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.

Buying IAI (by Scalded Chimp)

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The XLF can't seem to get its relative strength trending in the right direction, but the Broker-Dealers have been able to do so (at least it seems that trend is beginning). Perhaps the brokers stand to make some serious money with the Build America Bond supply that is supposed to be hitting the market by the end of the year. The Banking Index ($BKX) price action has been quite underwhelming. I'm trying to stay away from the banks, but get exposure to the area of the financial sector that's seeing some action.

 

 2010-11-18 IAI

 

The Moment of Truth (by Springheel Jack)

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While we've been retracing, I and many others have been playing this on the assumption that we are looking at a wave 4 retracement here, and that it would be followed by a wave 5 up after the retracement bottomed. There's a good argument in my view that this wave 4 retracement has bottomed this week, and that the new wave 5 up has started. That wave 5 up on SPX would target at least a new high, but would most likely target somewhere in the 1250 to 1300 area over the next few weeks, with a EURUSD target in the 1.45 to 1.50 area.

There are a number of reasons to think the retracement has bottomed, mainly that the obvious retracement targets in a number of areas have been hit, notably on the USD bounce, XLF and others. One commodity that I watch very carefully is silver, and there I've been watching what looks like a classic retracement low. You can't see all of it on this chart, but silver has retraced to the support trendline from where the cuurrent advance started at just under 18, forming a falling wedge on the decline, with a small IHS in the reversal area that played out to target overnight:

Now silver's important because it is part of the gold:silver ratio indicator, and because it tends to outperform gold on waves up. When silver is in a wave up stocks tend to perform well too, and if silver has bottomed, the chances are that stocks have also bottomed.

We don't yet have confirmation that stocks have bottomed yet of course, but we may well get that today, as NQ and ES are both nearing a test of their declining resistance trendlines. On the Nasdaq futures (NQ) I'm seeing declining resistance in the 2130 area. A touch there is a perfect short entry of course, as it is declining resistance on a declining pattern, and the risk/reward for a short entry there is therefore excellent with a stop slightly above the trendline. On a break of that trendline however it becomes an excellent long entry for the further upside that should follow that break:

Encouragingly for the long side here, declining resistance on the broadening descending wedge on the corresponding Nasdaq chart is at 2110, and that has already been convincingly broken in overnight trading, though we could pull back within it before the open of course:

On ES I'm seeing declining resistance in the 1192.5 area, and again that is a nice short entry with a tight stop in case the retracement has further to go:

Unlike on Nasdaq, the ES and SPX charts match up almost exactly, and declining resistance on SPX is in the 1195 area:

I'm leaning towards a break up here, and while I share the bears' feelings that this bull market is more bull than market, I don't think the Fed's credit cards are maxed out yet, and until they are, this bull market is likely to continue. If we get a nice wave 5 up here, then we should reach a level within a few weeks where there are some unambiguously excellent short entries for what should then be a very decent pullback. Bears should be patient, and if we do break up, then we should all just settle in and enjoy the ride.

The Unimaginable is Assured

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We live in times of rapid change. Since we actually live day to day in these times, it's easy to lose sight of this fact. If you confronted yourself 5, 10, or 20 years ago and stated a salient fact or two, you would astonish and shock your old self.

Imagine that you had a time machine and could tell the people the following truths:

+ Go back 50 years, to 1960, and tell the Beatles that they would be the most influential musical group in history and that, half a century from then, there would be a announcement receiving worldwide attention that their music could now be purchased on billions of small computers. You probably should be kind enough not to mention that in 20 years, one of them will be gunned down in cold blood, and about twenty years after that, another would be almost fatally stabbed in his own house.

+ Return 30 years, to 1980, and tell the United States public, perpetually terrified of nuclear confrontation, that two big concerns within now-capitalist Russia are how the government is dealing with multi-billionaire Russian oligarchs and the fact that Moscow is the most expensive city in the world.

+ Teleport yourself to a decade ago to downtown Manhattan and tell the people staring up at the glimmering World Trade Center towers that next year they wouldn't even exist.

+ Go easy on your time machine and zoom back just five years. Find the teenager Mark Zuckerberg and tell him in just a few years he would be the world's youngest billionaire. While you're at it, burst onto the set of CNBC and tell them the world's biggest financial calamity was going to take place soon and that Lehman Brothers and Bear Stearns would simply disappear.

All these things are true, and the recipients of this information would have considered you absolutely insane. They'd cart you off.

So I tell you now – – people living five, ten, and twenty years hence will know of events that I guarantee you would find impossible to believe. Some of them good; some of them bad. But they wouldn't be simply surprising or thought-provoking. You would find them unfathomable. So don't discount the infinite possibilities – again, good or bad – before us all.