Wow, that subject line really sounds wrong somehow. Anyway. I don't touch UNG anymore, even though it's technically always kind of interesting. I do glance at it daily, however, and I was stunned to see it had fallen – yet again! – to a lifetime low. At this rate, why don't we switch all our energy needs to natural gas? The stuff is getting close to free!
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.
Regular and/or observant readers know that very late in August, I posted – – and subsequently deleted – – a post from Boston Wealth (written by Mortie) with a very bullish take on the market's prospects. In fairness to myself, I genuinely did disagree with the conclusions of the post, but to take a carefully-written piece of work and toss it in the dustbin simply because I disagreed with it was wrong-headed and – with hindsight – a telling warning about the sea-change that was about to take place.
I wrote to Ben of Boston Wealth this morning in the most humble terms, and he graciously accepted my apology. I believe in the words of Desiderata – "As far as possible without surrender be on good terms with all persons." I appreciate forgiveness, particularly when it's warranted like this. Ben promises more posts will be coming in the future, and I shall treat them with the respect they deserve.
There seems to be virtually universal agreement that 1250 is the next stop on the S&P (Gainesville, Georgia notwithstanding), although I still maintain the bulls are going to be sorely disappointed. The confidence – in some cases, smug arrogance – of the bulls can be understood in light of this month's price action:
Equity rallies based on government manipulation don't strike me as sustainable, and I continue to find, and secure, short positions that I feel are promising. I do have a small number of bullish positions whose charts I genuinely can get behind, but my largest hedge – a very substantial SPY position – was closed this morning and I remain positioned heavily on the short side.
Friday was a very good day for the bulls and a number of key support and resistance levels fell that suggest that we've a lot more upside coming. After the slight break back down through the SPX IHS neckline on Thursday it was weakened, but not greatly so, and the neckline was recaptured with a lot of confidence on Friday. On the 60min chart we've now established a support trendline to go with the already established resistance trendline. Together they look like a rising wedge, but there aren't enough crosses between the trendlines to make it one really:
Copper has broken upwards from the rising wedge and well established resistance trendline and the rising wedge target is 397, which fits with the two alternate resistance trendlines that I've marked on the chart. This break could possibly still be a wedge overthrow, but I wouldn't put any money on that:
USD has now broken down from both the H&S neckline and the support level that I marked in on Friday's chart. The next obvious targets for EURUSD and GBPUSD from their charts are in the 1.375 and 1.595 areas respectively so I'm not really seeing much reason for a bounce here:
Oil broke declining resistance and the H&S that was forming now looks unlikely to finish forming the right shoulder. Oil's probably the weakest long here with the high stocks position looking likely to be a drag on any move up:
Financials are often a good indicator for equities and I've been looking at the XLF chart over the weekend. That also looks encouraging for bulls, with a falling wedge that has broken up and retested, and a smaller rectangle bottom that has formed at the bottom of the falling wedge. Rectangle bottoms, despite the name, break down 55% of the time, but this one looks likely to break up under the circumstances. On an upward break this has an 85% chance of reaching the target at 16.8. The falling wedge target is 17.05:
All in all the technical picture overall looks very bullish now and the best strategy here looks likely to be buying on weakness. We may see some weakness this week and I'm seeing a big move today in one direction or the other. If that move is down then it is likely to set the direction for much of the week. If that move is up then I'm seeing strong resistance in the 1161 – 1165 area today.