16 years ago – Page 9 – Slope of Hope with Tim Knight

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.

1937 vs 2007 Bear Market Comparison Update (by TheInflationist)

By Theinflationist - 16 years ago (22, Feb 2010 1:02:18 PM)

Our last update on 1937 vs 2007 comparison was exactly two weeks ago, 7 Feb 2010 – when markets were in the pits. Dow was 9880 at the time of writing then – and our plan 2 weeks ago was: Our strategy going forward: We look to reshort at ~ 10400 +/- 50 points. Lets hope for a swift rally. Stops at previous high 10720.

Well, here we are now at that point – markets closed at 10402 on 19.2.2010. Here are updated charts, zoomed in to try to pinpoint the top (for new readers, we have never been able to do this so please proceed with caution). We will let the charts do most of the talking:

Series 1 (blue) : 1937 Bear Market

Series 2 (pink): Current Bear Market

X-axis: number of days from peak

Y-axis: Percentage from peak

Chart 1: 1937 vs 2007 Crash Comparison Chart (Big picture)

Chart 1: 1937 vs 2007 Crash Comparison Chart (a closer look)

Just to remind readers and for new readers, our first post on this (ridiculous) series comparing 1937 and 2007 (two independent points in time 70 years apart!) was in Dec 5 2009: Using Fibonacci Numbers to Predict the Market. We have been tracking it since.

Our trading plan this week:

+ Hope for markets to rally early in the week. Looking at 1937, markets need to rally ASAP. This is the terminal part of the rally, so some good news on Monday would be good. Note that whilst 10500 is based on the same percentage retracement as 1937 at point "X" shown above, the rally could fall short of 10500. We have fired a miserly $2/point at 10400 – we will reserve our ammo for 10480 ($5/point) and 10540 ($10/point).
+ Small McClellan Oscillator change on Friday. Whilst we bears hope the large expected move is a DOWN move, lets hope its an UP move to hit our targets set above. A 140-point rally on the Dow (1.34%) would take us to 10540, setting off our highest short.
+ All shorts have a stop at 10700 (loss of: $600 + $1100 + $1600 = $4300) ($4300 is quite a big gamble~3.5% of our portfolio)
+ Potential upside: target 9600 (final target will be updated in the coming weeks) – ($800 + $4400 + $9400 = $14600)
+ We will be posting this analysis on as many blogs as possible – in hope of advice from readers who are familiar with options to provide an alternative trade plan based on the above scenario. We don't like our $4300: $14600 play. Thank YOU in advance.

Monday Malaise

By Tim Knight - 16 years ago (22, Feb 2010 9:44:36 AM)

Well, most of the trading day has been spent in a 2 point /ES range (!) as traders just grind around, trying to figure out what the market is going to do next, if anything……..

My heartfelt apologies for bringing up SLV (the silver ETF) again, but I really, really like this chart. I lost a little on it last week, but I'm back for more punishment. I've got a stop set above today's high, and I continue to think this ETF is a good indicator of general market direction these days.

SPY and the Coming Week (from Arthur)

By Arthur - 16 years ago (22, Feb 2010 8:34:58 AM)

Hi there, it's my first post on the Slope, thanks to Tim and everyone for your insights. I figured I would return the favor with a couple of my own ideas. As far as my thoughts on where we are, here are some charts that I have plotted on the SPY.

Since the beginning of August 2009, we entered a fairly predictable price channel that lost its steam at the end of January 2010 when we broke lower resistance (purple trendline). Since then, we have seen a retracement two times that, in both cases, has flirted with breaking the upper resistance trendline. Currently, we are at the second instance (the first being around Feb 3), and if prior experience holds any weight, we may bounce off that resistance in a dramatic effect (as per Feb 4).

I, for one, am in agreement that this market has been overbought and that our current "correction" has been far from such. We have also seen diminishing volume since the bounce back on Feb 5, which signals the bulls may be running out of steam.

Here are my thoughts on some fundamentals, which I believe will determine whether or not we will continue the uptrend or drop back down.

In my opinion, the market has shaken off bad news recently and pioneered new highs (versus the situation a couple weeks ago when we were dropping amidst good news/earnings). We had the news that China was tightening policy regarding their banks, which merely dropped us down to lower resistance and subsequently bounced off the same (Feb 12), only to rise to relative new highs. The second, and more important, news was that the Fed decided to raise the rate at which banks could borrow from them (Feb 18). This can only mean two things:

1) The Fed, with its unfettered access to information, has analyzed the numbers and believes that we are on the path to full recovery in every sense (bullish).

2) The banks have been rising at a disproportionate level than the other industries have been growing and need to be brought in line with them (bearish).

I am of the opinion that (2) is what is at play. This seems to correlate with Obama retracting his discourse against high bonuses at banks and such in the previous couple weeks, moving more towards a pragmatic approach from the Fed that levels out the numbers between bank profits amidst a suffering landscape. I will be looking at the upcoming numbers this week concerning consumer sentiment and housing markets as indicators for directional moves in the markets the next coming days.

Thanks for reading and good luck this week!

The Chinese Factory (by Royal with Cheese)

By Tim Knight - 16 years ago (22, Feb 2010 7:13:37 AM)

Bonjour Slopers ! Royal with Cheese here … I'm glad and honored to add my little contribution,or call it my "french touch", to SOH which happens to be the best place on the blogosphere !

Most of you have heard about this big country called China with its population over 1.3 Billion haven't you ? The iphone's that you carry with you,the Nike shoes that you wear come from China, the mouse you click on every five minutes like an addict in order to get to SlopeofHope also comes from China ! You guessed it, this country is more or less the ultimate factory of this god damned planet ! Without further ado let's analyse the chart of the world's biggest factory and compare it to our SPY (The Holy American Empire) !

As you can see in this chart, FXI has produced a golden cross in early May 2009,i.e (the 50 dma crosses above the 200 dma),which is a bullish pattern ! Indeed,FXI has rallied up to $47 until mid November 2009.

Surprisingly, the chart of the SPY or call it US of "A" has produced it's golden cross a little bit later, in mid June 2009. Yep, that's a a bit more than one month after China … Sweet Jesus on a biscuit, is America lagging behind China ??! Anyways,the SPY rallied up to $115 until early January 2010 !

This is where things get a little more interesting….

The actual chart of FXI shows a top at $47 in mid November with a death cross,i.e (the 50 dma crosses below the 200 dma), that is lurking ! It goes without saying that it will take a "miracle" for FXI to prevent this death cross from taking place… maybe if it rallies sharply 20% in the next couples of weeks would this bearish cross be avoided ! I'm sorry to say that,but based on my observations, this death cross is an accident that is about to happen. If you want to know the recent victim of the death cross,you can go check out the chart of the EUR/USD of the last four months if you see what I mean.

If everything goes as i expect them to, then the death cross in FXI could materialize by the end of February. Since the SPY was one month behind FXI in the golden cross,wouldn't it be "logical" to expect the death cross to take form in late March ? If you compare the actual chart of the SPY and the actual FXI.. I think that things look pretty clear to me going forward.