Looks like the Latin American ETF is headed for a fall if it can break 50.47, given its very clean H&S pattern. This is an intraday graph spanning several months:
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.
Large Short in Real Estate
I really, really like this chart. I entered the day short DRN but covered it at a profit since trading 3X ETFs gives me the chills. I swapped it for a similar size short in IYR the a stop shown below.
The Euro Rascals
Let's suppose you had a gang of friends. You're a Sloper, so I realize this is a stretch, but go with me on this.
You and your friends agree to stick together through thick or thin, for the collective good.
One day, one of your gang – let's call him Aristotle – is having financial trouble. He's lived recklessly, has racked up a gargantuan debt, and has blown off his taxes for years. In keeping with your agreement, you and the rest of your gang bail him out.
Not long after, another friend, Seamus, is having similar difficulties. Those in the gang who are able to help heave a sigh of resignation, gather up the necessary funds, and bail him out as well.
Following that, your friends Madeira and Juan start hinting that they may be having some financial difficulties as well. They might need…….a bail out.
You'd start to get a weary of this, wouldn't you?
The fact is that a bail out is a bad thing. If you get thrown in jail for drunk driving, and a friend bails you out, that's no cause for celebration. You screwed up, and you had to rely on the kindness of someone else to save your butt. There's only so many times that's going to be permitted to happen.
This is why I scratch my head when – on every subsequent Sunday, it seems – some nation gets Bailed Out, and the market zooms higher with exultation, only to have it slowly dawn on them that anyone requiring a bail out is in sorry shape. It was kind of amusing watching the EUR and the ES explode higher yesterday only to wither away, hour by hour, as this obvious simple fact seems to slowly sink in. Didn't that happen last Sunday in an identical fashion?
So, contrarian freak that I am, I say again: bail outs are bad, and they only worsen the inevitable.
Where Do We Go From Here? (by David Kern)
As I fought off the crippling effects of tryptophan poisoning this weekend, some brief moments of lucidity gave me opportunity to look at some charts. What I saw inspired me to get out the crayons and make some annotations. Whether or not all this rumination will help my stock portfolio remains to be seen.
As the ancient Chinese proverb goes, “may you live in interesting times.” Indeed we do. There are currently some significant contradictory signals within the world of technical analysis, and some pretty attention-getting headlines as well. There are plenty of ominous headlines: “S.Korea’s Lee: North to ‘pay price’ for attack“, “Saudi king urged US to attack Iran: leaked documents“; but then there is also encouraging news: “EU agrees on $89 billion bailout loan for Ireland“, and “Black Friday: More shoppers, modest sales“.
I think the only reasonable response by traders is to look at the charts, for all the news/sentiment/seasonality/astrology/etc is contained in the movement of the price. In the end, it doesn’t truly matter why the price moved — all that matters is what movement occurred and what is likely from here. I spent some time cuddled up to the S&P 500 chart, and my notes are summarized in the picture embedded in this post. I thought it was especially interesting to take a step back from the daily chart to see the forest for all the trees in the weekly. Three observations I thought worthy of mention:
- Until the wheels came off the bus in Aug/Sep/Oct 2008, a support level was established in the 1200 – 1225 range. Then the bottom dropped out.
- The markets digested a lot of bad news between Sept 2008 and Sept 2009 (and the bears had a massive party).
- Support has been established over the last year at around 1010 to 1045, with resistance near 1220 as we bump up into the previous 2008 support levels (which is where we happen to be now).
So — what now? Based on the current readings of market breadth and bullish percents, with a clear uptrend in place: I think it’s very risky to short the market here. The “Minority Report” in favor of a bearish stance right now is the McClellan Oscillator (posted to the right), which did move to a sell signal recently. Note that market breadth and bullish percents could swing quickly to show supply back in control, and that would change this non-bearish opinion rapidly. Even then, I would hesitate to short the market aggressively until the support at 1010 had fallen.
The least risk, of course, is to sit in cash/bonds and wait for a clear opportunity to strike. (But that carries lots of opportunity risk…) I think with the market sitting on its 200 day moving average, plus market breadth and bullish percents showing buyers in control, there’s a lot of reason to suspect a healthy bounce higher this week.
Of course, it’s equally likely that Wall Street suffered the same tryptophan hangover I had. Then it might be 2011 before we see any real movement bullish or bearish!
Check out the rest of David Kern's trading blog, AbjectAvarice.com
Mushy Lows (by Springheel Jack)
I had an idea of what I'd expect to see at the end of last week, and it was to see EURUSD & GBPUSD make nice lows at support, and then a few days of recovery this week during which ES & NQ would probably make new highs to finish off wave 5 of the equities wave up from the August lows. That would create an ideal shorting opportunity with equities and USD moving in sync with equities falling and USD rising, rather than the out of sync chop we have seen over the last couple of weeks.
Unfortunately that just didn't happen. EURUSD made a very mushy and unreliable low at support, rather than the nice clean bounce I was hoping for, and GBPUSD fell through short term support altogether. I wasn't surprised to see both make new lows overnight and to see that they failed to break declining resistance this morning. That's not great for the bear side here as it looks clear watching equities and USD in recent weeks that the wave up in equities doesn't seem to have finished, and until it does, a rising USD won't do much more that stall equities near this level or a bit lower.
I've looked closely again at the EURUSD and GBPUSD charts and I have a candidate declining channel on EURUSD. If it's right, then we'll see EURUSD make the next low soon in the 1.30 area. Within that declining channel EURUSD is declining more steeply within a smaller declining channel, and I'm looking for a break with confidence of the upper trendline of that smaller rising channel to signal that the next EURUSD low has been made:
On GBPUSD I have another candidate declining channel with the next downside target in the 1.545 area. There is a falling wedge within that declining channel and I'm watching for a break of the upper wedge trendline to signal that the next GBPUSD low has been made:
There's a nice looking falling wedge on AUDUSD, and that low was made fairly cleanly on Friday, but there's a distinct possibility that AUDUSD could break down into a declining channel and I've marked the alternate lower trendline on the chart:
So what's this saying for equities? Well in my view the outlook for post-Thanksgiving week looks weak until USD makes the next interim high. ES is in a triangle on the hourly chart and the most likely scenario looks like a test of rising support in the 1180 area. If that breaks with confidence then I'd expect a test of the recent lows:
On NQ I'm seeing a triangle within a rising channel. I'm expecting to see the triangle break down towards channel support slightly over 2120:
I'll break my usual limit rule and post a sixth chart today, and that's the simply beautiful chart for silver, with a really nice broadening ascending wedge from the 18 area. It looks weak at the moment, with a double top and negative divergence on daily RSI, but as long as it lasts, the wedge gives excellent entry and exit levels, and if it breaks down, silver will look like an excellent short term short:
