Category Archives: Sentiment

The Usual Suspects

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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.

Just Two More Days

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As I wrote on Christmas Eve, my plan was to ride out the last four trading days of the year without any positions. It’s been pretty agonizing, because I am dying to get very aggressively positioned, and in spite of the market’s surge lately, a lot of my best short picks are falling to pieces. All the same, I am gritting my teeth and counting the hours until this year is over. Just two days to go.

The Dow Composite is still tracing out a series of lower highs.

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My Two Big 2015 Errors

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It’s a little early, I suppose, to be doing any kind of “end-of-year wrap-up” kind of post, but frankly, I don’t have anything new to say about the market, and I might as well share the one semi-pithy reflection I’ve got about 2015 at the moment.

My two errors this year actually contradict one another. My first error was not holding on to positions long enough. My other error was holding on to them for too long.

To address the first error: as some readers may recall, I made a post back in November 2014 called Shifting Sands which, even at the time I marked as a “Best of Slope” post since I considered it so important. My basic thesis was that oil producers were going to be wrecked, just like gold miners had. As I wrote, “I am inclined toward individual energy-related shorts, because I think they’re going to suffer the same gruesome fate as precious metals miners have”

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The Year Bias Died

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“All of us show bias when it comes to what information we take in. We typically focus on anything that agrees with the outcome we want.” – Noreena Hertz

I have been wanting to write this article for some time now this year. I wanted to wait until the results I was attempting to achieve became overwhelming. I think we’re there, so I am eager to share. Before I do, let me take a step back and share briefly my history as a trader and investor. I would divide my investing & trading history into three segments.

1998-2007 – Long term investor. Buying and holding assets.

2007-2014 – Combination of buying long term investments & discretionary trading

2015 – Combination of buying long term investments & ATR based trading

I graduated from college in 1998, began working, and investing. My focus was accumulating capital, and putting it to work buying companies that I believed in, understood, had good balance sheets, and for the most part paid dividends. It worked. I enjoyed it. I was good at it. At this point in my life my expertise was understanding companies, not the global economy, or technical analysis. My father was an executive, and my brother was an entrepreneur. I had grown up in business, and been educated in the management of companies.

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Market Volatility is About to Get Wilder for 2016

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I can’t get too excited about possible market follow-through in any one direction on the S&P 500 Index unless and until price breaks and holds either above 150 or below 100 on the SPX:VIX Daily ratio chart below.

Currently, price is still in what I call the “Major Conflict Zone.” Yes, I realize it’s a huge range, but that’s the way 2015 has gone. In my opinion, I think 2016 will see greater volatility and much larger swings than we’ve seen this year…hang onto your (Santa) hats, folks!