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.
It's enough to make one want to give up. Nothing – – – not riots, not joblessness, not foreclosures – – – seems able to fight the Treasury's commitment to asset inflation. As we pause here to consider the S&P has doubled in value since twenty-two long months ago and, for the first time since September 2, 2008, has penetrated the 1300 line, we wipe away a tear and think of what might have been.
I've been beating the Short GDX drum for a while (with occasional instances of saying Buy GDX, like two afternoons ago). Yesterday afternoon I switched horses again and jumped back on Ol' Shortie. My intent to do so was met with some good-natured rotten tomatoes.
I think $48 is a reasonable target. GLD and SLV are at kind of a decent base for the immediate moment, but the potential for about $7.50 more in losses for GDX is still there.
Well, quite a change in sentiment this past week. Bullish sentiment dropped from 50.7% last week to currently 42.0%. Meanwhile bearish sentiment rose from 29.1% to currently at 34.3%. I present two charts below comparing the SPX to bullish sentiment and SPX to Bull / Bear spread. As you can see below, both have correlated very well. Two thoughts I have is that (a) this market is truly set for a decent correction and (b) the correction will be fast and if you blink you may miss it. The reason I say it may be fast is the fact that bearish sentiment has moved up so fast and the market still makes new highs. Regardless of my view / interpretations, the data speaks for itself.
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Just a short post today as I've had a late start and I have a lot on, so I'll just have a close look at EURUSD, ES and NQ. First EURUSD, which has been frustrating in recent weeks because despite showing some signs of topping, it persists in making new highs. EURUSD is of particular importance because while it continues to rise, it's going to be tough to see much retracement on equities, and the best chance to see that retracement will be when it turns.
So where are we on EURUSD? Well as I said it continues to make new highs, and has made new highs overnight, but it has been breaking down into a succession of shallower rising support trendlines. This is something that ES did in the run-up to the April 2010 high last year and is a signal that an important interim high may well be approaching. I've done a broad view 60min chart on EURUSD to show also that it has also entered an important resistance zone, which would be a likely place to see that reversal:
On ES there's now an interesting setup that has me leaning somewhat towards weakness today. There's a five day rising channel, and a rising support trendline / wedge within that channel that has broken support. It may also be forming a reversal H&S. If we fall today the target and support will be in the 1282 – 1284, which would be a good long entry for another move up. If that lower channel trendline breaks that would look very bearish:
NQ looks unequivocally bullish this morning, and is outperforming ES considerably, so the possibility exists that NQ could make the upside targets there without ES breaking up from the rising channel. The upside targets are 2333 for the rectangle and 2339 for the falling wedge, and that would be close to a double-top or new high for NQ which might then be made within the current short-term broadening ascending wedge. A break below the support trendline would be bearish and that support trendline is currently at 2317. If we do see weakness today before NQ makes the upside targets then there's a possibility that we might get another long entry near the rectangle top at 2300, as we did yesterday:
I'm seeing the current action on equities as part of a topping process, but there's still room to rise within that process, and my short-term bias is still bullish with a keen eye on the exit until we see some further signs of weakness. Seeing a top too early can be very expensive and we should remember that it is the second mouse that generally gets the cheese. 🙂