SPX took the green pill yesterday, breaking over the double-bottom trigger level and making the double-bottom target and more by the end of the day. Is the retracement low then in? Not necessarily but the odds that the low is in have obviously increased considerably. On the SPX daily chart it's worth noting that both of the main highs in 2012 were followed shortly afterwards by retracements to the lower daily bollinger band and bounces back to the top. However I don't think the current high was a main high. SPX closed 5 points over the daily middle bollinger band and if we see more upside the obvious target is at the daily upper bollinger band in the 1532 area:
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Back on January 16th I wrote a post titled "The January Effect" simply stating that the beginning of 2013 looked absolutely identical
to the beginning of 2012. Given the
selloff over the last week I wanted to go back and see if the 2012 analog was
broken and if it was time to wave the "all clear" flag for the
bears. Bottom line, the analog is in
full effect and it looks like the bulls have another full month of smooth
sailing ahead. Again, I'd like to
present the technical analysis via charts with numbers (the numbers are
markers, not wave counts).
I had gold as my one long position for a few days, with good results, but as I mentioned in my video yesterday, I felt it was time for gold to change course and soften up again. Thus far, it has done so, and as I'm typing this, it's balanced just above 1600, threatening to drop beneath it. I've built up a fairly large short position in GLD with a tight stop at 155.61. (Edit: Ummm, the moment I typed the period to that last sentence, support failed, so……..I'm going to publish this now; the break isn't reflected in the screen shot below).
Shaking Out The Herd
In a Slope post on Tuesday ("30.2 Yield Curve And Gold"), Gary Tanashian noted that, "over the last 1.5+ years gold has shaken out the herd". Our host Tim, not one to follow herds, reminded us on Tuesday that he's currently long gold via GLD ("Target on GLD Long Approaching"); nevertheless, according to Reuters, more GLD herd members did get shaken out last month, with the gold ETF seeing a billion dollars in outflows in January. In this post, we'll look at a couple of updated hedges for GLD. First, though, a note about Bernanke's testimony yesterday, and an interesting gold chart Bespoke Investment Group posted in response to it.
SPX hasn't yet reached an important area for support or trendlines. While that doesn't necessarily mean that the low isn't in, I'll be assuming that it isn't unless we see a conviction break on SPX over the 1515/6 resistance area. I'm torn as to whether the current topping pattern on SPX is a very ugly H&S or a double-top, but either way the high yesterday was a retest of the broken pattern support level. This is important resistance today: