Originally published on TheTechTrader.com.
Slope of Hope Blog Posts
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Today's (Thursday's) price action gapped down and closed below horizontal
support on the European Top 100 Index, as shown on the Daily chart
The RSI, MACD, and Stochastics indicators are signalling more
weakness ahead…one to watch, in view of the comments I made in my post of November 12th. Downside follow-through on this
index should also produce further weakness (and probable support breaks) on the DAX,
CAC, and PIIGS Indices.
“The Federal Open Market Committee Fed’s bond-purchase
programs, known as Operation Twist, expires next month. Under the
program, the Fed has been buying long-term Treasurys and selling its
holdings of shorter-dated Treasurys, effectively “twisting” the yield
curve that charts the gap in yields between different maturities.
Investors expect the Fed to continue its buying of long-term
Treasurys while letting the short-term sales expire, in effect expanding
its program known as quantitative easing, or QE, beyond large-scale
purchases of mortgage-backed securities — something to which the Fed’s
committed to doing as long as necessary.”
Below is a look at what the Twist manipulation has done as various
items – and notably, gold – have been held in a corrective grip by the
“sanitized” aspect of Twist, which does not increase the money supply.
It is of course bald faced (in that it is very official and not just in
the realm of Tin Foil Hatters) manipulation of something that has
traditionally been a ‘free market’ indicator of systemic stress or lack
Here’s a compelling view by a log scale chart of gold dutifully following the yield spread.
Both charts have been used in NFTRH, where we a deal in what is, not what should be. What is
is a barbarous relic that also acts as monetary insurance and barometer
of systemic problems towing the line with a yield curve whose structure
has been manufactured.
What happens if they terminate (or are forced to terminate by lack of
short-term bond supply) this operation in December as the currently
announced Twist phase ends? Well then, inflation may become just a
little bit more honest.
At this point, when compiling my short watch-list, I'm not looking for setups that are good for "right-this-moment' though there are some in this list, instead, what I'm looking for is a post-market-bounce list of short setups. Most of the desirable short plays out there have already made their move – i.e. the easy money has been made.
Now, is the time where I'm looking to exit most of my shorts and right now I'm down to only 3 existing positions: CLNE, HOLX, SODA. Each of these positions have about 3-4% in gains, and when it comes to shorting the market, I really don't like to go for the home runs. Thats what leads a person to getting squeezed. So, outside of CLNE, I'm probably going to cover HOLX and SODA before today's close.
[Update: I covered HOLX at 19.57 for a 2.9% gain]
But what this short list offers is stocks that you'll want to watch once we get the inevitable market bounce, and then short them as they head into resistance barriers that provide lower risk/high return opportunities.
Trying to get heavy short today, or piling onto existing positions I believe is a huge mistake and one worth avoiding. There's a very likely chance, I won't be adding any new positions at all today.
Come tomorrow, I want to start scaling into some long positions to take advantage of the bounce when it comes, and I think there is no better of a week to do that than Thanksgiving week where the market has low volume turnout and historically tends to be more bullish than not.
Be Sure to check out Ryan's swing-trading blog at SharePlanner.com
Long-time Slopers know that Abercrombie & Fitch is one of my favorite stocks to short. I've stayed out of it for the past few months, but after yesterday's huge pop, I decided the opportunity was presenting itself again. I shorted some today, although there's still a little more room between the present price and the gap, tinted in green.
Ah, the holidays. A
season celebrating food comas, Christmas decorations before Halloween, cards
sent to people we haven’t spoken to in a year, and pure market insanity. My favorite time of the year is back again.
It is no secret that I love looking at historical patterns
and this year Stock Market Santa appears to be flying down from the North Pole
a month early. November 2011 seems to be
repeating itself all over again. Below
is a chart with some numbers and lines on it, read the text below and I promise
it will make more sense.
Data released today (Thursday) shows a sharp decline in the
Philly Fed Manufacturing Index, as shown on the graph below.
"changes in businesses' sentiment can be an early signal of future economic
activity such as spending, hiring, and investment," it's worth noting this
sharp reversal of the small rally of recent months…particularly as it relates
to the overall longer-term downtrend from the peak in March of 2011. As you can
see, this downtrend is much steeper than the one from 2004 leading to the big
decline in 2008/09…this may be forecasting a repeat of such a downturn in