Category Archives: Sentiment

Viva Hate

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At the start of this week, on my Tastytrade show, I said that it felt like something had “snapped” in the market. There was a confluence of little events that took place that convinced me that the few remaining bears had either lost their minds or thrown in the towel. The “Disappointment After Doha” – – that is, the inexplicable rise in the market after the complete collapse of talks in Qatar last Sunday – – – was the straw that broke the camel’s back for many people.

Now, in my line of work, you’d expect me to be the recipient of a regular amount of hate mail. For one thing, my view is an unpopular one. The vast majority of people actually want assets to inflate in perpetuity. A permanent bull market would be just dandy for 99.9% of the public, and not only do I tout exactly the opposite, but I’m rather bombastic about it.

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Failure to Bank

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I’ve had this post in my head for about a week now, although I’ve been debating whether to write it or not. The reason for my hesitation isn’t because what I have to say is particularly shameful (“I have a secret fetish related to capuchin monkeys………”) but it is one of those Earnest Trader posts which is prone to attracting stupid/obvious advice or, even worse, criticism. Part of the reason for Slope’s success, however, has been my openness, and I have no intention of changing that.

To come right to the point, even though we’re just a little bit into 2016, I have twice had “peak profits”, only to see the majority of them wither away. More specifically, I managed to put together a very handsome profit, peaking on January 20 (which happens to be the day I saved those two puppies in the park), only to see most of those profits get torched (see first green tinting below). A subsequent drop in the market allowed me to rebuild those same profits, step by painful step, to enjoy an even greater total profit by February 11th (second green tinting below) after which time the vast majority of those profits were, in turn, torched. (more…)

The Usual Suspects

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usual_suspects

Over the past few months a potent emotional cocktail of fear and confusion has been seeping into the consciousness of market participants. It’s not just that equities are steadily heading lower whilst producing more and more bearish context above to be overcome sometime in the future. What’s worse is that there appear to be very few places remaining to sit out the storm. The exception of course being the two usual suspects – bonds and gold. (more…)

Market Volatility Now In “Fragile Zone”

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Further to my post of December 3, 2015, the price of the SPX:VIX ratio has broken below a critical level of 100.00 and has fallen into, what I call, the Fragile Zone.

I named it this because, as you can see from the ratio chart below (where each candle represents 1/4 of a year), price has now encroached into the last major bearish candle of Q3 of 2011, and has also fallen below the 60% Fibonacci retracement level taken from the 2009 lows of this ratio to its highs of 2014.

A hold below 80.00 could see the SPX plunge, particularly if this ratio drops and holds below 60.00. The declining Momentum indicator is hinting that further weakness is ahead for the SPX…as I mentioned here, with respect to the E-mini Futures Indices.