Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
This chart took quite some time to put together so hopefully some
find it useful and might understand why I have been very reluctant to
add new long-side trade ideas despite the all the bullish rhetoric and
price action since the start of the new year. I've often stated how I
find the various sentiment surveys to be "noise" and only useful (and
actually one of the most useful tools in trading IMO), when at rare
To take it a bit further, I don't
even care much about extreme bullish or extreme bearish readings by
themselves but what does get my attention is when the bull to bear
spread is at extremes, such as it currently is. The reason for this is
that we could have a high number of bulls one week but that might not
necessarily be accompanied by a very low reading of bears or vice
versa. However, when the bull-bear spread on the IIAA weekly sentiment
survey reaches the extreme readings of 18% or higher or -18% or lower, I
find these to be some of the most reliable and timely buy or sell
indicators out there. Of course, nothing has a 100% success rate in
trading…not even close. With that being said, I'll let the chart
below do the talking.
I started with the cluster of extreme bearish readings that marked the
end of bear market in March 2009. Each green arrow marks the exact date
(weekly reporting date) of bull-bear spreads of -18% or lower. Those
reading come only when we have an unusually high percentage of bears vs.
an unusually low percentage of bulls (i.e.- a contrarian buy signal).
The red arrows marks weekly bull-bear spreads of 18% or higher, a
contrarian sell signal from extreme bullishness. Note: When I come
across a cluster of consecutive or nearly consecutive extreme readings, I
place the arrow on the last extreme reading. Although every extreme
reading did not mark a major inflection point in the market, every major
inflection point WAS marked (+/-) by one of the readings and those that
didn't, typically marked at least a tradable counter-trend correction.
You can click here to view the chart above in full-size as well as the supporting data (all weekly AAII sentiment data from Feb 2009 to present).
Not a day goes by that I am not grateful for the writers who contribute to Slope (with a special shout-out to Springheel Jack, who allows me to sleep in until 6 a.m. each morning and get myself organized). I was reminded of this when I tripped across the amusing video below by the absurdly-talented Seth MacFarlane. It combines a favorite song from The Music Man ("Ya Got Trouble") with some inventive lyrics on Seth's part to express how vital writers are to the entertainment industry. It's a pretty cool mash-up:
You know, around here we beat the Fed up pretty good; and rightly
so. But the FRED (Federal Reserve Economic Data) website is top notch
and I just love going there and rummaging around.
Not only do they have nominal data graphs but you can ratio disparate
data to come up with your own analysis, as I did recently with the
London Gold Fix divided by the Monetary Base. More people should get
used to doing their own work instead of listening to the talking heads
all over the internet, and know-it-all bloggers too for that matter.
Work will set you free.
The links to FRED are over on the right side bar of the main page,
including a handy graphic that updates CPI, Unemployment, 10 Year
Yields, GDP, Industrial Production and Payrolls. It’s really cool,
although the Fed does not (yet) allow for creating your own widget with
your own desired data. If it did, I’d be all about the money supply and
other things that tattle on the Fed and its operations. But it’s all
there on the site anyway, so do consider becoming acquainted with it if
you have not done so yet.
So here’s the latest BASE update:
It is still in consolidation but I have highlighted the little tick
higher after QE3, which was still encumbered with Op/Twist. The latest
data show a tick higher still.
A new inflationary phase would have to start somewhere and breaking this consolidation would be a good start.
As it was yesterday the technical picture is clear enough this morning. On the 60min chart SPX is now close to retesting both the 2012 high at 1474.51 and channel resistance on the rising channel from the November low. I will be looking for reversal there if that is reached and will assume that the channel will hold unless we see a clear break above it: