Contrarian Update December 28
/kənˈtreə.ri.ən/ disagreed with by most people, or liking to express opinions that most people disagree with
Contrarian investing is an investment style in which investors purposefully go against prevailing market trends by selling when others are buying and buying when most investors are selling.
iam going to present an alternate view - I did not give this theory much credence until recently, and today (I hate writing "today" because a lot of moo'ers are on different days, and I often start my posts that day and work on them around midnight. so what's the best way to convey that?) I noticed some things. Some movement that didnt make sense to me, but now might. This post is a contrarian view (of even myself![]()
) with charts and hopefully some reasonable explanations. Take from it what you will. iam not offering a strategy, only a view of what may be possible, so IF it happens, you can be prepared.
I apologize in advance of using my busy charts, I wish I could use my cleaner charts.
There is a contrarian view that we are building for a MASSIVE rally, and even a blow off top. yes that's right, a blow off TOP, allow that to sink in, get your gruff and laughs out and allow me to explain.
The market has been going down since November 2021 for $E-mini NASDAQ 100 Futures(JUN4)(NQmain.US$ and Jan 2022 for the $S&P 500 Index(.SPX.US$ & $Dow Jones Industrial Average(.DJI.US$ . What happened in January? - The FED announced they were going to hike rates, they didn't actually hike until March... Between then and now they have raised rates and have recently hit a PAUSE, this is not a reversal in rates, it is a pause but there is a reason... Inflation has peaked (for now, but that is all the FED sees, they are not forward thinking, they are reactionary)
the first chart showing inflation (red) and the FED fund rates (green) going back to 1970's
zoomed in
So now BIG PICTURE - Inflation= dropping, rates= paused, employment/economy= strong ![]()
GDP is showing a stronger than expected economy.
OK, so there is the set up for the weeds iam about to go into....
During the time from Jan until recently the FED had been hiking rates and selling down their balance sheet to do what? lower inflation ✅️ and to get liquidity OUT of the market. All that means is that the money pumped into the market for covid needed to be taken out of the markets. Looks almost done to me... And guess what just happened last week before the holidays? The US government passed a 1.6 TRILLION DOLLAR SPENDING BILL!!!!! No matter how you feel about it, the fact is 1.6 trillion dollars was just earmarked for the federal reserve to move into circulation (that's not really true or how it works, but to go over how government money gets into the system would take way longer than I care to spend ![]()
) this chart ends in November but I assure you, this is still going up.
So now we have inflation down, economy up, rates paused and money entering the banking system, ADD TO THAT - the HIGH PUT to CALL RATIO and I sense a market that can catch everyone off guard.
here are the charts of the indexes, with the strongest, the DOW first and the weakest the Nasdaq last.
There is a valid count (yellow) in progress, until it is disproven (break a new low) it remains valid.
Here is $Invesco QQQ Trust(QQQ.US$ Monthly. On this normally you wouldn't label a correction as a 5 wave, I could do a 3 wave, but I already had a 5 wave labeled on previous labels.
I see that futures are green, I had a hunch this would happen. iam not saying this prediction will happen. it is only a contrarian view, take from it what you will. But the theory goes once this pushes up it will create massive covering and closing of short positions followed by massive FOMO to drive the price to new highs, very quickly, BEFORE a massive collapse. This would be the blow off top that investors have waited for.
But like I said, just a contrarian view.
Be Safe, Be Wise, Be Careful and as always
Good Luck ![]()
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Buffalo : I agreed. Very informative.
日生人王 : Agree on the a much needed short covering and FOMO blow off top bullish run. But, slightly disagree on the timing wise, I am thinking the bullishness might come after the earnings compression, maybe Feb-2023?
NewMe : In ur view, will this massive rally finally begin tonite? Tmw? This week?
bwjx : May be bullish from now till next weds when the FOMC minutes are released. Hopefully, there will be good opportunities to load bearish puts or inverse etf.
iamiamOP NewMe: I think it began in November, it's building a base to suck in enough liquidity/energy/momentum to blow up, its just waiting for a reason... until it makes a new low, it's bullish. signals can say otherwise but until a new low the trend is bullish.
iamiamOP 日生人王: I just think this market has had every opportunity to sell down, but it has rotated perfectly to stay bullish while taking the liquidity out of most stocks. aapl is back at pre covid so all the covid money is out. just a thought. like I said I don't necessarily believe the theory but until it is disproven I'm going to track it.
日生人王 iamiamOP: Yupe, I saw AAPL is touching the support (previous top level resistance) trending channel from 2019-2020. I am waiting AAPL to make a decisive move then I will be either bull or bear riding the trend. With other FAANG already back to pre-covid level, and TSLA capitulating, I would agree that the covid money is basically out of current discussion.
Imso : hi sir how about uranium miners like uuuu/uec? is it good time to enter position now?
iamiamOP Imso: uuuu and uranium is on a little run, on a pull back thats a good entry, but be careful I think energy is getting ready to top in a month or so maybe earlier
Imso iamiamOP: how big a pullback is significant enough to enter although it looks like it's pulling back now?
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