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.
Much Stranger than Fiction
Grinding Up (by Springheel Jack)
Watching this tape grind up day after day really couldn't get any duller really. Alphahorn says that there's a fib turn date on 23rd December & that could well be the turn date. Short term I have a rising channel on ES that looks likely to give the range for today unless we break downwards:
We are now really very close to the likely high on IWM, which I've been watching for for some weeks. That should be in the 79.75 area and we'll most likely hit it today. Looking at the chart IWM is now up over a third since the lows in July and late August. Wow:
We're also close to my target on XLF, which is in the 15.9 area:
When we reach those targets, I'm expecting the interim top on equities to be made there. There is a chance we might break up through them, though I'd be surprised. If we did break up through them I'd be looking at the top trendline of the rising wedge on the SPX daily chart, which I was originally expecting to be hit for the next high. It looks a long way away right now in the 1275 – 1280 area but it is just possible SPX could make it up there:
Oil is another that is still well short of the target I was originally looking for at the upper trendline of the rising channel in the 93.5 area. If it can break through resistance at the current fanline it might still make it there, but as with SPX it looks ambitious:
Vix bottomed at key support on Friday, and unless we're going to see a major break down there we must now be very close to the next interim top on equities. Looking at the IWM and XLF charts particularly, I'm expecting to see that top made today or tomorrow.
The Analog – Warped Surge or Death Knell?
It's been exactly a month since I took a look at the 1937-1942 analog.
What's discouraging is that this analog, in retrospect, nailed every single turn in the market for two solid years, but the recent surge made have been the equivalent of a fatal knife wound to the analog. Here's the S&P – – point #20 is the aforementioned wound.
Below is the corresponding past…….point #20 was supposed to stop at about the same area as points 16 and 18, which would mean the S&P should have stopped at about 1130. As it is now, it's all the bears can do but pray that the S&P returns to that level, having blasted past it by 120 points and counting.
Could the analog get back on track? Sure it could – – – the entire point in front of #19 might be "POMO elevated". But it's disquieting to see my best friend the analog potentially mortally wounded at this point.
Good night…….
If You’re Not Going to Use Stops… (By Ryan Mallory)
If you are not going to use stops, because either 1) you prefer mental stops 2) the MM's will "steal" my shares or 3) you're afraid of it popping back up as soon as you get stopped out, is no excuse to not use stops, in fact, if you don't do it, you better confine yourself to a life defined by Dwight Schrute – pay careful attention to what he is doing AND what he says is the reason for doing what he is doing!
Is it extreme what I am saying here? No, it isn't. In fact, it couldn't be any more true. Take for example last week, MasterCard (MA) and Visa (V), after the fed introduced a proposal for interchange fee regulation right in the middle of the trading day. Had you decided to buy MA and subsequently take an 'extended bathroom break", within 20 minutes MA would have dropped from $253.35 down to $232.50 for an 8.1% decline. Had you decided to grab a bite to eat (assuming you washed your hands of course), you would have come back to a 12.5% loss. Visa was even worse, a quick run to the local Piggly-Wiggly and within 30 minutes you have an 8.8% loss on your hands, and if you go back for desert, you have 14.6% in losses. And let me tell you, your stomach isn't going to be the only thing hurting after that quick bite to eat.
Don't think that Visa and Mastercard are the only instances of this, stocks like Dendreon (DNDN) saw its stock drop from $22.50 all the way down to $7.50 in a few moments back on 4/28/09. Yes it did recover, the next day, as it resumed trading in the $20's, but when the bottom was literally falling out from underneath it, you had no clue what its fate would be the next day, and I for one, would rather be stopped out 4 or 5% below the current share price and see it pop back up the next day (which of course happens to me quite often), rather than wondering at sub-$10, whether the stock would recover or not. Because, folks when stocks get torn up like that, and at a pace as ferocious as what I just explained, you're not thinking about the what-if's for tomorrow, instead you are staring solely at the deep bloody red color in your account with a loss larger than what you had ever desired to take on.
You see, small losses are okay and are very recoverable, and at times, if you continuously take small losses over time, you will have instances, where the Market Makers stole or shook you out of your shares, you'll see your stop triggered only to have it go on to be a would be stock pick of the year, and many other cases that seem unjust and unfair. But that is part of the game, and trust me, I'd rather take a small loss from someone who wants to take my shares at a cheap price, then let one of these stocks (or a flash-crash too) rip me a new one, because my ego was too big to control losses by any means other than a stop-loss. And because of the examples outlined above, and how close I was to buying Visa (V) as a legit breakout play back on 12/15, that if I didn't use hard stops I'd be like Dwight with the a 2-liter bottle in hand for when nature calls.
