• Background Image

    CT Journal

    Volatility Report

November 2, 2018

Yenning for an Opportunity

Japanese Yen FX

If you liked the 90’s the yen may be a flashback to the bull run in the last 90’s. The rules are, to follow a  buying surge because they almost always pick up a following.

The last four times %BB-Oscillator broke above .72 there was a multi-month advance. When %BB moves above .72 it is a momentum surge caused by the market’s realization of some bullish underlying fact that kicks off the trend. In this first chart, the length of the trend after the signals presented long-term opportunities for bull trading.

The context this buy signal occurred in supports a forceful trend. The Technical Event Matrix is registering twos for all three-time horizons. Technical Events Rule #2  precedes trending moves in most cases and provide a bias to trend following types of systems.

There are some other triggers to go along with the %BB-Osc signal. The triangle pattern – while it may not be a valid triangle in EWT terms – has the historical volatility background that supports it. In other words, a move above the descending trend line would be a breakout.

Furthermore, if the yen can get above the high end of the 20-year base, there is a point and figure count or measured move that targets 180.00 The base and triangle both project 160 to 180 for the USDJPY, a buying power for the yen not seen since 1995.

Along with the application of trend following systems to the yen, here are some bullish ETFs for considerations.

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 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  My indicators and strategies can be withdrawn for private use without notice, at any time.

— 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 to your financial situation. Use only risk capital when trading futures or options

NO WARRANTY / NO REFUND. Contrary Thinker   MAKES NO WARRANTIES, EXPRESS OR IMPLIED, On ITS PRODUCTS AND At this moment EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CBI BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY  PORTION OF ITS PRODUCTS.

October 31, 2018

Volatility Report October 31, 2018

S&P ENERGY SECTOR

Looking at XLE and $IXE are presenting trading opportunities seen as low risk, let me explain.
This S&P Sector provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries.

You need to login to view the rest of the content. Please . Not a Member? Join Us
October 29, 2018

Contrary Thinker Market Review

You need to login to view this content. Please . Not a Member? Join Us
October 23, 2018

Market Timing is Dead

If irony evades you, you are in the majority, heads up.

Contrary Thinkers know,” the market programs the investor to do just the opposite of what he should be doing.” Contrary Thinkers also know that investors are not hard-wired to fail at achieving alpha, like so many others, would like you to believe. Its all a matter of being a Contrarian. Read More

October 22, 2018

Fanng stocks losing their bite

It is becoming more doubtful the bell weather Fanng stocks will reverse a series of sell signals from the high pivots in September. Failures to hold new intermediate term (IT) support along with a break below classic neckline formations add to the bearish outlook. The red arrows hight light these breakdowns. Both Amazon and  Google broke below I-T support and continue to trade under that level, a bearish indication.

GOOG is sitting on long-term (L-T) support (old L-T resistance) where the inability of this market to get back above this level would further the bearish outlook.

One of our favorite shorts is Netflix.  Of interest in the above daily bar chart is the 100 point risk the stock has until it reaches the high side of our L-T support zone.

 
Once the neckline breaks the head and shoulders top targets a decline of 100 points or better. Further, our measures of rational vs. emotional buying peg all of the buying from 190 into its historical pivot as panic or FOMO motivated. As such, it will flip easily once the decline puts pressure on these traders.

These diverse methods provide price targets clustering, which adds confidence. Now, its a matter of market dynamics to provide insights into when a forceful move can be expected.

Netflix’s background or set up on a long-term basis is similar to the Dow/S&P peak in late January when it peaked on panic buying followed by a mini-crash on panic selling. With Netflix, the panic buying into June provided a pivotal high with a decline that did not lead to panic selling, at least not yet and there has been no new long-term TE. From an I-T point of view, the dynamics only mostly support a forceful trend this week and S-T the market has not worked off its panic selling.

Puts

NOVEMBER 2018 (EXPIRATION: 11/30)

Strike Last Net Bid Ask Vol Int
NFLX1830W337.5-E  16.20 +0.74 20.45 21.50 1 59
             

My initial trading experience used only high delta puts and calls. These are deep – I mean deep – in the money options. Today it is difficult to avoid time premium, without giving up lots of liquidity – as inferred by the volume/open interest.  The weekly November 337 ½ put is 5 ½ points in the money and with six weeks to work has 16.00 premium. I would look deeper and keep an eye open for any OI.

However, the potential is there with a conservative target of 264 leaving the puts 60 points in the money.  The bid/offer spread is a full point; some option brokers are better than others.

It’s easy to get started, and the only thing that will keep you from quitting is your success. 

Premium Publications Merging Strategies into Forecast. The newest and most reliable risk, asset and strategy management advisory in the industry. No matter your size or investment policy, the volatility report will put you at an advantage. These are individual and student rates.

ContraryThinking Starts Here

Great and Many Thanks,

Jack F. Cahn, CMT
A Contrary Thinker Trader Since 1989,
Copyright 1989-2018

Contrary Thinker 1775 E Palm Canyon Drive, Suite 110- box 176 Palm Springs, CA 92264 USA.  800-618-3820

— Thinking Man’s Trader 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.

–Thinking Man’s Trader 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 to your financial situation. Only risk capital should be used when trading futures or options.

NO WARRANTY / NO REFUND.TMT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, On ITS PRODUCTS AND At this moment EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CBI BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY  PORTION OF ITS PRODUCTS.

October 17, 2018

One day wonders dominated in 2008 & 1932

Based on the evidence this is what I know

In the wake of the extended bull market since November 6, 2016, and more recently the advance from the April lows it will be hard to resist bullish actions the day after a 500 point rally by the Dow.

Read More

October 16, 2018

Netflix is a short

The only thing that bothers me about my headline is CNBC’s Technical Analyst just went bearish on the air.

Our volatility model noted the buying going into the recent historical high was based on FOMC, not reason based.  Such emotional buying will not provide good support when a decline test the investor’s resolve.

From Contrary Thinker’s point of view, our True North and TD Sequential are on long-term sell signals and the bar chart is finishing a classic head and shoulders formation.


Prices are sitting on the low end of I-T support zone, a break of 317 would signal a continuation of panic selling.

The Technical Event Model provides a context for a dynamic decline at 4-2-1, leaving the S-T bottom the bulls are hoping for with the S-T panic selling vulnerable to continued dynamic decline over the intermediate and longer term.

The 207 to 237 support zone is a reasonable long-term target.

Risk-Free start your membership now, which membership is right for you?

Premium publications are merging strategic thinking into a forecast. MarketMap and Volatility Report, the newest and most reliable risk assessment, asset and strategy management advisory in the industry. No matter your size or investment policy, MarketMap will give you dates for scenario planning, and the Volatility Report provide a basis for better strategy selection and risk/reward assessment

Quarterly subscription $449.00    OR  Annual Subscription with collaboration $1,599.00

— 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.

— 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 to your financial situation. Use only risk capital when trading futures or options

NO WARRANTY / NO REFUND. Contrary Thinker   MAKES NO WARRANTIES, EXPRESS OR IMPLIED, On ITS PRODUCTS AND At this moment EXPRESSLY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE. IN NO EVENT SHALL CBI BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, OR CONSEQUENTIAL DAMAGES IN CONNECTION WITH OR ARISING OUT OF THE PERFORMANCE OR USE OF ANY  PORTION OF ITS PRODUCTS.

October 15, 2018

MarketMap™ 2018 Annual One Day falls (AODf)

The 8.85-year Cycle

Just like any relationship, anniversaries are important to the market, and many traders know it may cost them if they do not recognize these occasions. As a nation, there are days we will not forget, like 9/11. Just like a rock thrown into a still pond, the effects repeat over time.

The same big splash effects happen in the market, and it does not forget. Since 1885, some ten major DJIA AOD falls (≥ -3.60%) occurred between September 10 and October 31.  These are sizable price events.

There are many more than ten referred to above when you consider declines in the one-day class that are less than the 3.6% but happen with a negative geopolitical news or media event.

MarketMap draws many parallels to the 1972- 1974 period based on the events from 1973 (9-year cycle x 5) this week is the anniversary of the “Arab oil embargo” among others in the 9-year repetition.

While MarketMap came into the year headlining “Geopolitical Security threats will precipitate financial distress” it is noteworthy that the real-life headlines read “Saudis threaten retaliation after Trump warns of ‘severe punishment’” for the suspected killing of a self-exiled Journo, Jamal Khashoggi, one of Saudi Arabia’s most prominent journalists.

However, what has become the new normal in the last 18 months is nothing ever happens, the problems simple pill one on top of the other.

However, cathartic market action in the current timeframe may lead to a clearer vision of what the future has in store.

One of the “among others” referred to above is the weekly long bar low in the 3rd week of October, highlighted in this chart. That big splash in the 2nd and 3rd week of October 2000 was a 12.% decline to the intra-week low. The week of October 20, 2000, declined 6.2% before putting in a mini panic low to recover.

The dates that come up for an AOD fall are today, the16th or the 17th. They set up as panic days from open to close. The longest bar of a move tends to be the last bar of that trend. The long weekly bar that ended the move in 2000 was 6.2% the one that precedes it was 5.8%, for example.

Thus far, since the October 3 peak, the biggest decline is only 3.2%. Exceeding that daily range will suggest a low is nearby, and MarketMap will look for cross-checks to confirm a low. Also of note here, the AOD decline in February was 6.9% and in a period of great extremes, in this era of the “tremendous” where anything is the “probably the greatest ever done,”  and after 2017 a year of the lowest volatility on record, expecting an AOD decline exceeding the 6.9% this week would not be a surprise.

The scenario has not changed: risk/reward favors selling with selective long V hedges. A low here in the latter half of October followed by a failed rally into the election with another decline into the COT dates mid-November. There is the potential of an alternate or second AOD decline hitting on or about November 23.

 

October 14, 2018

The New Paradigm in Risk Management is Direction Neutral

You need to login to view this content. Please . Not a Member? Join Us
October 14, 2018

Volatility Report October 15, 2018

Momentum Surge in Volatility

Looking at the CBOE perceived risk data as well as the long volatility futures ETFs (bearish investment vehicles) across the four major indices there is a momentum surge. Our chart on the left of the 3Xbull S&P ETF gives a clear picture of two failed tops at all-time historical highs followed by breakdowns. Following January peak, the February/April low pivoted when %BB-Oscillator was a divergent overbought long volatility ETF “SPXU”– right-hand Our Bollinger band oscillator is not yet at an extreme suggesting more decline to come.

What else is clear is %BB SPXU never moved above .382 during bullish trends. Looking back over the complete history of this bear ETF %BB-Osc only moved above .382 when the market moved into consolidation at least or a meaningful correction. With that being the context of the market now on an I-T basis, expect more decline.

Bottom line is our measures on V have surged past a point that implies follow through or lower prices for the major averages.

error: Content is protected !!