I said before the opening bell today that I'd be watching GLD as a "tell" to know when to get serious about shorting again.
A two-hour rally seems just a little quick (ahem), but for GLD at least, I'm getting back into short positions.
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.
The Big Picture (by Pat McNeill)
Hi, I’m Pat
and I’m an Elliott Wave Guy. If you don’t know about Elliott Wave theory I recommend
that you go to the library and read the first four chapters of Elliott
Wave Principle by Frost and Prechter. It should just take you a few hours. These
four chapters summarize the theory in its entirety. Do not research Elliott
Wave on the Internet. Folks are always making stuff up on the Internet and
calling it Elliott Wave when it is not. IMO, the tutorials over at EWI aren't even that good. The book has it all, is the fastest way to learn it, and is the defining reference on the theory.
this do for you? If you have done just a few months of screen time these four
simple chapters will Blow Your Mind. You will never look at markets the same
way again. I have done many thousands of hours of research back testing indicators and relationships within markets and Elliott Wave has become the foundation for all of my analysis. I have never met anyone who understood Elliott Wave Theory and
Markets and concluded that EW is nonsense.
know about markets?
(2) These waves move in trends and
oscillations.
(3) These waves have structure.
(4) We can define with rigid rules 5
structures.
(5) The Market is a fractal; waves at
lower degrees in the fractal combine to make larger waves at higher degrees in
the fractal.
what Elliott Wave is telling us in The Big Picture:
500 just dipped below the lower trendline coming up from the Mar. 9 bottom (on
both Linear and Semi-Log scales). IF Primary Wave 3 has begun, we are in a
position compatible to the October 2007 top. However, the number three is a big
deal in Elliott Wave because it is almost always the most forceful wave in a
motive series. This means the upcoming decline (if it has started) as a three of Primary Degree will be more
forceful (greater price change / faster) then the decline from October 2007 to
March 2009. This is why the Elliott Wave Folk are getting so excited.
Click on
the chart for a sharper image.
to Tim and best regards to my fellow Slopers!
Pat McNeill
Come to Papa
This bear is seeing a big, fat bounce coming, and he couldn't be happier.
A surge higher is just what the doctor ordered. My view is that the market will push higher – – and the key question is how high – – and then resume its fall, gaining speed on the way down.
Some people – the "1120 crowd" – see the market pushing to new yearly highs. I don't. Looking at the chart below, I would anticipate the /ES getting up to the 1060-1070 range.
The other "tell" for me is GLD. It would be confirming evidence for me if GLD got up to about 102.50. I personally would be much more comfortable getting aggressive on the short side at that point.
In the meantime, all my shorts are still in place, but I'm going to try to balance things with some well-placed long positions. But, I say again, I am thrilled at the bounce that is going to start happening at the opening bell, since I think a tremendous bull trap is in the process of being set.
Floating on Ichimoku Clouds (by nummy)
Firstly, I want to say thanks to Tim for letting guests post. I think it is a wonderful idea and will bring a myriad of viewpoints from around the globe (literally).
So, about a week ago, I read some chatter in the comments from thunda72 (the guy with the sweet avatar) and wycfitz about Ichimoku clouds.
At first they look confusing … just a bunch of seemingly random lines. However, when used properly, Ichimoku clouds can help confirm or deny an ongoing trend. Keep in mind, it would not be a good idea to use this indicator/strategy alone in your trading decisions. This indicator is not the best for signaling tops and bottoms. What it is good for, is finding resistance/support zones and trend information. In this post, I will discuss how the Ichimoku cloud can be used, and show how a simple indicator can be designed to rate long/short signals with strength.
Here is the Ichimoku cloud on the daily SPX chart (Ichimoku comes as a study with TOS). The default input values are 9 for the Tenkan period and 26 for the Kijun period (Ichimoku(9, 26)). The Ichimoku cloud can be used on any time frame. The Tenkan line is the cyan line and the Kijun line is the fuchsia line. These are the lines we want to watch for a signal. We consider a bullish crossover when the Tenkan line crosses above the Kijun line, and a bearish crossover when the Kijun line crosses above the Tenkan line (referred to as the K/T cross).
The cloud is composed of the two orange and red span lines which are pushed forward in time. This cloud can act as a zone of resistance or support. Instead of normally treating resistance/support as a single price level or line, the cloud gives resistance/support a thickness which reduces the risk of a false breakout. The general theory is, price action above the cloud indicates we are in a bullish trend while price action below the cloud indicates a bearish trend. The Chikou is the gray line which is basically the current bar's close moved back 26 periods ago. Note that the colors in your TOS setup may be different, but I chose these to help distinguish which line is which. For a complete definition of how each line is defined, check http://www.fxwords.com/u/ichimoku-cloud.html.
After reading the literature that is out there on Ichimoku clouds, there is a general method of determining signal and strength from this indicator as follows:
- The signal is 0 (neutral) at all times unless a K/T crossover occurs.
- First, determine whether the K/T crossover is bullish or bearish. Do this by determining whether the Kijun crossed above the Tenkan, or vice-versa. Positive points will be given in the bullish scenario while negative points will be given in a bearish scenario (+1 for a bullish K/T cross, -1 for a bearish K/T cross).
- Determine where the K/T cross occurred with respect to the cloud.
-In a bullish scenario, a strong signal is achieved when the K/T cross occurs above the cloud (medium signal within the cloud, and weak signal below the cloud).
-In a bearish scenario, a strong signal is achieved when the K/T cross occurs below the cloud (medium signal within the cloud, and weak signal above the cloud). - Where is the price action with respect to the cloud?
-In a bullish scenario, price action above the cloud will strengthen the bullish signal.
-In a bearish scenario, price action below the cloud will strengthen the bearish signal. - Where is the Chikou with respect to the cloud?
-In a bullish scenario, the Chikou above the cloud will strengthen the bullish signal.
-In a bearish scenario, the Chikou below the cloud will strengthen the bearish signal.
Following the flow chart above, you can see that a signal starts out as either a +1 or -1. The signal becomes strengthened by further criteria: where the K/T cross occurred, where the price action is, and where the Chikou is. What you end up with is a bullish signal ranging in strength from +1 to +5 (-1 to -5 for a bearish signal). I whipped up a little TOS script which basically uses the source code from the Ichimoku indicator and builds a signal strength indicator. To spare some of you a lot of explanation, I won't go through the details of how to write the thinkscript code to do so, but I'd like to in a future post. You can import this into TOS as a study and it will be called IchimokuStrength. Download IchimokuStrengthSTUDY.
Remember, don't use this signal as a signal to initiate long/short positions. Use it as a supplemental indicator that helps confirm an ongoing trend.
A Heavy Post
One of my favorite Slopers is Leisa. Besides being a nice person all around, she also doubles as my conscience; if I ever get a little out of hand, I get a kind but firmly-worded email, and that sets me straight.
She sent me something to post on the blog which she originally wrote a couple of years ago. I offer it to you and I thank Leisa for sharing this. – – Tim
This post is very pertinent to investing, but it is also deeply personal.
For whatever reason, I was moved to post this story. I may regret it. But I'll
resolve not to delete it because I think it is important. I would also like you
to share it with someone that you think might benefit. And let me be clear,
this post is not meant to be dramatic. I'm not trying to draw attention to
myself. I'm trying to draw your attention to you. It is meant to be honest and
coldly objective. If you ever find yourself in this position, I hope that you
remember reading this post. It's tragically true, and one of the most deeply
moving experiences of my life.
Nearly 17 years ago my brother committed suicide. He was 32. In February of
1990, my father, sister and I went out to Colorado Springs (my mother had died
of lung cancer the previous November) to await the why's and wherefore's of my
brother's death. It's a horrible space to find one's self in. He had a wife and
two young daughters: 2 years old and 5 months. It was heartbreaking to see my 2
year old niece cry Daddy, Daddy, Daddy to every headlight that beamed down the
road. She didn't understand that her Daddy would not be coming home.
He had put all of his things in order–to include his income tax preparation. I
will not go into all of the underlying reasons why I thought my brother
(estranged) chose suicide, but the catalyst was that he lost everything in the
stock market. Everything. There was $300 in his bank account. They were arrears
in their rent. His wife had no idea. He had sold his home in CA with a
significant gain. Moved to CO and was renting a beautiful, expensive home. The
sizable gain on home? Evaporated. Nada. Zippo. He had the one thing that was of
financial value: a sizable insurance policy (he sold insurance).
He did the penultimate financial fuck up–he lost EVERYTHING in the stock
market. The real pathos of the story is not that he lost his money, but that he
thought that the insurance policy was more valuable to his family than his
life. Amaranth and Mother Rock are titillating stories. But, there are real
people behind those stories. Why am I posting this? BECAUSE
I DON'T WANT ANY OF YOU TO EVER CONFUSE THE VALUE OF YOUR BANK ACCOUNT WITH THE
VALUE OF YOUR LIFE.
I have little to offer people who stop by to read this modest blog. But I
assure you that today's message is the most powerful and incisive that I could
ever offer–one that you will NOT get from any paid subscription. Sure,
investing is a provocative subject: it's sexy, it's intellectual and it's
instant, provocative conversation. But in the end, it is your financial health.
But I want to tell you, bluntly, that if you fuck up, it is not your life. It is
never your life. You start over. You dial back to being in your 20's
again–poor but idealistic. However, never, ever is it your life. (Of course
the underlying message is NOT to screw up (no more than 2 f-words in a
post!).
I don't know what 2007 will bring. I don't know a damn thing but this: You are
not your bank account. You are not your annual return. You are not your annual
salary. You are a spouse, a mother, a father, a friend, a son or a daughter,
but you are never a dollar.
So whatever decisions that you choose to make about your life–whether it's a
stock purchase, business venture, financial investment, love interest or
employment decision–you do so with conviction that should it blow up in your
face, you can face the next day with the stain of embarrassment on your cheeks
or a "how could I be so stupid" slap to the forehead, but you
continue to be a part of the lives of the people who know and love you. And all
of these things I feel well qualified to tell you.
