August 21, 2023

Volatility Reports 8/21/23 Stock Indices

It’s not fortune telling. From experience with an open mind there is confidence in what the market is saying.

In most cases before the media knows how to spin the news…

…like

“Another day brought another troubling sign for the Chinese economy. Beijing authorities are said to have told state-owned banks to step up intervention in the currency market in a push to prevent a surge in yuan volatility. Senior officials are also considering using tools such as cutting banks’ foreign-exchange reserve requirements to prevent a rapid depreciation in the currency. The request came as the yuan fell toward 7.35 per dollar. A broader sense of gloom had already descended on China’s markets this week, even as Beijing sought to bolster sentiment with a surprise interest-rate cut, a string of stronger-than-expected daily reference rates for the yuan and large injections of short-term cash to the financial system. Despite all of these measures, the onshore yuan is tumbling toward the weakest level since 2007 and a key index of shares in Hong Kong is close to a bear market.” —8/18/23 David E. Rovella

Opportunities do not come every day.  Great opportunities are even rarer.

The above trades taken the day after I Published on: Jul 31, 2023, Volatility Reports.

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The above trades are based on details contained in our two publications updated below with insights into the equity markets, interest rates and new select trade ideas.

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Three days ago, the group reposted the outlook for Bitcoin.  I pointed out the following

“This market is a bellwether for all risk markets. It is the BRAND for the first and best known crypto and provides a market for major risk takers. Especially in the face of multiple1,000-dollar swings in a day or two.

So goes BTC and so goes the other risk markets. It is ahead of its time, it is not a hedge and given its “changeability” in wild swings up and down, vendors cannot use it unless they build a large spread into customer purchases to protect themselves, Juts like international need to hedge on FX translations but to a much larger degree.

Thirty days before I pinpointed the nominal high for BTC. Today the market has started in my view its next leg down in the long-term bear started back in late 2021. Unlike the stock market’s related economy, the idea that the government would bail out what can become an infant industry in meltdown is not going to happen.

Click to enlarge charts and tables

Annotations in the above chart should put expectations into a point of view. The condition behind the market is one that suggests the continuation of the high rate of change (ROC) decline. My volatility model hit a panic reading on the S-T that is supported by the indicators telling traders to go with the trend, TE#2.

Pricewise a move below 23,200 closes the door on any bullish alternative. Along with the breakdown seen in the chart, the two-year cycle has crested now pointing lower into the end of the year to early 2024.

What follows below the page break covers the four major indices, and a select trade idea. For members only.

This work by Jack Cahn is licensed under a Creative Commons Attribution-NonCommercial 4.0 International