September 18, 2018
The 10-year and 30-year are breaking down
Bonds are coming off another S-T pivot high – triple tops plus one. This peak, however, was set up like the two peaks preceded by low perceived risk. The decline thus far has not increased perceived risk based on the CBOE data, as bond volatility has remained oversold.
Three more reasons to be bearish on T-bonds.
1. A big top was established with the monthly head and shoulder’s top.
2. True North strategy on a short and intermediate basis is short the markets.
3. The volatility background sets up like previous I-T peaks is followed by nice declines.
Our volatility model – the Technical Event Model – on both S-T and I-T provides a background that supports a high rate of change trend, given the above our bias is to use short selling strategies.
September 15, 2018
1. Prices are high relative to traditional measures
2. Prices are discounting future rapid price appreciation from these high levels
3. There is the broad bullish sentiment
4. Purchases are being financed with high leverage
5. Buyers have made exceptionally extended forward purchases, such as of inventories, to speculate or to protect against price appreciation
6. New buyers have entered the market
7. Simulative monetary policy threatens to inflate the bubble even more.
We have pointed out number six above based on our modeling.
Our measures of volatility show that from October 2017 into the January peak the buying was based on fear of missing out FOMO. The Technical Event Model was in a sustained period of panic buying. Something that is normally an event not an ongoing condition. These late cycle buyers will flip out at the first sign of pressure on their account balance.
In fact, the February decline stopped right at their break-even level of these FOMO players; and from a long-term point of view our targets for the bear takes prices back the surprises Trump win in late 2016.
The chart here has they period of panic highlighted.
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Great and Many Thanks,
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
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September 13, 2018
September 4, 2018
Except for a very few, the vast majority of sectors and the leading FAANG sector is topping out
Volatility Report Sector’s Table
September 4, 2018
The Dow 30’s inability to make new highs leaves it as a major non-confirming index.
September 3, 2018
Continued Weakness Offshore Leading the US and Canada
The ETF of offshore market EFA is following the Chinese market with a leading diagonal triangle, a bearish chart formation.
August 31, 2018
A Shift in Mood Forthcoming
Change of Trend (COT) dates from several independent studies are clustering in the current time frame. It is more than a random outcome. For one reason, the fractal method I use for diverse markets has a pivot – a COT-in the very near future.
August 6, 2018
The outlook has not changed on the stock market, just waiting for the other shoe to drop. While there is another COT date on the 8th, the expectation has been for a mini panic low in the first two weeks of August, no change.
August 1, 2018
May 30, 2018
Advanced Rule of Alternation
My work advances the EWT Rule of alternation and builds on the way Robert Farrell understands the unexpected nature of the market. An understanding that made him the top-ranked institutional market analyst on Wall Street for 16 years.
While Bob never spelled it out, he uses natural calendar demarcations to anticipate change to something different. If the first half of the year was characterized by a narrow range, he would expect something different in the second half of the year.
In EWT the rule considers the nature of the alternating corrective waves if the first correction is simple the second one is expected to be complex and vice versa.
This simple notion breaks the linear mindset, a trap for traders and advisors alike.