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.

Revised QQQQ Correlation – (by Osbourne Cox)

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The correlation played out pretty perfectly on Thursday, with section 22
following 2007 perfectly, gapping up and printing a big green bar that lifted above the previous day's high.

Below is a cleaned up correlation graph.  I also broke apart some of the larger chunks of daily bars.  They still match up very well.  I also added the percentage size of the bigger moves and the corresponding gain to come lines up well with the channel/shoulder line that I've drawn.

QQQQ_Correlation_20100527

Since this is implicitly based on EW Theory, I get to flip flop on my previous call.  (HA!)  My earlier post about the SPX not reaching 1150 might have been overstated.  Well, we still might not hit 1150, but it appears that the recent movements in the QQQQs are all of a smaller magnitude than in 2007.  So I'm starting to think it IS reasonable to trace through much of the rise to the right shoulder that occurred in 2007 without invalidating the H&S pattern.  That extra time will enable the SPX to at least approach 1150 or 1140.

According to the chart, the expectation for Friday seems to be a slight rise above Thursday's high, only to drop down to Thursday's low without breaching it.  Granted, in 2007 this occurred over 5-6 days so maybe Friday we'll just make a new high and sit there all day.  After all, it IS the Friday before Memorial day.

But if it all happens in one day, it will be the perfect setup to piss off as many people as possible:  Bulls will get trapped in the morning as we make new highs and bears will be caught in a bear trap at the EOD.  Notice that big gap open that occurred after the red bars.

At least, this is all what happened in 2007.  Let's see if the pattern repeats.

My Natural Gas Mistake

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I've had good luck with the ETF on natural gas, UNG, lately. I came into the day long UNG, and I sold it at a profit shortly after the open.

However, I learned a painful mistake today that I will avoid repeating. After I sold, UNG continued strong, so I re-entered the position. I normally pay close attention to the events of the day, but in all the excitement of this morning's rally, I didn't notice that at 7:30 my time, a natural gas report was coming out.

It did, and the market ever-so-briefly ripped down, took out my stop, and continued its upward climbing. My profits from the earlier position were gone, and then some. I wound up buying UNG (yet again) later in the day, and I closed the day with a profitable UNG position.

I am a big believer in stops, but it's apparent to me that it's unwise to have relatively tight stops in place during these reports. The dip down lasted only moments, but that was all it took to rip me off. Learn from my error.

0527-ung 

WAG Remains Spot-On

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My patent-pending WAG System has been picture-perfect so far. Below I point out Wednesday's action (the surprising drop, which – thank you, Jesus – prompted me to cover my SPY short two hours after yesterday's close) and Thursday's (the zoom higher). I've put a circle where I think we are now.

If the WAG continues its wonderfulness, we'll simmer down tomorrow and then resume the rally big-time next week. The Ungodly Shorting Opportunity Of The Year will appear in June.

0527-wag