Although at the moment I am – surprise! – predominantly short (15% to 85%), I'd like to highlight a long position whose cup with handle pattern is really clean.
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.
Sloper Basketball
US Dollar Bottoming?
USD failed to consolidate a new low last week and closed the week above triangle support:
On the daily USD chart we can see positive divergence on RSI and a big spike on Friday that has been continued in the forex markets over the weekend:
AUDUSD hasn't reached my broadening formation target but has nonetheless reached an interesting level:
Copper is now close to making all time highs. Copper has made highs over 400 twice before in 2006 and 2008 but has retraced sharply afterwards both times:
So where does that leave us on SPX? Near a wave top I think, but I'm not expecting to see the main wave top until the SPX IHS has played out to target in the 1244 to 1250 SPX area. I'd be surprised to see SPX top here, and the break up through the top of the rising channel of recent weeks leaves the path open to reach the SPX IHS target in the next few days:
Weekly Sector Report | 11/05/10 (by Leisa)
The market showed no signs of fatigue last week. The broad market index was up 3.57% with a sweep of sectors positive across the board. Below is the Weekly Sector profile compared to the broad market index (in blue). (Click to make larger).
Note that the more defensive sectors, healthcare, food/beverage, utilities, are lagging. Here's a chart of the broad market index (Click to make larger)
Prices are very extended and caution is warranted for longs. Prices are approaching a heavy volume@ price bar (which I have extended and placed in a dotted outline). It will be interesting to see how volume/price action react at these levels over the next few weeks.
To facilitate your personal study of the the sectors, I've created a downloadable PDF which contains detail sector information, summary sector information, and chart books for the summary sectors in both weekly and daily format. It is a large file, so be patient with the download.
The Fog of War
It seems to me the mass of humanity seems wisest only when disaster has recently struck. After the dot-com crash, everyone – and I mean everyone – clucked their tongues, shook their heads, and took on a bemused grin at the silly souls of 1999 who bid worthless stocks up to heaven. "What were they thinking? How could they believe those p/e's? I never would have done that!"
But then a new bubble started – the housing bubble. And it all made sense at the time. They aren't making any more land, after all, are they? And housing prices have never gone down. Interest rates are really low, and you've got a lot of first-time homeowners coming on the scene. I mean, it all makes sense.
So the the entire financial world is pushed to the brink (and only Lehman was allowed its own natural death; everyone else was artificially saved), and here again, everyone gets Instantly Wise. It's so obvious now how fraudulent and inflated it was, isn't it? Of course.
But we're in fog-land again. From Jim Cramer on up, everyone has figured out that it's silly to ignore the obvious reasons the market is going up. Don't fight the Fed, right? I mean, the writing's on the wall! Bernanke has made it crystal clear. It all makes so much sense.
And yet, whenever the next big fall comes – whether it's next week, next year, or five years hence – the Instantly Wise will wonder how on earth we could have deluded ourselves. How could we have missed the fact the Chinese were about to pull the rug out from under us? How could we have assumed hyperinflation wouldn't take place? What were we thinking?
Wait, we're not there yet. We aren't in Wise mode. We're again in the bubble, and only a fool isn't taking advantage of it. Enjoy the ride.
