Please note I accidentally published a Jobs segment on Sunday, out of sequence (subsequently UNpublishing it), so don't be a little confused if you saw part 6 already!
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.
Going Up, but Which Floor?
The big question I can't answer right now is whether the rise we've seen is just the first half of a larger rise to a more significant breakdown point of the markets. Look at the rounded rectangle below on symbol IWM; it represents, for me, the potential for a greater increase in equity prices, which is why I am hedging with some longs right now. As I'm typing this, the markets seem to be pooping out just a little bit, but that is meaningless is the air-gap I'm showing below will ultimately be filled.
Lazy Longs
I have had a horribly frenetic morning, so I'm going to be lazy and just show you the symbols I've bought. I've been going back and forth about whether to commit myself to any longs, and in the end I decided to do so, much in the same way as I've done with shorts – – – a lot of small positions with regularly-updated stops. Here are the symbols, for your perusal.
Breakout Above Triangle
Well, perhaps the pathway to 1250 is finally now cleared. The ES, after having an amazing turnaround on Friday, continues its strength today. The (very minor) resistance level I'm watching on the ES is 1206.75, and in spite of the potential of the market to tack on another 5% from present levels, I am adding attractive short positions and keeping a substantial portion of my portfolio in cash. This is not a market to be trusted, in my opinion. I'd rather wait out the storm than participate.
Closed at Strong Resistance (by Springheel Jack)
Of all the things I expected to see on Friday, I'll confess a strong rally at Bernanke's failure to announce QE3 wasn't one of the them, but that's what we saw. The bullish engulfing candle on Friday was even more impressive than the (almost) bullish engulfing candle on Thursday. Will there be more? Maybe, but for a number of reasons the place where SPX closed on Friday was extremely significant, and it may be that that this rally will fail there.
The first thing to note was that both bonds and precious metals rose strongly on Friday, and this was odd as both have been moving inversely against equities in recent weeks on the flight to safety trade. Copper rise slightly and while EURUSD had a strong day, it didn't break triangle resistance. There's nothing from any of these to support Friday's rally or to suggest that there may be more coming.
SPX closed right at the top of the daily candle range of the last few days and also closed at the daily 20 SMA, which is also the middle bollinger band. A break of this level would look significant and an open above Friday's close would suggest at least a test of the top of the next range up at 1204.5. You can see from my daily chart how well SPX has been respecting the range support and resistance levels on an opening and closing basis:
On the Vix the recent support trendline was tested and pinocchioed on Friday, but Vix closed back well above it and on the middle bollinger band there. An open below the support trendline and the middle BB would suggest that this rally has more legs:
Just two charts today, as I'm writing this late on Saturday and I'm away until Monday's open, but I think they say it all. If SPX gaps up on Monday then I'd expect to see a further run up to 1204.5 with a high degree of probability. A Vix break with confidence of the support trendline and the middle BBs would suggest that this rally might even take us up into the next range up between 1204.5 and 1258. Equally if SPX doesn't gap up on Monday, then this rally might well fail right here, as bonds and PMs particularly are suggesting might be the case.
As I've mentioned before, I'm on holiday for the next three weeks and during that time I will be doing some posts on an ad hoc basis, but I won't be doing my daily posts. Everyone trade safe. 🙂
