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.

Hamlet Has Left the Building (by Springheel Jack)

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We finally got a break down from the wave 3 channel on SPX yesterday:

100325 SPX 60min Wave Channels
About time too really, as making this interim top has taken way too long, and this has unfortunately wasted much of the period when it could have coincided with the strong wave up in USD.

The USD wave has been so fast and so strong that it looks unlikely to last too much longer. We could reach the top of the USD channel in the 83.5 area if we get there next week, and at the rate USD has been rising, it isn't impossible that we could reach it in the next two trading days:

100325 USD Daily Rising Channel
That's bad news for the retracement in equities, as there is a very distinct possibility that the retracement will end when USD hits the top of that channel, just as the bottom on Feb 5th was hit on the same day and at about the same time as EURUSD hit the bottom of the declining channel:

100325 EURUSD Weekly Channel
That makes the EURUSD target here of very considerable interest, and the clearest picture of that channel target  is on the weekly, where the highest the target could be is 1.30. Next week it should be at about 1.295. However we could get as far as 1.285 as the previous two bottom channel hits both pinocchioed through before bouncing.

In the very short term though, EURUSD has been bouncing overnight, and I'm expecting that it may well rise a little further to hit the bottom of the current short-term declining channel just above 1.34. Given the greater targets on this, EURUSD looks like a very nice short indeed from there:

100326P_EURUSD_Forex_Channel
One chart I've been checking very regularly for a while now is the XLF chart, where a beautiful rectangle top pattern has been building for several months on the weekly chart. Last week it was trading above the rectangle for much of the week, but returned to close within it last Friday, and I'm expecting to see the same thing happen today, which would mean a return to 15.75 or lower. As and when this does break, and assuming it breaks to the upside which is likely, the pattern target is 18. Rectangle tops of course, despite the name, break upwards 69% of the time:

100325 XLF Weekly Rectangle
I don't trade gold much, but this head and shoulders pattern, which could well play out over the next couple of days, also looks very inviting:

100326_GCM0_60min_HS_Pattern
Overall I'm expecting to see sharp drops in both equities and EURUSD today. I think that we're in a subwave 4 abc correction, and that we probably saw the a wave down yesterday and have been seeing the b wave retracement overnight.

I've marked in the fib retracement targets on the SPX 60 minute chart at the top, though it doesn't include the 23.6% target which would be 1158 SPX. I'm expecting to see 1144.5 SPX for the 38.2% fib target, and am hoping that we will see 1133 SPX for the 50% retracement, though I'm less optimistic about that now that we have wasted so much time making this top.

If we see anything lower than 1112.42 SPX then this wave count is wrong and the main wave up from March 2009 will most likely be finished already

Until and unless we see that though, this is just a short but pleasant interlude for the bears before another wave up, and is primarily a good opportunity to get good long entries.

US Treasury Bonds Uber Alles

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(Tim sez: please note this was written by Gary yesterday, so adjust time references accordingly)

In honor of our friends at Treasury selling their bonds (more of our
unpayable debt) yesterday and today, and in light of the fact that it
took higher rates (bonds across the board tanked yesterday) I thought I
would take a look at some iShares T-bond charts.

Up today, the
government peddles 32b
worth of 7 year notes, so the iShares 7-10 year treasury fund IEF
gets the main chart. In the lower panels are the IEI 3-7 year and TLT
long bond funds.

Before we look at the chart, a question; what
exactly does it tell us when the inflators attempt to find buyers for
their bonds (def- 1: a binding security; firm assurance: My word is my bond. 2: a sealed
instrument under which a person, corporation or government guarantees to
pay a stated sum on or before a specified day. 3: any written
obligation under seal) and with long term interest rates already
approaching 'big picture' tolerance levels (that would be the err, barn
door) rates rise strongly on auction day?

It tells me there is a
problem with a lack of confidence in the US treasury (no shit?), but
that the policy of low short rates (despite market pressures on the
freer long end and despite economic/asset recovery) and a firm 'inflate
or die' attitude to continue funding this macro experiment continues
unabated. They are pushing the tachometer into the red in a tacit
statement of "We are America, and what the F are you going to do about
it anyway?"

Is it possible that the world – given the unraveling
of the euro amid the failed experiments popping up over there with
greater frequency – is submitting to the US and the too big to fail
owner of the reserve currency simply knows it can take and take and
take? And the US' subjects just line up for more, albeit at higher
rates of interest?

Hey look, I am just a blogger trying to figure
out the meaning of some very confusing questions and conflicts, just
like you. So on to the chart. What I find here is surprisingly bullish
– for treasuries (and for the still open deflation impulse scenario).

Ief

7-10
year treasuries are in a nice symmetrical triangle, which is a
continuation pattern. No breakout yet, but if the break is to the
upside, expect a strong move with upside follow-through.

The next
panel is the home of the 5 year treasury bond and its pals on the short
to medium end. Ascending triangle – bullish continuation as long as
lower line holds. A break of the top line brings on a strong move
higher. It's just about done coiling and will break one way or the
other shortly.

Finally, in the lower panel is our long bond
proxy, the iShares TLT 20+ year fund. Below the lower trend line we go
into Wonderland, uncharted inflationary territory. But what's this?
TLT has creeped out of the weekly downtrend while holding the 'barn
door' line. There is little downside tolerance left. We are there
folks; on the cusp of having some big ongoing questions answered.
Recall that if you flip TLT over, it looks like a bullish inverted head
& shoulders. Talk about drama? —Gary

Sniffing Kodiak?

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It's Brian Johnson again and here's a video on the current state of the markets and what to look for as we move forward. The markets decided to actually roll over this afternoon and put in a series of decent red candles. While I don't want to put a damper on the bears parade it needs to be said that there is still nothing broken from a bull standpoint. We're sitting at or above a lot of support so confirmation tomorrow would really be nice from the bears.