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I will keep today's post brief, but as I believe this chart is important… Here we go.
As I described in my last post, the wedge that has developed on SPX over the past 2 years has broken, and is now backtesting the wedge breakdown. I continue to believe that the wedge breakdown was very significant, and is ushering in a large bearish move in the weeks/months to come. You will notice in the chart above that the MACD trendline break is also being backtested, as well as approaching the zero line. Daily stochs are also approaching overbought territory. A reversal here is likely, and could lead to the large bearish move that I have been stalking. Have a great weekend Slope!
Some of the most amazing gainers during this recent counter-trend rally have been steaming piles of dog poo that, until recently, no one wanted to be near. Witness Groupon, which has pushed over 50% higher recently (having put its earliest IPO shareholders through a ~90% drop).
And then long-suffering Research In Motion (remember them?), which has offered up a nearly doubling in price (I'm not showing it here, but Nokia – NOK – another fallen phone maker – has also been zooming).
There are certainly ample helpings of trashed stocks these days, if you're the contrarian-buyer sort. JC Penney (JCP) and, shown below, Advanced Micro Devices.
SPX came within three points of the daily middle bollinger band on Wednesday so that is no longer a target. ES broke over the strong resistance area at 1386-8 after the close on Wednesday and consolidated above it for much of last night so that is now key support.As I've mentioned before there are some serious resistance levels just above and on the daily chart they are in the 1394 area at the middle bollinger band (often closing rather than intraday resistance) and the intersection around 1400 of declining resistance and broken rising wedge support from the October 2011 low: