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.


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We give traders and authors like Larry Williams, John Person, and Jim Dalton all the credit.  Yeah, we know some of this stuff is as old as the hills, but hey, history and human psychology have a funny way of repeating themselves.  Back in May, we posted our previous ES volume profile.  It's time for a refresher.

Williams likes to watch for extreme readings of the net positions of commercial traders.  He also likes to use a 52-week moving average as his trend guide.  Sorry for not submitting this earlier when our fabulous host was looking for sentiment indicators.

When the slope of the 52-week average is up, the trend is up, and the commercials show us extreme net long positions, Williams tends to favor longs on pullbacks.  DISCLAIMER: we have no idea what Messieurs Williams, Person, or Dalton are doing now, we are only watching the charts form with interest.

John Person likes to fade whatever retail traders (small speculators) are doing.

Jim Dalton watches volume-based value areas for clues and insights into the auction process at different price levels.  Resistance becomes support, vice versa, and so on an so forth as price discovery ranges around a mean until price breaks out and moves to the next value area.

Using these lenses simultaneously either makes us cross-eyed or reveals an interesting picture.  In the weekly chart below, we plot the weekly Commitment of Traders (COT) data.

Red=commercial traders, yellow=small spec traders, blue=large non-commercial traders.
Green vertical lines are extreme commercial net position readings in bullish trends
(positive 52-wk MA slope).
Red vertical lines are extreme commercial net position readings in bearish trends
(negative 52-wk MA slope).
Note where we are now.  Traders fading this market are trading against both the commercials and spec traders.  It will be very interesting to see who wins.


We have no idea, but a volume profile analysis reveals the following levels above us.  We have post-flash crash highs, a little 15 point caffeine shot from there, and then who knows.  Bulls will need to break above 1200 to show us they mean business (no, that is not a dare).  And, at this point, buying highs unless we can break above and hold 1160s makes us feel a little Latte to the party (sorry, couldn't resist).


Originally published on


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"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way."

This market is a real puzzler.

On the one hand, the kinds of charts that folks like me, Serge, and the good folks from EWI have created are beautiful, logical, coherent, and stunningly symmetric. There is an artfulness to good charting, and – – when it works – – there is a real beauty to patterns repeating, cycles turning, and analogs matching. This is as God intended.

On the other hand, it's a cold, hard fact that Shalom has stated in terms that needn't be interpreted that he will print as many trillions of digi-bucks as are needed to stave off deflation. The bull market in precious metals doesn't matter; the crushing of the US dollar doesn't matter; the credit-worthiness of the U.S. doesn't matter. All that matters is to make damned sure interest rates stay near 0% and deflation doesn't have a chance.

The speculations offered in Prechter's book suggest deflation as inevitable, but I don't think it takes into account the fact that Shalom can create an infinite amount of digi-bucks. So no matter how much debt is out there, it can be nuked with one press of the Enter key on the right person's desk.

It's starting to get through my thick skull that aligning my positions with Benny Boy's insanity makes the most sense, which is why my TLT short – – my largest – – makes sense to me. As these trillions of digi-bucks start to sink into the economy, it seems to me that high interest rates and inflation are a foregone conclusion, which will torpedo bonds. Added to this, the U.S. debt – – which politicians are openly admitting has as much chance of being paid back as the $6,800,000,000 Kervial owes – is going to sink the country's credit-worthiness. So I think the notion of US debt being a great investment is ridiculous.

Now the risk here is that US bonds might represent a flight to quality, just in case the market ever falls again (which should happen around the time we've successfully colonized Mars). I'm not so sure. To me, the US debt market representing a high-grade place to keep your money safe is the equivalent of being told you have to enter sexual congress with the corpse of the late Strom Thurmond, in which case the alternate – Roseanne Barr – is the less-unattractive alternative. Yes, there may be a flight to quality, but there's "quality"………..and then there's Quality.

I presently have eight long positions – – two of them quite sizable - – and 80 shorts. I have, over the past weeks, lost my appetite for carrying a lot of small short positions, since this market seems principally interested in Going Up. So if they get stopped out, they get stopped out, and I let my quantity of positions diminish.

My main interest right now is the rise of the US dollar (which I think will be temporary, but somewhat meaningful) and the degradation of TLT.

And that's all I've got to say about that.

Chart on Gold (Mike Paulenoff)

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Spot gold prices rocketed again in overnight trading, reacting to Bank of Japan's renewed ZIRP as a cue to investors to get out of very low or no rate of return investments into riskier ones! Gold certainly qualifies and also satisfies the desire to protect against an inflationary shock that likely is the light at the far end of the "tunnel," as well as against domestic and global political instability.

My intermediate-term work points to $1350/80 next, which is just 2%-4% above current levels and just might represent a minor target in a price move that appears to be picking up "parabolic" type pattern momentum. At this juncture, only a decline that breaks $1280 will begin to compromise the powerful upside assault of gold prices.

Originally published on