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.

US Dollar Opens Death’s Door (by Springheel Jack)

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Equities gapped up and ran yesterday for the second trend day of the week. We'd normally expect to see a retracement for a day or two after a trend day unless the move is extremely powerful, but ES held the gains overnight so far, and I'm wondering whether we'll see that retracement today. I have a line in the sand on ES, as it has risen to declining resistance from the recent high, and it has held so far. Any move over 1334 would be a clear break up. The likely target of a retracement today if we do see one is the 1320 area:

NQ was much stronger than ES yesterday, and blew through declining resistance before breaking the last high in the 2370 area. Overnight it retested the 2370 level and like ES the overnight action is looking a lot like a bull flag. If we see a retracement I'd be looking at the 2340 area as the most likely target:

The copper IHS is still looking good, though I've been playing around with the neckline a bit as it's hard to pin down exactly. The retracement yesterday has confirmed a supportive rising channel and I'm expecting to see more upside. Immediate resistance is at 454 and the next rising channel target is in the 467 – 72 area depending on when it is reached. Channel support is at 449.5 and key support is at 445. A breach of 445 support with any confidence would badly damage the bull scenario:

For any of you following the longer term Yen short setup, I was saying that USDJPY (inverted Yen) had most likely bottomed the other day. It went a little lower subsequently but has now broken declining resistance at 82.5 (since I did the chart) which confirms the short term low. I have longer term declining resistance at 83.8, the main target is in the 86 area, and if the full Yen meltdown scenario plays out to target, the potential move is to 124. An alternative play on Yen for anyone wishing to avoid USD is to short JPY using another currency pair, long EURJPY for instance:

EURUSD made my upside target yesterday, and is now testing this extremely important level. The level is so important because USD is now testing rising support from the 2008 low. A break above will open up a lot more upside on EURUSD with more declining resistance at 1.43 to 1.432, but my main target would be a declining channel upper trendline in the 1.517 area, if it is hit in June or July. I've marked the rationale for this target on the chart:

The last chart today is the DX weekly chart to look at the US Dollar. I'm not optimistic about USD here, as the last bounce up looks like a dead cat bounce, and with the US effectively printing 70% of the huge deficit over the last two years the downward pressure is obviously strong. If it breaks down here then there is some support at the previous lows at 74.25 and 70.9, but USD will essentially be stepping into the unknown and it could go much lower. USD is still looking good next to the Yen, but that's a race between two currencies competing to have the worst fundamentals of any rich world currency. That Yen looks even worse is no compliment to USD. If USD falls hard here, there is also the clear risk that trading partners will move into using more stable currencies as a reserve currency, and that could turn this retreat into a rout on both USD and on US Treasuries. Anyone wanting to see the effect of a currency losing reserve currency status should take a look at GBPUSD between 1945 and 1980 to see what that looks like. Not a pretty picture:

I'm leaning towards seeing some retracement on equities today unless ES breaks up through declining resistance, but the underlying picture here will look bullish to me unless SPX breaks the main support trendline on SPX since July. That trendline is in the 1305 SPX area today.

SPY Guesstimate Contest Reminder (by Market Sniper)

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For those who may have missed it, the deadline approaches to get your SPY guesstimates in. Friday, March 4, 2011 at 4 pm (EST) is THE deadline! Here are the rules and prizes.

I know some are sandbagging waiting for just before the close to get your entries in. Just do not forget to do it! Should you win first or second prize, Morgan Silver Dollars maybe worth a bazillion dollars by May 6, 2011!

This is open to ALL including lurkers and visitors to The Slope Of Hope. Cost of entry=just one email! Send your guesstimate in to slopefest3@gmail.com; IF you have a Slope handle, please include that as well!

Hope to met a lot of you at the Slopefest III festivities in Las Vegas as well and best of luck!

You Can’t Make This Stuff Up (by Trade Flight Plan)

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Imagine it’s 30 years ago.  Someone comes to you and offers you a crystal ball.  You gaze inside to see the future.  Instead of the Jetsons and Star Wars, you’re entertained, saddened, and surprised by what you see.  Each of these is in no particular order…

 Ball

What are the most shocking world wide events that rip through markets and plant the seeds of global unrest?

  • One of the greatest bull markets the world has ever known
  • The fall of communism in countries like the Soviet Union and East Germany
  • A modern day repeat of the great tulip bubble, only this time with virtual companies that have no income (dot com meltdown)
  • The destruction of the World Financial Center by a terrorist event (the US launches a multi-decade campaign to seek redemption)
  • A modern day repeat of the great tulip bubble, only this time with home ownership (the great recession)
  • One of the greatest bear markets the world has ever known
  • One of the greatest bull markets the world has ever known (if only they take out prior highs)
  • Everyone now carries little tiny magic boxes that allow them to communicate with anyone else in the world and answer virtually any question in a matter of seconds

And what companies endure the exhilirating and painful business cycles over these 30 years?
What products and services become the most powerful?

  • Computers and those little tiny magic boxes (AAPL)
  • Software that operates everyone else’s computers, but not the little tiny magic boxes (MSFT)
  • Silicon wafers that make everyone’s computers possible (INTC)
  • Searching for stuff (GOOG)
  • Classified Ads (EBAY)
  • Coupons (Groupon)
  • Keeping in touch with friends (Facebook)

Of course, 30 years later, you would also see in the crystal ball that the same ruler still presides over Libya, but you would not have known to pay attention to that.  Will be interesting to see how this one shakes out.

P.S.
In our prior post, we had some fun with math on calculating QE2 induced ES targets.  Springheel Jack’s been watching similar targets.  Our post was very timely in that the ES immediately sold off as soon as the article posted.  Where’s that Chocolate Rain video?  Nonetheless, 1310s remain as a key S/R level.  We broke below it, broke above, broke below it, broke above…  So, it shall remain our line in the sand as an ongoing reference point.  If ES stays above 1310s, then those longer-term QE2 targets remain intact.