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.

The Annoying Market

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July, so far, hasn't been a good month for me. Out of 9 trading days, I've had four gainers, four losers (all of them big), and one completely flat day (which was today). Net it out, and this month has stunk so far.

Why? Pretty simple: the rally from hell over the past week. Early this month, it genuinely seemed to me that substantial levels had been breached and we'd have another hearty push lower. It was not to be. The market has "floated" higher, on virtually non-existent volume, based more on a lack of bad news (does anyone remember the chaos Europe was supposed to be in?) than a plethora of good news.

The folks over at Elliott Wave put together a chart in their update tonight which neatly shows how utterly annoying this market is being to bulls and bears alike. Sometimes the market trends nicely in one direction (such as in 1995, when it basically went up a little bit every day for the entire freakin' year). Other times – like now – it goes up…….then down……..then up……..then down………making everyone miserable except commissions-charging brokers.


I remain completely short, although I have scaled back so I am only about 95% committed (e.g. I am not using any margin at all; I had "peaked" this month at about 150% committed). I have a huge variety of short positions, and if you looked at all of them, they'd probably fall neatly into about five different categories of rationale as to why I think they're going lower.

One particular category is the "exhausted trendline." These stocks have broken their upward trendlines, but they are spending weeks – or even months – clinging desperately to that trendline, even as the stock ascends higher. Microsoft (MSFT), shown below, is a beautiful example of this. These stocks, in my experience, eventually succumb to the forces of gravity, although waiting for this fall can be exasperating.


There are really no charts of note that I find bullish-looking. Even though I'm getting stopped out of a minority of my positions each day, I will keep "going to bat" with supplemental positions, since I think a break in this market is coming soon. The waiting – as Tom Petty sang – is the hardest part.

Pause in Flight-to-Safety Trade (Mike Paulenoff)

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What is fascinating about the enclosed daily charts of spot gold and nearby 10-year T-note futures is that both major trends remain very much intact and dominant despite the recent weakness. In fact, the weakness has NOT violated any meaningful prior pivot low — in gold at the May 21 low of 1165.74 and in the T-notes at the June 21 low of 119-24.
Purely from a technical perspective, the 6.5% decline in gold and the 1.5% decline in T-notes appear to be "normal, minor" corrections within the larger uptrends. To listen to bond and stock market pundits claim that a mass exodus out of bonds and, to a lesser extent, out of gold will now drive equity prices much higher seems to belie what these charts are telling us — that the flight to safety trade is undergoing a pause that refreshes, rather than a total reversal…at least for now.

Originally published on

Directional Lines in the Sand (by Springheel Jack)

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Intel beat earnings expectations massively last night, prompting some
flashbacks to the bear wipe-out last July and wails of how it is
happening all over again, and that may be right, but it isn't
demonstrated yet, and there are more earnings than Intel's to come in
the next few days. A quick look around us tells us that we are unlikely
to see record earnings all round this year.

The silliest comment that I saw was that technical analysis was no
longer relevant to this market, which is garbage. Even if the SPX rises
to new highs in the next two years, which seems unlikely, there will
still be important trendlines, channels, patterns and indicators to
light the way and supply good trading entries and exits. Only fools
would think otherwise.

Back on planet earth ES reached rising trendline resistance at 1098.75
after the Intel announcement, and has since fallen back to 1090.5. I
have an immediate target of the centre trendline in my ES rising channel
in the 1086 to 1089 area depending on when it is reached:


On the bigger picture the best indication that this rally was the start
of a new bull move would be the main indices breaking above the June
highs, though most have now broken declining resistance from the April
top, including ES which broke it yesterday at 1094.5 ES, albeit that
hasn't been broken on a daily basis yet. There are some other indicators
to consider too though, and they are the reason that I was expecting
this rally, if it is a rally, to fail at yesterday's high. I have
serious doubts about that now as this move up has looked so impulsive,
but let's review them again.

The key one is USD. USD and the main component of the USD index, EURUSD
have been in mirror image wedges. Here's the broadening descending wedge
on EURUSD which has not quite reached target, just as the USD one has
equally fallen slightly short:


EURUSD has a history of forming wedges on big moves, and when broken,
they generally play out to target. It is very important for the bear
case that these wedges don't break, as a bear move down against the tide
of a falling dollar would not be easy.

The second key indicator that I am watching is 30 year treasuries. There
we have a strong rising trendline since April that was tested yesterday
and is still intact and it will help the bear case if that remains the


On oil I've been considering whether we have a rising channel or a
broken rising wedge. The broken lower trendline of the wedge has been
retested hard yesterday and has not broken, which supports the idea that
it is a wedge. If so, we can expect a move soon below $70:


Of the USD currency pairs GBPUSD has now reached my target at the upper
trendline of a declining channel from last October. I am expecting it to
turn down here to a target under 1.40 but if it doesn't reverse, that
will be a major bullish breakout, strengthened by the fact that the
upper declining channel trendline goes back to July 2008:


I posted a possible IHS on AUDUSD yesterday and I am watching that
very carefully, as a serious break up over the June highs would suggest a
target of 92 to me, and most likely a return to the upper trendline of
the larger broadening formation at 94. I can't see that happening really
unless the recent equities low is to hold for several months at least.
The June high held as resistance yesterday and I'll be keeping an eye on
that today:


I still think we may have seen a major interim high on ES yesterday,
though I am aware that is very much a minority view at the moment. If
so, we will most likely consolidate that top over the rest of the week
before the main bear event of the year begins.

If not, USD and bonds will break downwards and I'll outline my alternate
bull scenario with a target at 1400 SPX, but we're not yet at the point
where that needs to be seriously considered.