September 18, 2018
Thinking Man’s Trader Report
in your mailbox September 14, 2018
After the February spill, it was unclear if the Japanese stock averages had put I a clear peak and kicked off a cyclical correction like the Dow and S&P. TMT had deemed the advance from the 2009 low the beginning of a new secular bull market that would rival the big bull run from 1950 into 1989.
That very long-term underpinning explains why the early 2018 spill did not take an EWT five wave structure, which leads our advisory to an I-T 4,200-hundred-point opportunity.
The first pop-up chart on this page is the NK last week. The chart on the right shows a large – multi-month horizontal triangle. A pattern that is resolved by a high rate of change (HROC) trend when prices break out of it. The left- hade chart depicts the TEM model on the weekly bar that supports an HROC trend with its TE rule #2.
I have labeled the daily chart with a bullish wave count however the move can go either way. This bias is where forecasters take too much pride in opinion, and a strategist mentality is more important. A breakout in either direction from here should get follow through.
Tuesday, September 18, the Nikkei made it clear. In right-hand chart from today, the NK is up over 600 points with new highs a few hundred points to go.
The middle chart makes it clear what to expect after an intermediate-term event #2 from the Technical Event Model. The daily chart in the right-hand window shows TEM now into panic buying with %C at an extremely low and directionality at an extreme high.
What is of critical importance is the breakout here, just like the small-cap break out back in July, it is the end of a trend not the beginning of a new one. Every chartist I read is bullish on all the sectors that lead that small-cap breakout, and this is where being a contrary thinker earns its business.
Once new highs are made by the NK, a decline will begin following the same pattern as the mini Russell and the Nasdaq 100.
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.
Available to CMTs, Capital Managers, and Professional Investment Advisors
Great and Many Thanks,
Jack F. Cahn, CMT
A Thinking Man’s Trader Since 1989,
— ContraryThinker 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.
–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.ContraryThinker 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.
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.