Slope of Hope Blog Posts
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Now that we've officially hit the highs, I figure it's a good time to
review the personal study I brought forth on July 5th. Two months
later, it has played out exactly to plan.
In summary, studying back to 2004, with four instances, it indicated
75% odds that there would be a 50-62% retracement followed by a run to
the highs. As of today, with another successful follow through, that is now 80% odds. Now, it's worth a look back
because each of the successful high retests (2 out of 3) hit previous highs and then had a pullback
of a few percent before heading higher.
In Oct 2007, SPX reversed down to its 50MA for 5.4% which was not followed by new highs because that happened to be THE 2007 top (I do not think this will be the case for us yet).
In Nov 2010, SPX reversed down to its 50MA
for 4.5% with the entire move done over 1wk which was followed by two weeks of basing before resuming the uptrend.
In March 2012, SPX reversed for 3% in 3
days with no 50MA hit followed by marginal new highs which
were major intermediate highs.
This would indicate that SPX is headed back to 1370 in a quick fashion before being followed with new highs which will likely be part of an intermediate topping
process. 1370 seems kinda far, but actually, it's 4.2% which is in
line with the rest of the study. I can't rule it out and I have to
admit, it would be healthy to get a little more fear and volatility
into this market. Be nimble out there.
Of course just as finish my Bullish Longer Term assessment of the SPX – We print a shooting star which could (should) signal a reversal down in the current channel.
I thought we would have seen this earlier based on the swing / time frames since the June 4 Low.
If you’re playing this short the R1 at 1405 is a likely target and now support – Likewise this is a good place to buy if you believe it’s going higher.
Should that fail then the pivot and 50 DMA converge almost exactly at 1365.
Good afternoon Slope. Two quick charts today. First, on the VIX, notice the falling wedge on the hourly chart. $VIX broke out of the wedge in July, has fallen back to retest the wedge, followed by a nice base with mulitple positive MACD divergences. Lastly, take a look at the nice rising wedge that has formed on JPM. The financials are about to experience some nice volatility. Bring it on!
So far today, I was bummed that the excellent trade opportunity that I had been tracking in Silver Standard Resource (SSRI) gapped above my entry price and ran for 6%. On the other hand though I was able to lock in 7.7% in gains in MDT after getting stopped out this morning at $41.09 for a multi-week swing-trade.
On to the Lazy Trades today: GMCR is a volatile beast, but the upside potential is emerging nicely, and like HE short listed below, GMCR is also to be looked at as a swing trade.
Here's Today's Lazy Trade:
LONG: Green Mountain Coffee Coasters (GMCR)
SHORT: Halcon Resources (HK)
Be sure to checkout Ryan's blog at SharePlanner.com
Now that my electricity is back – – and I've got a 7-pump chai by my side – I'm ready to dig in again.
I saw a very interesting parallel with real estate ETF symbol IYR. Take note of the wedges. I believe we are in the same place now as we were where I've put the other green arrow.
We. Shall. See.
I find it very difficult not to be a Bear now –
For reasons like:
- Economy / unemployment
- Overall mediocre earnings
- No QE3 is coming
- Greece default still looming
- Fiscal cliff in 2012
Yet the market continues to move higher. and as Jesse Livemore said so succinctly:
"They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side"
In this case though Price is the ultimate arbiter and price tells us the market is going higher.
Here's a three year weekly chart of S&P 500. The Andrews Fork (blue), Channel (black) and trend from the June 4 bottom (green) all point one direction – up. That it broke into the upper half of the Andrews Fork off the June lows was the final decision point for me.
Even the Euro appears to be breaking out of its consolidation pattern:
When price tells me it's time to sell – I'll listen
But for now it's the Bulls Market
Apple hit a never-before-seen-in-history high earlier today, although at the moment, it's actually (gasp!) down.
From a measured-move perspective, there are a couple of targets, depending on what you consider the "breakout" to be. Of course, there isn't a person on the planet that would be happier than Yours Truly if this breakout failed, but it hasn't failed yet, so……….here's da chart: