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.
In Honor of the Debt Ceiling Debate
I present below Slope's patron saint (blessed be his name) with one of his most brilliant pieces. Genius is never understood in its own time. It's long, so fire it up, look at your charts, and be enlightened.
Bonds as a Contrarian Play
Although I already took a profit on it as a day trade, I bought TLT earlier today since it was smashed pretty hard (understandably!) This sucker pays a 4.34% dividend and – assuming the US doesn't default permanently – looks poised for a push higher.
Faces of NDX (by Springheel Jack)
The big news this week is the talks to increase the US debt ceiling. Officially the deadline is August 2nd, but I've seen credible estimates that could extend that by a week or so. What's interesting here is the degree to which both sides have a significant incentive to wreck any agreement. On the Republican side the populist Tea Party movement is dead set against tax increases and even tax loophole reform where that results in net tax gains. This is making the Republicans take a much harder line than they might otherwise. On the Democrat side there is an opportunity to transfer ownership of the economy back to the Republicans if the talks fail, and Republican intransigence can credibly be blamed. The government shutdown in 1995 was an electoral disaster for Republicans and at least some of Obama's advisors may well be advising him here that his best chance of re-election may be to be seen to try hard, and fail, to reach an agreement here.
Of course a loss of confidence in the bond markets that led to a significant increase in interest rates might well eat up all of the currently proposed savings in increased interest payments but hey, it's not their money.
ES gapped down overnight. That wasn't a surprise as SPX, Dow and RUT had all broken the support trendlines that I posted on Friday morning by the end of the day. ES broke briefly below 1329.50 support and I'm thinking we might see a move down to 1315.50 support today:
NDX was the only one of the four indices that I posted on Friday morning not to break support by the end of the day. On the 15min chart this now looks like a rising wedge and the obvious target if we see the support trendline break at the open would be the open gap just under 2370:
That would break NDX down through the 'neckline' of the now completed cup with handle on the 60min chart, which weakens that slightly but doesn't invalidate it:
The cup with handle isn't what I'm primarily looking at on NDX though. It's an ok pattern, and there may also be an IHS forming there too. The important pattern to my eye however is the megaphone, or broadening top, that NDX has now been forming since December of last year. Another touch was needed to confirm the upper trendline and we got that at the new high on Friday. Despite the name a broadening top is a neutral pattern with a 50/50 chance of breaking up or down, and is a weak performer in reaching targets. However a break of the upper trendline should be a reliable breakout signal, and if we were to see a big reversal here, then the lower trendline would supply an ambitious downside target that should provide solid support:
I'm leaning short today and watching this retracement carefully for signs that it may mark a significant high. If the bear case for the rest of the summer has any weight, then we reached the obvious reversal levels on Friday. A break above those would suggest that the bulls are right about a new bull wave up.
It’s Fake, Fake, Fake, Fake!
Right now the whole country is fixated on the debt ceiling drama. Why not include Paris Hilton for some reliefs and oomph while we are at it. It seems Mr. Boehner is now the most powerful man on earth, holding the fate of the world in his hand. As far as soap operas go, it cannot get any better. We forget why we are here in the 1st place. I am not going to start a debate who is right or who is wrong, because both these parties are the two sides of a counterfeit coin. Whichever side you choose, it is still fake, fake, fake and fake.
As I said earlier, I think the market will huff and puff for a day or two before it shoots up. I shall be waiting to “buy the f*****g dip”. Do not get confused by my call when I say that stock markets are not going to fall yet. I am bullish in the very short term but super bearish in the intermediate and long term. Why I think the stock markets will go up in near term? Apart from many proprietary indicators and formulae, I also try to think like the Boyzs.
Let us look at the following chart. It is a correlation between SPX and Fed’s Balance Sheet.
As you can see, the rise in stock price is the direct result of liquidity injected by the Fed. So now that Fed is no longer pumping money into the system, why it is still going up? Elementary my dear Watson! Because the Boyzs want “get everyone go long, then we dump them”.
Look at the Seinfeld clip again. They are good! I mean the people running the fake rally. This rally will run till all the money sitting in the sideline has been sucked in and all late comer bulls are fully invested. Do we run away from this rally? If you are a long term investor, then yes, you should probably stay away from this rally. But if you are a trader, you might as well enjoy this ride and make money. That is the best revenge you can take.
I shall be calling out the market turns as I see them. Read my market calls and rate my work .Keep reading “World of Finance” for the up to date information and stay one step ahead of the game. ( http://bbfinance.blogspot.com/ ).
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