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.

Mixed Signals (by Springheel Jack)

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The action on equities looked pretty bullish to me yesterday, with the SPX falling from a higher high, and bouncing at a higher low from the daily 200 SMA, which was hit for the second time in recent days. SPX then recovered much of the losses from the morning and the previous day. Here's the daily SPX chart with bollinger bands to show those bounces, and the failure so far to get past the middle of the bollinger bands at the daily 20 SMA:

On NQ the IHS that we have been watching form this week is now complete, waiting only for NQ to break resistance at 2250 with confidence. That hasn't happened yet and might not happen today:

On the shorter term SPX chart a wide and shallow rising channel may be forming (thanks to Nugie for pointing these out on SPX and RUT yesterday afternoon):

A similar rising channel has formed on RUT:

On equities this is all therefore looking fairly bullish, but it's when I look at other markets that I'm seeing a few flies in the bulls' soup today. EURUSD obviously had a big fall and less big recovery yesterday. It's fallen back somewhat overnight, but the chart that drew my attention today was the UUP daily chart with the huge year old fully formed falling wedge. The EURUSD move down yesterday poked through the upper wedge trendline which is often a sign that the wedge is about to break. If EURUSD closes a day near yesterday's lows at 1.414, then that wedge will break:

The key trendline on silver at the moment is the rising trendline from last August which was hit for the fourth time yesterday and held. Overnight though silver has tested it again and has penetrated the trendline on an intraday basis. If that trendline breaks on a daily closing basis then the way is open for silver to fall to test support levels lower down. July is a weak month for silver generally and the average summer silver retracement bottoms at the end of July. If the trendline breaks we could well see a sharp downward move.

Oil fell yesterday as it was announced that strategic reserves equivalent to 17 hours of world consumption will be released over the next month. That pushed /cl through 92.5 support and that broken support held as resistance overnight. The technical picture on oil already looked precarious and I'm expecting to see oil back in the 80s very soon. I have a variety of targets for the move down ranging from the early 70s to the mid 80s, but there's decent support in the mid-80s, so that's the first target:

I've been writing about a possible interim top in treasuries for a few weeks now, and I'd expect them to fall if equities rally strongly. I was a bit surprised therefore to find a 69% bullish rectangle on the futures yesterday. The target on a break up would be in the 128'05 area and these tend to be solid performers on breaks up, with Bulkowski giving 80% odds of the upside target then being reached. Definitely something to watch:

On these last four charts it's important to note that support on silver, and resistance on UUP and ZB, are still holding so far, even though it seems they may not hold much longer. If these trendlines break though then four separate markets that are all correlated with equities will be breaking in directions that suggest weakness on equities. I'll be keeping a close eye on all of these. 

Short term the equity bulls are holding their ground, but need to break overhead resistance to deliver the multi-week rally that I've been expecting. The key levels in my view are that NQ must get above 2260 and hold above it, and ES must do the same with 1293 and then 1300. Fridays and Mondays have been fairly bearish lately, so that might have to wait until Tuesday.

The Bolt from the Blue

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"I'm beginning to come round to that opinion. All my life I've tried to put it from me, saying Vladimir, be reasonable, you haven't yet tried everything. And I resumed the struggle." – Waiting for Godot

I've really got to say, yesterday afternoon's surprise Greek News messed with my head. We have to deal with uncertainties in the market every day, but let's face it, the vast majority of market news is presented before-hours or after-hours so that people can have time to digest it. There's a good reason that companies don't do earnings announcements in the middle of the day. It's the same good reason that the government doesn't issue key economic reports 15 minutes before the close.

So having this Greek thing pounce on the market yesterday was pretty much universally unexpected. Some folks got lucky, I imagine, and profited from it, but for a lot of people, the gyrations of yesterday were frustrating.

The bizarre thing is how much the planet has become focused on this one tiny nation. I didn't know Greece manufactured anything except tourism. But here we are, half a world away, obsessively wrapped up in a parliamentary vote about austerity measures that, let's face it, no one really believes will be carried out over a five-year period. Five years? Hell, five days is a long horizon at this point.

In any case, like it or not, we're all FOREX traders now. It's never what I set out to be, but for now, we're at the mercy of the Euro's gyrations. Good luck out there today. It's a mine field.

ACHN Pick of the Day (by TraderHR)

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Achillion Pharmaceuticals, Inc. (ACHN) jumped $1.25, or 20.80%, Wednesday after the company announced plans to sell 9 million shares of stock in a public offering, expected to net proceeds of about $52.1 million. After testing its all-time high and key resistance in the 7.50 area during the day, the stock fell back to the 7.20 area where it closed. If momentum continues in the next few days and breaks resistance at 7.60, we could see the stock reach the 8.40 to 8.80 area next. Preferred entry (buy stop) price is at 7.65, with a stop at 6.70.

ACHN
Originally published on TraderHR.com.

Shorting China (by Mike Paulenoff)

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A look at the chart of the inverse China Stock Index ETF — the ProShares UltraShort FTSE/XINHUA 25 Stock Index (FXP) — suggests strongly that slowing Chinese growth and climbing inflation remain part of the problem, not part of the solution — at least, not yet.

As we noted for subscribers last night, Wednesday's sharp afternoon advance in the FXP after the morning's weakness positions the inverse China ETF to accelerate to the upside towards a test of multi-month resistance between 32.00 and 33.00. If hurdled, this will confirm the upside breakout from a major base formation that has the potential to propel the FXP to 39.00-41.00 in the weeks ahead.

Let's notice that the price structure has carved out a significant "W" pattern, which represents accumulation of the FXP — or price distribution within the iShares FTSE China 25 Index Fund (FXI). In either case, the pattern forewarns us to expect potentially serious negativity and equity liquidation in the China equity markets in the weeks immediately ahead.

While I have no idea what the fundamental story will be, I strongly suspect the global stock markets are entering a period of vulnerability to the China headline risk.

Unless the FXP reverses sharply and breaks below 28.30, today's upside breakout represents the initiation of the thrust towards 32.00-33.00.

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Originally published on MPTrader.com.

About That Last Hour

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Well, today didn't turn out exactly as planned, eh? And for anyone out there who claims they saw the whole "Greece pop" coming…..errr, I don't think so. It was about as foreseeable as the silver crash back in early May. Sometimes something wild happens. If you were long and made money, congratulations. But let's recognize an element of chance was at play here.

For myself, a fairly fat profit turned into a small loss. Thank God for stop prices, because I was removed from a number of positions before the big pop. And – just to be clear that my bearishness wasn't all bluster – I want to note that I doubled the quantity of my short positions after the pop. There was one ETF, symbol SMH, that looked like a decent hedge, so I am long a large quantity of that (it is the ETF for semiconductors).

Let's take a quick look at the pop; here's what the Euro did:

0623-euro

Here's how the ES responded (note how it was starting to soften for the day before the news):

0623-es

And – the most interesting chart for me – here's a daily candlestick of the miners:

0623-gdx

Check out that red line I've drawn. That is the battleline, my friends. For the past three days, the GDX has had a huge range, and that line at about $54 has been the shoving delineator.

Of course, this whole Greece obsession has become a bit of a farce. One day there's a deal; the next, there isn't. To my way of thinking, I used the pop as an opportunity to get better prices.

But I have one closing thought, and that is in praise of the slow, plodding way I am forced to trade because of the large quantity of positions I'm in. If I were trading just, say, the SPY, I'd probably get chopped to pieces. Days like today can make mincemeat out of a person.

The way I trade, I am in a large quantity of individual positions, and I cannot flip from bull to bear (or vice versa) on a whim. Instead, the cumbersome nature of my portfolio's makeup – – its unwieldiness – – is actually a blessing. Each stock stands on its own merit, and each stock has its own customized stop. It helps remove some of the emotions and arbitrariness out of my own trading.

Of course, these individual positions are subject to the broad direction of the market. My point is that the nature of my portfolio helps foreclose me from being rash (which, as a human, I am prone to being from time to time). An explosive move like this afternoon's, which was a bolt from the blue, can trigger panic and unwise choices. I am happy that my positions simply have their stops in place and have to live and die on their own merits.

That'll be it from me today. I hope you guys survived – – and some of you, I imagine, had a surprisingly strong finish! – – and I'll be putting up posts from others over the course of the evening.