Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Weekly and Daily Analysis of the SPY (by bouje)

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Yesterday I put up a post about the Ten-Year and while that was well received I know that most people here don't really trade Fixed Income so I thought that I would do a similar analysis of the S&P but only on a weekly and a daily time frame to show you exactly how divergences work (and also when they don't work).  Up first the weekly:

SPY.weekly.oct.22

As you can see in late 2008 the market made a new low and so too did the MACD but in early 2009 the market bottomed out but the MACD made a higher low.  This is a typical divergence and what you should look for when looking for market trend changes.  Look at the RSI and again you will see a similar divergence at the bottom in 2008/2009.  I also like to extend the current trend-line on the MACD and look for breaks of that trend-line to also confirm the trend-line (which in this example the S&P had a confirmed trend change in April and then broke the MACD trend line around May/June).  Now the larger pick trend will stay bullish until we can first get a bearish cross on the MACD on the weekly and then if we are lucky a confirming divergence (look to the way left of the chart to see an RSI topping divergence). 

 
Now on to the daily picture:

Spy.daily.oct.22

So I think that everyone remembers the H&S that happened over the summer that many bears got trapped on and we can look back and see what exactly happened.  First there had been a trend-line (that cannot be seen) from when the bottom was formed on the MACD.  The MACD actually curled up after the failed breakout and formed another point on that trend-line.  Look at the bearish divergences on the daily chart and then how they didn't play out.  The daily charts have had a ton of daily bearish MACD divergences (particularly in companies like GS) and so I've decided that it is better to look at the weekly as a better indicator of where the intermediate/longer trend lie.  So while the bearish divergence in the daily looks good as can be seen earlier this year with the failed H&S breakout they haven't exactly behaved ideally which is why I'm not willing to say that "This is definitely the top". 

This isn't all bad news for bears because the daily MACD upward trend-line has been broken now since that down move in September which is the first good sign that the rally is coming to an end.  But I think that the real story will unfold when there is a trend change in the weekly and the weekly MACD finally rolls over and forms a bearish cross and (god willing) a bearish divergence. 

Some things to keep in mind about the divergence:

1.  You can anticipate the divergence if you see the weekly start to roll over (for the lower high) and then can go into a daily to determine if there is also a bearish divergence there and look for better entry points there. 

2.  The divergence isn't broken until there is a clear violation of the trend-line. 

3.  This analysis can be used for any time period (I really feel like it works very well for 15m charts for a look into the future of a day or 2.  For example right now the TY has a 15m bullish divergence and until that trend-line is taken out the risk is to the upside in the TY. 

Thanks again Tim for having me and I hope that you guys enjoy the analysis feel free to leave questions, comments, concerns in the comments and I'll try to get back to you.  - – - Jason

Bad Breadth and the Market (by Biffermas)

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Bad breadth 
The McClellan Oscillator is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE.  It is primarily used for short and intermediate term trading.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It's interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends.

 

 Mcnasdaq 

Both show great value when the major indices make new highs or lows, but the McClennan's fail to validate the movement.  This indicates lagging participation in the ongoing trend and shows the possibility for reversal.  Recently, the S&P 500, Nasdaq 100, and DJIA all made new yearly highs, but the MO and MSI failed to follow.  I’ve marked the divergences on the following charts.  Upon closer inspection many sub-sectors failed to make new highs, including small caps, industrials, materials, banks, and homebuilders.  Truly this bull is suffering from market halitosis.

 

McNyse 

As always, obey your stops.  This market has proven it has staying power and routinely ignores bad internals to blast higher.  We’ve seen many bounces off oversold McClellan readings over the past 6 months, so be careful at these points.  Taking partial profits, hedging, or closing positions should be considered.

(Editor's Note: I am in awe of the quality Slopers are generating here; wonderful stuff; thank you so much! On a less cheery note, sorry Disqus is stinking so badly. I know how important comments are to the Slope experience – Tim)

Is That With Two Fs?

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A hearty thank-you to the fellow Slopers who are contributing content; it's a huge weight off my shoulders, and a ton of people have written me grateful emails (strictly speaking, only Christine Romer wrote me, but I still am accurate  in my characterization).

I thought with all the heavy-duty technical charts, you could use a bit of a musical break (plus Disqus is behaving very, very badly today, so comments is kind of dead). I have a major weakness for good lyricists, and Aimee Mann certainly fits that category. Her song "Momentum", whose lyrics I've put beneath this video, captures a lot of what I've been thinking lately. Enjoy!

Oh, for the sake of momentum

I've allowed my fears to get larger than life

And it's brought me to my current agendum

Whereupon I deny fulfillment has yet to arrive

And I know life is getting shorter

I can't bring myself to set the scene

Even when it's approaching torture

I've got my routine

Oh, for the sake of momentum

Even though I agree with that stuff about seizing the day

But I hate to think of effort expended

All those minutes and days and hours

I have frittered away.

And I know life is getting shorter

I can't bring myself to set the scene

Even when it's approaching torture

I've got my routine

But I can't confront the doubts I have

I can't admit that maybe the past was bad

And so, for the sake of momentum

I'm condemning the future to death

So it can match the past.

EUR/USD – A Technical View (by Alex)

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A lot a people believe that EUR/USD in the key to US stock market right now. So lets see where we stand-from big picture -down to our current distribution (last 7-8 days).We definitely are at a key resistance area now. 

Bigpicture_3

Now let's go down to the current distribution and compare it to August 2008 distribution (that was last time the market traded at these prices) to get some clues. 

History3d

The chart says it all. Looks like a mirror image. Please note how the market quickly rejected prices highlighted in green in august 2008. But this time we also need to consider that we have a lot of support (volume traded) below.

Hope you find this interesting, and thank you Tim for letting me to post this.

Kickoff! (by Pat McNeill)

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(Editor's Note: now that other folks are contributing to Slope, I'm going to put a "By-Line" in the subject to make it more clear that it was written by someone else; far too many people have been thanking me for the hard work of others, and I'd also like to clarify whose opinion belongs to whom – Tim).

When an oscillation is rolling with the primary trend it takes some time to turn things around. The sectors, one by one, fail to make higher highs, then stall, and then begin to decline as their time arises. Financials, Energy, Utilities, and Transports have all shown non-conformances in the past five days. NASDAQ and Russell 2000 have been quite sluggish. Today’s high at 10:45 am EST was strongly repulsed.

This is when violence ensues – bringing all sectors and markets back into alignment.

091021 Elliott Wave S&P

( Please click on the chart for a sharper image.)

The Impulse Wave up has extended to 5 + 4 = 9 waves. The final subminuette wave has truncated. The channels on SPX and NASDAQ, while quite different in character and timing, have both broken down. With counts at or near completion a correction is here. We cannot say with much confidence how far the correction will take us. We can say with confidence that all the characteristics of a decline of Minor or Minute Degree have fallen into place and declines of this degree take days to complete.

Thanks to Tim Knight and best regards to my fellow Slopers!  - - Pat McNeill

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