Slope of Hope Blog Posts
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Have we bottomed for the summer? The simple answer is, quite possibly.
My work was looking for three things to come together:
- A break of the October '11 lows for leading stocks/indices, such as GDOW, BHP, ITUB, & SU
- A spike higher in VIX, possibly to the low 40's
- An early June low, followed by a 6-8 week bounce
So where are we now? Stocks such as BHP and ITUB have indeed broken their October '11 lows. GDOW and many energy related names, such as SU, have yet to break their October '11 lows. Let's take a look at BHP first. A global commodity megacap, it has been leading the market lower. Of the leading stocks that I follow, it has one of the best technical structures. It is currently overbought on the daily chart. I would look for some selling this week, followed by a possible move higher into mid-July to backtest it's broken trendline coming off its November '08 low.
Having fled my GDX options position this morning, I'm simply going to wait for a better (higher) price before having a go at shorting miners again.
In the meanwhile, I'd like to point out that one of the most battered issues, Jaguar, might be primed for a bounce. These are super risky, but the percentage moves can be substantial.
Oh, incidentally, I did re-enter my big FXE long (entry price 125.05, stop 124.99) as my current long hedge. It's showing a profit, so – – so far, so good, on that one.
Well, the huge Sunday gaps (in green) erased all the bullish news (tinted in teal) for two weeks in a row. The question becomes: will this week continue to be a repeat of last week (that is, the "fade the news" drop will be shaken off, and we'll simply move higher).
Two important things happened on SPX on Friday. The first was that SPX broke up and touched the upper bollinger band on the daily chart. This is the first likely point of failure over the middle bollinger band on the daily chart if this move has just been an oversold rally. The obvious cause for failure would be the election in Greece, though the result there looks like a victory for pro-bailout deal parties at the moment: