Slope of Hope Blog Posts

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.

Well THAT Was Stupid

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I am so furious at myself. And I don’t normally give Springheel Jack’s post so little time, but I had to get this off my chest.

Remember that terrific day I had yesterday thanks to energy? Well, it’s been completely unwound by a huge rally in crude oil. It’s like it never happened.

Well, that sucks, but why am I so mad at myself? Simple. I ignored the clearest, most important indicator ever, as shown below.

1028-cl

Now let me be stone cold clear here: I’m not trying to cute, clever, witty, funny, or snarky. I’m dead serious. I had before me the closest thing to a foolproof signal ever created in human existence, and I thought, “well, maybe it’s different this time.”

Shame on me. Shame. On. Me.

When Doves Meet

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The big news today is the FOMC dove convention from which few are expecting any interesting news. No doubt we’ll get the usual blather about how the huge step of raising interest rates from almost nothing, to slightly more than almost nothing, will only be done after all the current Fed members have been carried out of Fed HQ in caskets. That may or may not be bullish but it’s hard to see a big move from FOMC today.

The decline on SPX didn’t quite hit wedge support yesterday and that is unfinished business below. That is currently in the 2057 area and rising at about 12 handles per day. There is still a possibility that this is a rising channel and, if we were to see a break over wedge resistance before a test of wedge support, that would increase the odds of this evolving into a rising channel considerably. SPX 60min:

151028 SPX 60min Rising Wedge or Channel

I have a slightly higher target in the 4670-80 area on NDX that we may well see hit before a more meaningful decline. NQ looks cooked and ready to go though so that’s a maybe. NDX 60min:

151028 NDX 60min Rising Channel and Wedge

Both SPX and NDX have open 60min sell signals and could start a larger decline at any time. There may well not be much to see either way before FOMC at 2pm, and there is an obvious high retest target on SPX at 2079 that we could hit before FOMC.

Mutual Fund Outflows Warn Of Another Major Leg Down in Equities

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On the chart below, I plotted the month-end values of the S&P 500 against the Domestic (U.S.) Long-term Equity-Only Mutual Fund Flows. Although we don’t have the data for the October month end yet, the first two weekly reporting periods (Oct 7th & Oct 14th) for Domestic Equity Funds have seen net outflows of -$1.31 & -$1.44 billion, respectively, for a total of roughly $2.8 billion in net outflows MTD (data for the week ending Oct 21st should be released in the next day or two).

Note how investors “bought the dip” in previous corrections, providing institutions with the capital to buy more stocks which fueled the next leg higher in U.S. equities whereas this most recent correction has been followed by persistent, massive withdrawals from US equity funds.

$SPX vs Fund Flows
$SPX vs Fund Flows

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