Slope of Hope Blog Posts
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I think I'm pretty "blogged out" for now, this being my eighth post for the day. My final post last night garnered about 1,000 comments, so I wouldn't be surprised to see something similar in the morning.
Just for fun, I was curious to see in ProphetCharts what a chart of the SPY versus the $VIX yielded. This is an interesting ratio, particularly since the VIX nearly reached the triple digits a year ago and now is almost back in the teens. Here's the chart:
That red line pretty much sums up why I think the notion of a new bull market is misguided (I would normally describe it as clinically insane, but I'm trying to temper myself). The past year – – and by a lot of measures, this countertrend rally isn't 7 months old, but is 12 months old (take a look at GS to see what I mean) – – – has been nothing more than a recovery rally, fueled by government debt.
Today's very whippy tape shows the struggle continues. As I said in my post last night (which, if you didn't read it, please do), I grudgingly accept the possibility of an S&P as high as 1120, and, for the most part, I continue to wait and watch, with almost all my buying power sitting in cash.
The ultrashort-on-bonds ETF symbol TBT is having a great day, and it's about the only bright spot for me. It's up nearly 3%, and on very strong volume.
I've had good luck over the past several weeks doing swing trades on FXP (the ultrashort Chinese ETF). It seems to me $CZH is soon going to be exhausted……..
So I am acquiring a long position in FXP………..
At the risk of seeming utterly capricious, I will say that I got out of my DIG position soon after I got into it.
Why? Three reasons.
- Volume Counts: The fact that the volume has been steadily falling for an entire year shouldn't be ignored.
- Gold Envy: I realized a big part of this trade was to compensate for regretting not getting in on gold. That's illogical and a poor basis for a trade entry.
- No Breakout: Yes, it's a nice inverted head and shoulders pattern, but there still isn't a breakout. Until there's a breakout, it's simply in formation.
Total loss? Three-tenths of one percent. I can live with that. But a handful of folks seem to get upset when I state a position and then they find out later I'm no longer in it. So I'm trying to make a bit more of an effort.
It's obvious that gold is on a runaway train, but as for jumping on the commodities bandwagon, I've selected DIG instead (the energy ultra-bullish ETF).
I'm all for head & shoulders patterns, included inverted ones, but I don't get too excited when they're at the top of a chart. I'd rather buy into them when they constitute a base. I've therefore gone long DIG, although I must say, I find the continuously withering volume to be a little disconcerting.