Slope of Hope Blog Posts
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That was a very impressive decline on SPX that continued after hours
yesterday, and the wave down bottomed at 1074 ES, making it a peak to
trough move of slightly over 50 points on ES in slightly over 24 hours.
Very impressive indeed.
I don't do EW much myself but I have read a couple of books and am
familiar with most of the rules. I've put a possible wave count on ES
since the high last week:
I'm using the bull count taking this as an ABC move from the top. For
the bear count you just change ABC to 123 and assume an extra two waves
to follow of course. On this count we saw 3 of C yesterday and we have
started 4 of C. As you can see from the chart I'm considering the
possibility that wave 5 down has already started, though we could
technically have a rally under this count that went as high as 1106, but
would go no higher than the low on Tuesday.
In the very short term on the 1min chart ES formed a broadening
ascending wedge from the low last night but as I write has broken down
from it, which suggests to me that we may well see more downside this
The main USD currency pairs are suggesting that too, as they rallied for
a while overnight with ES, but then diverged to make new lows after the
overnight peak on ES. EURUSD is now most of the way towards my target
for a longer term bullish scenario on EUR. A break below it would look
very bearish to me and would suggest that we may see a new low on it
GBPUSD has also made it most of the way to my target.
Again, a break below would look very bearish and suggest that we may see
Oil has made it most of the way towards the lower trendline of the rising channel:
I have noted the exact target levels on all of these if these were to be hit today.
Copper hasn't been falling as fast ast the others, and is only halfway
to my target. Like ES, at the time of writing it is somewhat above the
The ones I'll be watching most carefully this morning apart from ES are
EURUSD and GBPUSD. If the bounce at my target levels that would only to
be expected, as they are the natural levels to see a reversal of course.
If they break down through them though, then it would suggest strongly
on both that we have been watching a rally on both of these since they
bottomed in early June, and that they are both still in a major bear
move. If so, that would suggest strongly that we haven't seen the low
this year for equities either so it is very significant if those levels
fail to hold.
I'll also be watching those levels because at the low in February the ES low was made at almost exactly the same time as my EURUSD trendline target was met. That didn't happen in July of course, where EURUSD bottomed almost a month before ES did, but it is something to watch regardless.
If that is the case, and this is an ABC correction as I have marked
it up in my EW count, then we may be very close to the low on ES, with
just one lower low yet to come and if so, then the relative strength of
copper overnight also has a bullish look to it.
Just a quick note: the SPX finally followed the NYSE above
the cloud, ever so slightly… for a whopping 2 days. That ended today:
The cloud range (support & resistance) for the next week
What I find the most interesting is the support &
resistance zone I’ve been watching for a while now. Going back to July-09, this zone has seen 8
events (4 in support and 4 in resistance), with today being the latest
resistance drop down. Note: I removed some
of the lines so as not to be the cause of general SoH eye damage:
I entered a 40% short position as the cloud + zone ceiling proved
too solid to break through. I sadly must
report to all of you that now that I have shorted, the market is virtually guaranteed
to have a huge up move, thereby leaving me without beer money for the weekend.
I had a few ugly short positions really take shape today, and was feeling pretty good after the big drop on Wednesday (even though I now wish I had opened up more shorts…). Being in a festive mood, I decided to to start my weekend early and cracked a few short dogs with Stun Gun.-Trading error 1
I told him to invite some of his friends over to get the party started. He yelled out the window, and it wasn’t long before Jaundice Pete, Bloodgum and Crabshack Maria were knocking on the door. –Trading error 2. My shorts were green, we were rocking out to Bloodgum’s favorite Butthole Surfers allbum, short dogs were flowing like the majestic Niagara Falls and I felt like Leonerdo DiCrappio in that Titanic movie, “King of the World” style. Trading error 3, getting too cocky.
I was on top of the world, but how quickly that can change. The Colonel unexpectedly came back from a two 1/2 week coked-out bender and looked pissed when he saw that Stun Gun had been sleeping in his room. The Colonel ran towards me and grabbed my neck in a sleeper-hold; the last thing I remember was watching Jaundice Pete banging away on the keyboard of my trading station (LOL, who knows what he was doing) then things got sort of hazy.
I woke up on the kitchen floor and was pretty sorel the place was a mess. The Colonel apologized for beating me, but said that allowing someone to sleep in his room violated and tarnished a sacred space in our apartment building. I needed to be punished for my actions.
He made me clean up the apartment and urine from the pee-jars that my skull had broken. Then banished me from our apartment for at least one week, so looks like Stun Gun and I will be roommates for a bit longer.
I’m having a hard time stealing bandwidth out here on the street, so Stun Gun has been helping me out old school charting with paper. Here are a couple fan-charts he made for me today, he said they are support and resistance. The red fans are drawn using his own blood, I won’t tell you what the green is…