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.

Fossilized

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As you probably know, I am for the first time in human history completely out of any short positions and am only in longs. I entered the day with two ETFs – IWM and XLI – and now I've got five. It's actually kind of refreshing knowing that the Powers That Be aren't doing everything that can to nuke me. In other words, it feels good, for the moment, to be a bull. I remain terribly, terribly light – 16% committed – and my blood pressure is uber-low.

One stock I've pointed out many times as absurdly overvalued has been Fossil. As with stuff like Green Mountain Coffee Roasters, I just didn't "get" how a stock could go up almost every single day. Well, all good things must come to an end, and FOSL has gotten completely curb-stomped, losing nearly half its value within days. Even though I have no position in it, I can't help but grin.

0809-fosl

London’s Burning

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My wife has been watching what I've jokingly been calling the riot channel here in the UK, where a riot after an unarmed civilian was shot by police in London has spread to a number of other areas in London, and also to other UK cities. It has been an education so see how helpless the police have been to curb the riots, or to protect property from the wholesale looting and arson that seems to be the prime motivation for the rioters.

As the UK is one of those 'civilized' countries that has ferocious gun controls preventing law-abiding citizens from defending themselves and their property, the rioters have been untroubled by anyone other than the police, and not much troubled it seems by the police. The riots seems to be spreading mainly because potential rioters have realized that they can take control of the streets easily, and without much fear of consequence. Worrying to see this happening before the austerity that is coming everywhere over the next few years really starts to bite

SPX closed down 80 odd points yesterday and ES then fell as low as 1077 overnight. That settled one question at least, which was the question whether this might just be a flash in the pan panic. It seems not, and I'm expecting that SPX will at least now go to test 1000 or to support at 870 before we see a major low. I've marked in the key support / resistance levels on the SPX daily chart:

Short term however, the setup here looks more promising for a bounce than anything that we have seen since the failed attempt to recover 1300 at the beginning of last week. ES has bounced strongly from the overnight lows with positive divergence on the hourly RSI:

Copper also looks very promising for a bounce on the hourly chart:

I've been posting the NYMO chart in recent days showing it as increasingly oversold. I was amazed yesterday to see it reach a level that is the lowest on my chart, with data going back to 1998. NYMO is therefore more oversold now than it was at any point in the post-tech bubble meltdown or the 2008/9 crash. Amazing:

Interesting things have been happening in the forex markets too, though you'd never know looking at EURUSD or GBPUSD. EURUSD is still bouncing around the 1.427 level:

While EURUSD hasn't moved much, the commodity currencies have been falling hard. AUDUSD broke the important 1.04 support level yesterday and traded below parity overnight. A retest of 1.04 looks very possible today or tomorrow, but more downside after that looks likely:

CADUSD has fallen less hard but is also now approaching parity again. As with AUDUSD the longer term charts suggest more downside after any bounce we see here:

I think we're approaching a bounce here and it should be a decent one. If we do see that bounce, it will be a bounce to sell and I'm hoping to see a decent trendline or pattern develop during the retracement to show when best to short again. I'd be surprised to see another move down like yesterday's, but if we do see that then this move down will start to be described as a crash, and correctly so. If we see more downside today then I'd be looking for support on SPX at 1100, 1085, 1040 and 1010.

Mornin’, Bulls!

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Well, I've got to confess some relief to seeing green on my screen. It's not that I'm heavily positioned. I've got two long ETFs, which for someone like me is the equivalent of eating two peas for dinner. But it still feels good to be positioned correctly, particularly given all the recent gyrations.

So just a few random it's-still-pitch-black-outside-this-morning thoughts:

+ I was thinking fondly of Slope's Kooky Crowd last night as I saw gold was up yet another $60 (thank God it's in the final stages of a wave 5 of 5 of 5 of 5………cough cough).

+ Noticing that silver, which usually is up three times as much as gold on such an evening, was actually down, I surmised it would be an interesting short. It's down about 2.5% as I'm typing this, versus gold being up 1.75%, so it looks incredibly vulnerable. I guess the notion of silver as any vehicle for a "flight to quality" has been dispatched.

+ The entire day is going to orbit about what is announced at 2:15 EST from the Fed. I think worldwide markets, which have been mercilessly sold off lately, are desperate for something bold. It would be astonishing to think the members of the FOMC would sit around this morning to chat about their golf scores. Something dramatic has to be done.

Finally, some old timers here may remember the SLIX indicator, defined in the Slocabulary as "a fabricated indicator based on the popularity of Slope. Historically, a surging popularity of the blog indicates an imminent market reversal to the upside".  Let me assure you, traffic pushed higher steadily last week, and yesterday's was a total blow-out (and, unlike ZH, I don't have my own server farm to melt down). So set your stochastics aside and recognize that SLIX is anticipating something big soon.