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.
It’s been a good day thus far, and one of my better shorts – Taseko Mines – is one I’d like to hold up as an example of the kind of short I like. Here are three things I like about this chart as a short:
(1) A large, relatively recent run-up in price, affording ample empty air through which a price can fall;
(2) A liquid-enough market in the stock to make it worth a position;
(3) A very cleanly-defined stop-loss level, confining risk to a reasonable ratio versus the reward
Here’s a fascinating synthetic indicator you can construct in ProphetCharts with the ratio symbol shown in the graph. By dividing the Fidelity Capital & Income Fund by the Long-Term Treasury Fund, you can get a sense as to the relative values (and willingness of the investing public to take risk) over a long period (in the graph shown below, over a decade) and see major inflection points in the market.
I think it’s healthy to keep the big picture like this in mind, days like 9/1 notwithstanding.
Good morning, everyone, and welcome to a shortened trading week.
So far, so good today. I don't get sick often, but I've been virus-stricken since Friday (perhaps my psychological state did a number on my immune system, just for good measure). All the same, the Slope must go on.
I did notice the Dow Industrials were in an interesting diamond pattern that's worth watching. I've also got some new "chicken scratch" that I may share later today.
I posted on Sunday at slope that my expectations early this week were that I was 'expecting a pullback testing 1084.5 ES on Tuesday, with a slight further deterioration to the support floor / wedge target in the 1074.5 – 1077 area on Wednesday / early Thursday.'
I've not seen anything overnight to change that view. Here is the broadening ascending wedge on ES that I posted on Friday, and which has broken overnight as I was expecting:
I could paint a picture here that we may have made a major interim top, and there are some arguments for that, but not enough of them, and it seems more likely to me that after a retracement we will be retesting the June and August highs at 1130 soon, so I'm just looking at short term retracement targets today.
That's not to say that I'm buying the argument that we are about to see a bullish breakout from 1130 yet. I'm struggling to believe that a major upward breakout could happen with the current economic backdrop, but this is a mainly technical market and it could happen. We'll see how it looks when we get to 1130 but until we see that breakout we're just bouncing within the 1040 – 1130 range that we've been trapped in for most of the last four months.
Short term I gave a target of 1.29 to 1.292 for EURUSD to reverse and it did reverse there. That isn't a good thing from the bear perspective as that is the neckline for a building IHS, and this reversal is probably the precursor to more upside. In the short term I have two retracement targets marked on the chart, and I'm favoring the lower one in the 1.2685 area:
I posted a falling wedge on GBPUSD at the end of August, and said that I expected it to evolve into a declining channel. It has done that, but other USD currency pairs are looking bullish enough that I'm doubtful about the channel holding. The next channel target is 1.51, but I think a higher target at 1.5275 looks more realistic for this week:
Teich50 alerted me to a rising wedge on AUDUSD on Friday and we were kicking round targets for a retracement this week. Overnight the rising wedge has broken and I have marked the two most likely retracement targets on the chart with my rationale. In the event that the wedge plays out closer to the classic wedge target I'm seeing main rising support at 89 and I have an upside (longer term pattern) target afterwards in the 93.85 area so this is looking like a very attractive spec long on this retracement:
I'm seeing a likely major equities interim top coming in the next two or three weeks on my SPX:Vix indicator, and two other charts I am looking at that may support that by then are copper and 30yr treasuries. On the copper chart we have seen a reversal at the 352.50 level I predicted last week, and are retracing to a likely retest of the 340 area. There is an argument that we may have just seen the top of the right shoulder on a huge H&S pattern, but I doubt that, and I'm expecting to see the 352.50 area retested and broken in a few days. On that break the obvious next upside target would be the upper trendline of the megaphone or broadening top in the 390 area, at a new high for 2010. Copper has been much more bullish than SPX over the last two months, and if we hit that target as my other indicators are peaking, that will be a powerful argument that we will see a major interim top there:
On the 30 year treasuries chart the recent top confirmed a rising channel from March, and we are now retracing to the lower trendline of that channel and should reach it within a couple of weeks. What happens then may define equities action for the next few months. If the channel holds then we should see a major interim top on equities there while treasuries start another wave up. If the channel breaks then the equity bulls could get the upward breakout that they are expecting:
In the very short term I've been considering the possibility that we might see a gap fill at the open this morning. ES has been stronger than the USD currency pairs overnight, and it looks possible at the moment that we could see a gap fill and broken wedge trendline retest in the 1104.5 ES area this morning. I'm writing this over three hours before the open though, and if we break down through 1094.5 ES before the open, then I wouldn't expect the gap to fill today.
I've been doing this blog for a very long time, and during these many years, I have consistently tried to be as open, honest, and transparent as possible.
That has been a good decision, because the "metrics" that matter to me – – a growing base of readers, a fantastic community of highly intelligent and mutually supportive Slopers, and a respectful atmosphere – – is exactly what I set out to achieve. Sometimes the truth can make me look foolish, and I certainly open myself up to trolls and mean-spirited outsiders by being so open – – but I'd rather be open than a charlatan.
There are fee-based newsletters which excel at making themselves look right, no matter what their track record is. The art of using weasel words and revisionist history seems to flourish in the realm of financial opinion. (Try declaring "Wave 2 is through!" for twelve consecutive months and see how it sounds). I don't want to be a part of that.
Of course, this is on my mind because last week was a rough one for me, and I did a couple of posts that made me particularly vulnerable. One spoke in stark terms about the horrible day I had on Wednesday, September 1st, and another asked quite openly for help from my readers on seeking a technical indicator which quickly got dubbed as an unfindable "holy grail."
Neither of these posts were necessary, but both of them were consistent with how I run this blog. The easier choice on Wednesday would have been to simply Change The Subject and talk about something else (pretending it wasn't an awful day) or, if I were a real scumbag, say what a terrific day I had. Instead, I opened myself up to derision (which was probably like Christmas to the frat boys at you-know-where).
It's funny, because when I was making triple-digit gains, I was accused by some of being full of it. And yet when I bemoan a 4% loss, a few people laugh at a supposed train wreck. I'm still very much in the game, fellas.
This all got brought up because of an incident today. I noticed that Dutch had zapped someone on the site for some nastiness. Since the nastiness was deleted, I didn't see what it was, or who posted it, so I forgot about it. Later today, the author of the aforementioned nastiness emailed me, going off on me about banning him from the site (which I didn't) and not being open to other opinions (which isn't true).
This fellow and I have been emailing each other back and forth pretty much all day long. His concern has been that my bearish bias has been leading readers into "ambushes". I have made no secret that I've been seeking concrete techniques as a counterweight to my well-known bearish bias, and I think I've got a few solid ones now, thanks to the help of dozens and dozens of people that have emailed me their suggestions.
The bottom line for me is that Slope has a culture I like, and part of that culture is borne from being open and honest, through the good and the bad. Sometimes I'm brilliant, sometimes I'm a moron, and most of the time I'm somewhere in between. (Lately "moron" would probably be about right). I will leave you with this:
People are often unreasonable, illogical, and self-centered;
Forgive them anyway.
If you are kind, people may accuse you of selfish, ulterior motives;
Be kind anyway.
If you are successful, you will win some false friends and some true enemies;
Succeed anyway.
If you are honest and frank, people may cheat you;
Be honest and frank anyway.
What you spend years building, someone could destroy overnight;
Build anyway.
If you find serenity and happiness, they may be jealous;
Be happy anyway.
The good you do today, people will often forget tomorrow;
Do good anyway.
Give the world the best you have and it may just never be enough;
Give the world the best you have anyway.
You see, in the final analysis, it's all between you and God;
It was never between you and them anyway.
