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How long the bulls can put a constant bid underneath this market is anyone's guess. There's no doubt we are overbought beyond measure, but that seems to hold little value these days. With that said, I've provided a balanced assortment of long and short setups. What's interesting, is that both long setups revolves around oil, while one of the short setups below is for USO. Go figure.
The Euro/US Dollar hit a one-week high this morning at 1.2985 off its low at 1.2620 (+2.85%). It has since corrected and turned up from 1.2890, which happens to be the recent upside breakout plateau of a two-week base-like formation that projects to 1.3080-1.3120. So far, the fact that the Euro/USD preserved support at its prior upside breakout area is a very constructive sign of higher prices ahead, after the current rest-digestion period runs its course in the upcoming hours.
I am always amazed how large the opportunity to “make it big” factors into the great magnetism of the market. The belief that anyone, from any background can be successful and make tons of money has quite the allure. But, in all of this euphoria people neglect to think about all of those that failed before them. And believe me the failure rate is high. Yet, investors/traders continue to choose the most difficult of investments to trade – stocks. Stock-only traders are at a complete disadvantage because they have no way to trade the randomness of the market. They have a 50/50 chance of success for each and every trade.
Bottom line – stock investors/traders are truly at a disadvantage.
Again, stock investors only have two ways to make a profit: buy a stock or short a stock. And most retail investors are not willing to short a stock, so basically they are only able to profit in one direction – up.
The last two days were really hectic with no internet connection and fifteen hour flight etc. As such I could not post anything and my apologies for the absence.
In the meantime, the stock market in USA has been a one way street. It has so far defied all logic and divergences. It has gone from extreme to further extreme. But such extremes are not backed by any fundamentals. We all know that seasonality pushes the stock prices higher at this time of the year but usually there is a correction during mid-January which has not happened yet.
I was looking for SPX 1300+ during the 1st week of January but it did not come then. I was also expecting a mild correction and continuation of the rally in the 1st week of February. So far the correction has been elusive. The problem with such situation is that without a correction not much upside can be expected in February.