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.

About Buying Every Dip

By -

The mantra these days from sea to shining sea is the same: Buy Every Dip. That works well for a while. It worked great for years during the last decade. Take note of that last buying opportunity, marked in purple:

0326-buythedip 

It is shown again in purple below. My point is this: one day, the dip slips. Buying a dip is no guarantee of profits. You might get five dips, or ten, or fifty – – nobody knows. But when the dip fails, look out, because everyone will have been trained to do nothing but buy dips, and you're going to wind up with a population that has no idea what to do next.

0326-thelastdip 

Speaking of dips, I said something dippy yesterday I should clarify: I did a post about the sad state of affairs at very blog sites, including this one. I jokingly made a reference to molecool's temper, but since some readers might not misconstrue what I said, let me clarify – – – I've known molecool for a long time, and he's a good guy. We've met each other once, and he was perfectly friendly (in spite of the 'Evil' moniker). Sorry if what I said came out the wrong way.

Chart on TAN (by Mike Paulenoff)

By -

The solar sector was left out of the entire Jan-Mar advance in the major equity market ETFs. However, the chart pattern and the behavior of the Claymore Global Solar Energy ETF (TAN)’s biggest component, First Solar (FSLR), suggest that “this dog” just might have its day yet. The rounded base-like formation that has been established since early February is intriguing technically, within a very oversold condition. Price, however, is everything – and until the TAN hurdled key initial near-term resistance at 8.55, the base will remain just that – a base in development. At this juncture, my work argues that I “need” to be long unless or until the prior low is violated at 7.88.

T3lyWYuHL 

Originally published on MPTrader.com.

Hamlet Has Left the Building (by Springheel Jack)

By -

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.