Volatility Report (click title for full report)
January 9, 2023
The headlines read “Why does everyone think there will be a recession in 2023?”
To be blunt, who cares what they think? The analysts that are leaning on the contrarian idea that what the little guy does the smart investor should do the contrary know how to talk the talk.
One of the key polls they use is from the American Association of Individual Investors. AAII is a nonprofit organization with about 150,000 members whose purpose is to educate individual investors regarding stock market portfolios, financial planning, and retirement accounts.
I have to wonder if the AAII membership is self-aware of the above notion they are used like guinea pigs and considered dumb money; and if they are, how does that impact their answers to a poll?
After 2016 we all know that polls are not reliable but actions are more important. What has been seen in the actions of the same group is their equity (risk) exposure has remained above its long-term average for the trailing 12 months. As such and they think the market is bearish, well that is dumb.
If you see the investment world from a long-only perspective and want a portfolio
December 21, 2022
The facts have been ignored since 11/6/2016 and the market screaming to be released from the financial and volatility repression became clear from the peak 1/23/2018. From that point to today, traders have played nothing but long volatilioty vhencials and out performed the S&P by a wide margin. Are you ready for 2023, All Contrary Thinker wants is to back investors, managers and traders to reach their best.
December 10, 2022
Kiplinger’s Economic Outlooks are written by the staff of our weekly Kiplinger Letter and are unavailable elsewhere. Click here for a free issue of The Kiplinger Letter or for more information. Fed Chair Jerome Powell offered investors both good news and bad news at his press conference on Nov. 2. The Fed’s policy statement included new language that it would consider the effects on the economy of previous rate […]
The Long Bonds
Before you get into the video on the long-term outlook for bonds and how to use the new excel worksheet for cycles, here is a short-term update I started in the group. If you are a visitor and have signed up on the TradeExchange app, let me know. In that regard, they are in the process of updating my UI and dashboard, make sure I know so you lock in your spot here in the group.
Unless you tell others that Contrary Thinker can make good calls, I have to continue to point them out. At the end of 2018, I warned the boys from Boston, the capital of the mutual fund factories, that the so-called “bulletproof” portfolio (60/40) would come to an end with the same kind of “hyper-correlation” seen in 2008.
Well after the first six months of 2022 all they are doing now is belly-aching about the 60/40 demise. Well, that is all well and good but in this industry, it is always about “what have you done for me lately? The updated chart featured here should help.
For equity players, it demonstrates how the bonds are leading the downturn. There are other leading markets, but this one has a broad economic impact. with that in mind, CT’s featured chart demonstrates the way the bond market speaks to you, once you understand volatility. Here I will point out how rule#3 preceded COTs by a day or two at the August high and the October. TE#3 is the definition of a low-energy trend that is due for a change. The trend lower walked the smoothed BB lower on the middle TE#3 with the help of an intervening TE#4 supporting the trend.
On Friday the decline in the 30-year futures was a failure, a reversal, and an S-T sell signal. With the TE#2 behind it, a move to 124 should unfold. That corrected the panic buying, retraces 62% of the counter-trend thus far, and moves below the smooth BB, which is an oversold signal.
Dates are highlighted in this chart that can be used if you plan to use the excel cycle worksheet.
Enjoy the 15-minute video, the other five are on the way.
December 9, 2022
LordHenriVoton The CPI report for November is due out on Tuesday, December 13, just one day before next week’s FOMC meeting. Expectations show the y/y rate dropping to 7.3% from last month’s surprise reading of 7.7%. Meanwhile, Core CPI is forecast to remain sticky, rising by 6.1% year-over-year versus last month’s reading of 6.3%. It would be the fourth month in a row that core CPI was above 6%. […]
“They all go together when they go”
Everyone will be focused on the CPI number and actions by the Fed. As a hard and fast rule it is not the news that matters, it is the market’s reaction to the news that is telling. For example, as the bear market becomes more widely acknowledged, more good news is ignored and bad news is exaggerated.
Also, highly anticipated news is used by day and floor traders to run stops with a long bar event. Therefore going into such an event from a tactical point of view, regarding positions longer than a day following a trend, stops are pulled or widened out, because the trend will be your friend. And that trend is down and gaining momentum.
This featured chart of the MSCI ACWI Index, MSCI’s flagship global equity index, helps make the bearish case and points to what to look for that will build confidence for the bearish case.
This ETF is designed to represent the performance of the full opportunity set of large- and mid-cap stocks across 23 developed and 24 emerging markets.
A number of things are clear from both the weekly and daily charts of the world composite. The context of the market is trend ready. That trend is down on an S-T basis as seen in the right-hand window, the breakdown of the channel, our Alpha Trend MA has crossed under, a sell signal, and the market failed to hold the S-T support zone. From an I-T basis, the dot on a close weekly chart is plotted with one of our Vidya MA versions. A close this week below 86.27 would likely close the door on any bullish arguments.
The video below covers the use of the cycle spreadsheet when applied to the S&P and the Dow. Along with that expo, I cover the outlook for the market from now into the early part of 2023.
As always your feedback, questions, or issues are welcomed.