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.

Are We There Yet? (by Springheel Jack)

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The five week ES rising channel saw a serious pinocchio through it on Friday, and broke definitely overnight. The question now is whether equities have made the interim top already. Pug has his line in the sand at a close below 1257 SPX and I'd go with that. There's a potential H&S neckline at 1250 ES though, so we could well see a bounce there before further declines:

I've been giving a lot of thought to USD over the weekend as an analyst that I'm in correspondence with and respect a lot (but who doesn't wish to be named) tells me that he is expecting to see EURUSD bottom in the next day or two in the current area. That would be well short of my expectations but it could happen. Recent USD strength has been mainly about EURUSD weakness, and the commodity currencies particularly such as CADUSD and AUDUSD have remained strong while USD has been rising. Something to bear in mind and it isn't helpful that the EURUSD chart is a mess, without much in the way of useful shorter term support or resistance trendlines from the November top. On the USD weekly chart it has reached the top of the likely bull flag and we'll just have to see whether it can break above it. If it can then the next resistance level is 83.6 and I'd expect to see EURUSD fall to 1.26:

One currency that always amazes me with its strength is the Yen, as Japan is a debt-riddled stagnant disaster area. Nonetheless the Yen is seen as a safe haven for whatever reason, and shows no sign yet of becoming the killer short that it must one day become. On the ten year USDJPY chart there is a strong support trendline that was recently hit and a possible four year falling wedge. I'm expecting a move to the 87.5 area unless the USD rally does top out:

I haven't had a close look at copper so far this year so I thought I should review that this morning. On the big picture the rise since late 2008 has the look of a rising channel with the upper trendline recently hit. If it declines to channel support that would give us a target in the 350 area:

Has copper therefore made a major interim top? I think so. On the shorter term chart the support trendline for the move up since November was broken last week and the next obvious trendline support is in the 400 area. The decline so far has taken the form of a falling wedge which I'll be watching closely for direction:

One thing worth noting on the shorter term copper chart is the way that copper bottomed well before SPX in November. It will be well worth watching for directional clues as equities correct, as it should do the same again as the correction finishes.

Weekly Sector Report | 01/07/11 (by Leisa)

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The first week of the new year saw the broad market index advance 1.05%, and some big winners and losers among the sectors.  Let's take a look (click on images for enhanced viewing):

Snap210

Automobiles and Parts was the big sector winner.  GM (+5.75%) and F (+8.8%) were big contributors along with  LEA (+7.18%) and MGA (14.83%).  HOWEVER, the auto parts stores had a drag of a week. Big sector losers were Gold Miners and Platinum and precious metals–largely a reaction to the USD's strength.  Here are the top/bottom performers (using sub-sectors):

Home Construction experienced a surge with KBH's good news.  This sector is heavily shorted and the bears got caught with their hands in the honey jar.  I created a chart book for you with the short interest and the weekly charts.

Let's take a look at the broad market index:

There is some negative divergence between the oscillator and the price action; however, the daily chart is not extended relative to the trend line.  Earnings will be coming out soon and will feed the charts with new information.  As we know, it is not the news, but the market's reaction to news that is instructive.

For your weekly research, I've prepared a chart book for you on the major sectors as well as some weekly change in price and short interest on subsectors. You may download it here (9.1mb).

Disclosure:  I have no positions in any stocks mentioned.

Are We at Deflations Gate? (by BKudlaQA)

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In December my indicators told me to move into a short position regarding the miners, especially gold, and I did so.  Then during the Christmas break, the strength of the move forced me to dehedge and go longer, which I did.  So far so good on that, made some nice money and was feeling good going into the new year.

This week I spent the better part of it very sick and scrambling to sell things and rehedge, as I think I was hoodwinked by greed, and not paying enough attention to the low volume week, and its implications.

As part of my reflection, I started to look at charts from December 09 to see how the miners, and commodities in general have done in this so called stimulated environment.  Some interesting finds.

The large cap miners have done nothing, while gold is up 11%, this can't be good news for them if they break this horizontal support.

Oil has, really, done nothing, and looking at USO, it was forming IHS, and has turned back on the neckline.  I am watching this closely.

The dollar has gone nowhere, as well. Based on all that we are hearing about stimulus, you'd think the dollar is in the tank, nope.

The Euro, is down, and looks ready for the next leg down right now.  This cannot be good for the stock market.

What is up is food and copper. Food I can understand, poor harvests, small commodity markets that can be overwhelmed with hot mney, etc.  Copper though is interesting, best I can guess, it is all about China, or is it.  I also hear that JP Morgan is controlling 80% of the metal in Comex, and has it warehoused, maybe a hedge against their silver exposure short.  If silver relents lower here, watch copper, also the China growth story is long in the tooth.  I am shorting FCX below its 20EMA.

We may be in a position for our next whiff of deflation, what say you?