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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.
Consolidation and Precious Metals
As a general rule if USD is in a wave up, and ES / SPX is also in a wave up, then ES / SPX moves sideways until the USD wave up finishes, and then ES / SPX resumes rising. It looks to me as though we have been seeing exactly that over the last two days, with USD bouncing sharply and ES / SPX moving sideways.
It now looks to me as though that USD bounce is over for the moment, as EURUSD has hit the obvious support trendline and bounced there. The next upside target is slightly over 1.43 but to reach it, the main USD support trendline will have to break on a weekly basis, which may limit the next USD wave down:
GBPUSD has also hit the obvious channel support trendline and bounced there. The next upside target is over 1.64, subject to the same USD caveat as EURUSD:
It could well be that USD will find an interim low here of course. There are increasing rumblings in Europe about QE2, and the lack of US leadership in finding some balance in the world economy rather than just hosing the world with freshly printed dollars. Obviously the Europeans have a point, and the US policy of USD devaluation and money printing to fuel an asset bubble is likely to lead to increasing problems with the trade partners (and creditors) of the US.
On ES the action over the last two days looks like a bull flag, and if EURUSD does bounce strongly then I'm expecting to see a move towards the top of the ES rising channel. I don't know if we can make it to the top trendline, which will be in the 1260 area by the end of the week, but I'm expecting that we should see the SPX IHS target in the 1244 – 1250 area hit this week, and that we'll make the next interim high there or higher within that rising channel:
One asset class that has not been trading sideways while USD has been bouncing is precious metals, which have been flying up, and are now within striking distance of my targets. The upper trendline of the gold rising channel is currently in the 1470 area, and it seems likely that this will be hit within weeks if not days:
Silver is even closer to my target, and is rising so fast that I'm becoming concerned it may go straight through it. The (continuation) IHS target is in the 30 area and I have my target rising resistance trendline in the 29.80 area this week. My theory is that precious metals will make a major interim top when these targets are hit. We'll see:
What Is Silver Telling Us?
The parabolic move in silver rivals the insanity of Chipotle Mexican Grill, Priceline, and AutoZone. The difference, of course, is that these three companies pretty much didn't exist ten years ago, whereas silver has been with us since – – well – – way longer than any living thing.
The last time silver went bananas like this during the past several decades was in 1979 and 1980. Take a look:
There are a couple of things worth noting. One, once the breakout occurred, silver had a long way to go – – – a move similar to the above would put silver north of $100 per ounce. Second, once the move exhausted itself, the collapse was just as sudden.
Ever since following the wise suggestion of selling my 1000 ounce silver brick, I've had a rather distorted view of silver, but by and large I avoid it like the plague. I'm not sure what silver is trying to tell us, but if God popped down for a moment to tell me it would be trading in the triple digits before it was all over, I wouldn't be that surprised.
If I owned silver, I'd be inclined to hang on. With no position, I shall simply remain a very interested observer.
I'm going to go look at non-silver charts now. See you on Tuesday morning.
Terra-Nitrogen, No Laughing Matter (by BKudla)
I think the Hard Asset markets are getting frothy, and am looking for some hedges on my long positions. Terra Nitrogen is simultaneously long fertilizers (Urea) and short natural gas (its feedstock), with 64% of their expense in natural gas.
Like the uranium and coal markets, I believe agriculture chemicals are relatively inelastic to the price of the dollar, and nitrogen has another boost in that it is a feed component to corn, which has its own economics of ethanol production. If my view on colder winters and shorter growing seasons hold true, farmers will need to apply extra Urea to ensure rapid crop growth. These benefit TNH.
Terra – Nitrogen also pays out a 8.7% dividend through an MLP, and is 75% owned by insiders. This makes them shareholder friendly a nice source of cash while you await capital appreciation.
I have two buy areas, and will scale in at these points.
Pregnant Pause
I'm going to do a post later tonight. Even though I've got dozens of guest writers, their contributions are down to just a trickle. Nathaniel Goodwin? Fujisan? Where are they? I don't know.
In the meantime……….
