2016: A Year for Contrarians; 2017 Shaping Up That Way as Well

2016 was the year I finally decided to codify my niche as a psychology-focused market contrarian, putting the Alice, Red Queen and Rabbit components of NFTRH’s logo right there on my inner forearm, forever.
This is because I love the imagery and themes of NFTRH’s guiding metaphorical story, Alice in Wonderland, and because the weird technical tools I use are generally in service to one thing; being right when the herds are going the wrong way. The concept originally came to me as the markets were beginning their descent into the crash of 2008 as the newly launched market management service needed a view that was apart from the emotional herds then preparing to go down the drain. Alice’s quote (Lewis Carroll), a portion of which occupies my other inner forearm was perfect in this regard…
‘If I had a world of my own, everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?’
2016 was a year that fit NFTRH’s niche to a tee and it is no coincidence that it has been a good one, performance wise (though in full disclosure, the last couple of weeks have taken a chunk of profits back as I give the markets some leeway through the ‘Santa’ seasonal). Let’s take a stroll through 2016 before taking a brief look ahead to 2017.
The year started with the topping pattern (that wasn’t, or isn’t yet) in the S&P 500. For all the world it looked like a top, walked like a top and quacked like a top. But it wasn’t a top! That was proven when SPX rebounded from its lower low to the 2014 and 2015 lows and then rose to cross the 20 and 50 week exponential moving averages back up again. This was similar to the 2011 whipsaw, but on a grander scale. Now of course, the would-be topping pattern may be a left shoulder to a bearish Head & Shoulders pattern in construction. But even if so, the ultimate high could be well higher (ref. the 1998-2000 situation). As of now, the market is bullish. Period.
But considering that Casino Patrons are momo’ing the market and dumb money is strongly over bullish, and the market is over valued (one important valuation metric being the greater interest being paid on ‘risk free’ Treasury bonds vs. the S&P 500) as the media TRUMPets a new promotion; namely bond-eroding inflation as far as the eye can see due to coming fiscal policy changes. The Treasury bond bull market is DEAD trumpet the mainstream financial media. Well, for another view, let’s compare what the public was doing last summer during the NIRP! hysteria vs. today.

This post was published at GoldSeek on 28 December 2016.