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.

Precious Metals Still in Strong Uptrend (by Springheel Jack)

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I was planning this as a post this weekend, but as it is possible that
the targets I'm looking at may be hit before then, I've decided to bring
it forward.

I was reading John Murphy's post last week talking about serious
technical damage done to the GDX uptrend, and then assorted suggestions
of imminent distaster in precious metals in various places, but notably
yesterday in Clusterstock
Chart of the Day

For me the essential driver in the long precious metals rally is the
loss of confidence in fiat money due to the easy money policies of the
last decade, and the wild printing of new money to support economic
growth in the last two years. There is little sign of this ending in the
US particularly, and every chance that it may accelerate if we see the
weakness in equities this summer that I am expecting, so I had a careful
look at GDX, silver and gold to see whether I could see any sign of a
significant reversal.

On gold we have a two year old rising channel and while we are falling
towards the lower trendline of that rising channel, until it breaks we
are just looking at a potential opportunity to buy at support in the
1153 – 1160 area. Here it is on the Gold Futures (Aug) daily chart:


On silver I see the same two year rising channel with a potential
opportunity to buy at support in the 16.60 area, here
it is on the Silver Futures (Aug) daily chart:


On GDX, I see an eighteen month old support trendline that will give
strong support in the 46 area, but I also see what may well be a
rectangle, with a recent partial decline. These rectangle 'tops' break
upwards 68% of the time, and a partial decline predicts an upward
breakout 89% of the time. If rising trendline support at 46 breaks, then
rectangle support should be found in the 40 – 41 area.

On an upward break of this rectangle the upside target would be almost
70, though I would add that the rectangle needs more crosses within it
to be a stronger pattern, and that rectangles that take more than six
months to form tend to be less likely to reach target.

Here it is on the GDX weekly chart:


All in all I'm not seeing any sign of weakness yet in gold, silver or
GDX. I am seeing a rare opportunity coming to buy at longer term

Only if these channels and patterns break would we be seeing a real

An Email From a Reader about the SPX

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1.  2009 Low – 666; 2010 High – 1,219.  38.2% retrace = 1,008.  Thursday's low was 1010.
2.  TLT didn't come close yesterday to testing Thursday's high.  I know we are all supposed to worship the $VIX as the fear index but long term treasuries are the true barometer of fear in the form of flight to quality.
3.  Almost every major index is following its downsloping trendline since the May flash crash.
4.  CNBC has picked up on the break of 1040, published Prechter's views, and pointed out the H&S formation.  If CNBC sees it I don't want it.

To me, this is a very simple view of a complicated market.  I've attached the chart of the $SPX.


USD and Opex (by Springheel Jack)

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A strange day yesterday, with ES breaking out above the short term
declining channel but falling back in a real show of weakness in the

I did mention yesterday morning that I thought that the USD currency
pairs didn't look quite ready for an equities rally and that's still the
case this morning, though that may change very soon.

My expectation is that by opex we will have seen ES rally to the 1070
area, EURUSD to the 1.28 area, and USD should fall to near the 83.5
area. We may well take a winding path getting there though. After opex I
am expecting the main bear event of the summer to begin, with a fall
over the next four to eight weeks to 870 on SPX while USD is in a strong
wave up. Here's the big picture USD chart to illustrate why we should
find very strong support at 83.5:


In the event that ES fails to stop at resistance, and USD fails to stop
at support, then I would expect just the opposite, with the USD rally
over and ES recovering most or all of the losses over the last few
weeks, but that is definitely the secondary scenario until and unless
that happens.

In the short term ES has been finding some support at the range support
level at 1016.5, and that may well hold. We may be seeing the formation
of an extremely ugly and unimpressive IHS and I am expecting that the
range support/resistance levels marked will continue to be important:


EURUSD was testing overhead rising resistance hard yesterday, but has
since fallen almost a hundred pips. I'm expecting further weakness, but
am doubtful that we will see a return to the lower trendline of the
rising wedge. I've marked in the two strong support levels where it is
likely to find support instead:


GBPUSD is my favorite channel for the moment, as it is in a strong
rising channel which is extremely tradeable. The two scenarios that I am
seeing here is either a return to the lower trendline of the channel in
the 1.5025 – 1.505 area today, or if strong support at 1.509 holds,
then a touch of the lower channel trendline at or above there late
tomorrow or on Friday:


I'm going to be away much of tomorrow and possibly all of Friday so
there may not be a Friday post.