Slope of Hope Blog Posts
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Well, after 41 months of an (ostensibly…..) countertrend rally, and eleven solid weeks of the latest upswing, it takes a lot of faith (or, many would say, stupidity) to hold out any hope for the bear market resuming. Today definitely did some serious damage to the bearish case. (Although wave 3 is bound to kick in any moment now – cough, cough).
The most obvious is that the ES is now – God help us – at a new high, surpassing even the nosebleed levels set late in March.
If you’re anything like me you’re quite aware that if you truly want to know someone forget about what they say, and watch how they conduct their lives. People might talk smart, but they can have the reasoning capacity on par with a pile of rocks.
I was struck or should I say dumbfounded this week by a few events that just made me wonder what are these people thinking. Then I caught myself and realized that was even more of a dumb question. Here’s what I just don’t get…
I have been pretty vocal about these targets, and we are getting very close to nailing them; today could be the day for a (probably temporary!) bottom to the bond drop.
On Tuesday night, I said we needed to maintain support over the 1394ES level in order to still view the upside as a reasonable possibility. On Wednesday we rallied off the overnight lows that held support over 1394. But the move up was an ugly pattern which seems to be best counted in waves of 3, so that we do not have to force an even more ugly count. This leads me to the conclusion that it is a possible leading diagonal. And, I have mentioned many times in the past how much I like to rely upon leading diagonals for trading purposes, but this is what the market has been giving us for 1st waves all too often.
Therefore, IF this is a leading diagonal, then either wave 2 has already completed in a very shallow manner, or we will see a much deeper wave 2, which is more typical of leading diagonals. But, if you remember the larger wave count I posted on the 60 minute chart today, the expectation was that wave 1 of wave iii was going to target the .618 extension at the 1406ES level, which is exactly what we seem to have gotten today. Therefore, based upon how we move up tomorrow, assuming we do see upside follow through, we will be targeting the 1412(1.00 extension) or 1416 (1.236 extension) levels for wave 3 of iii.