Slope of Hope Blog Posts
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There will be no actionable ideas in this post. It’s just me bitching. But I’m just tired of having to look behind my shoulder every single second in this market.
How I yearn for an opportunity to put on a bunch of positions, kick my feet up, and watch them unravel (in a good way) over a multi-week period. I’m not asking for years. Or months. Just a few weeks.
Because, as it is now, things are changing radically day to day. One day ISIS and Ebola are causing the VIX to soar into the 30s. The next day, Yellen picks her nose and wipes it under the table, and the market interprets that as a dovish sign, thus sending the Dow up 300 points.
It’s unnerving. And I’m getting weary of it.
This morning, my energy shorts are doing great things for me (and my in-need-of-salve self-esteem), so it’s not that today is going poorly; quite the contrary. But I already am worried about that horrid little troll on Wednesday. She’s evil, and I truly hate her.
Anyway, I have to keep my wits about me and take things one position at a time. Stop by stop, these things have to tend to themselves. But, good God, after six years of this homo POMO crap (and, thank you Jesus, it ends today), I could really use a nice easy “drift”. I’m exhausted from worry.
SPX closed the week on the weekly middle band at 1964. This is a very significant resistance level and the key thing that bulls would like to do this week is to break back above it. Only the weekly close matters for this so we could see SPX trading above it intra-week without that being a bullish break. SPX weekly chart:
I’ve been giving some thought to the circumstances in which we could see the IHS target in the 1976 area made this week, and it would be very close indeed to possible falling channel resistance from the high. On the bigger picture this would be a bull flag channel of course, SPX daily chart:
The pattern setup from the 1820 low continues to favor short term reversal here. There is strong support and an obvious target if that gets going in the 1926-31 area. SPX 15min chart:
Looking at intraday patterns I often remark that a double top after a strong trend that fails to break down is generally a bull flag, and that happens a lot. You see it on the larger timeframes too and there’s a very nice example on the AAPL daily chart where that bull flag broke up last week. When this happens there are two main options, the first being that the second high of a larger double top is being made. That’s probably the more likely option here given that AAPL is close to resistance on a larger and very nice looking rising megaphone. The second is that the flag is a mid-point consolidation in a larger move up. If the megaphone breaks up that would give a target in the 125 area. AAPL daily chart:
I find that USO makes a reasonable oil proxy and the 60min chart here shows the trendline setup on oil here. There is very well defined and and strong declining resistance above, and at some point USO will rally to at least test that. I have cautiously drawn in a possible falling megaphone and if that’s right, USO may be basing for that rally now. For now however I am not confident in that lower trendline and the consolidation is looking rather like a bear pennant for continuation downwards. Oil is still a brave and possibly doomed long at this level. USO 60min chart:
I am expecting to see a strong retracement on SPX soon, and that should start this week. It may be that won’t start until after the Fed on Wednesday, but as I strongly suspect they won’t have much ‘good’ news to report in terms of QE, the Fed may well trigger that retracement. I am expecting SPX to close flat or negative this week overall.