can be predicted. It sure reduces activity hence gets little to no attention by the industry.

In my mind, this is one of the best methods of controlling risk and maximizing profits. So in this battle for investment survival, “never interrupt the enemy when he is making a mistake.” Let them continue and sit and wait patiently for you low-risk high reward opportunity.

In poker, you let them rise into your superior hand.  If you are in 100% or max percent cash allowed by policy since the double peaks of 2018 you have lost very little based on the 200 day average prices are only 2.7% above it and you are well positioned to re-enter at prices 30% lower and you are able to use long Volatility systems to add to your returns over the next two years.

more on systems and tactics in the next few blog post.

my best,

Jack

 

March 23, 2019

Volatility Report FX March 15, 2019

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March 22, 2019

Volatility Report March 16, 2019

Precious Metals

Everyone in the Twittersphere is jumping up and down about the Bullish triangle set up in the precious metal along with speculation on how it breaks out will negatively impact the yen and the dollar, as gold is the safe harbor for a famous stock market crash.

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