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.

“Post-Bubble Contraction”

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“Post-bubble contraction” (PBC) as coined by Bob Hoye, may finally be at hand

Bob Hoye has been talking about a coming post-bubble contraction (PBC) for many years, in my experience. Now after many false starts, it may finally be in play on the wider macro picture. Past contractions (e.g. 2008 and 2020) have proven to be little more than precursors, triggers to new asset bubble phases because the Fed’s main macro manipulation tool, bonds, were in a multi-decade long trend of disinflationary signaling.

To this point with respect to the PBC, timing has been an issue. This is not a critique of Hoye, a fine financial historian and macro fundamental analyst. In fact, it is the opposite. It is from him that I learned the proper fundamentals for gold and especially the gold mining industry. But perfectly good deflationary meltdowns (of previous inflationary operations) were foiled in both 2008 and 2020.

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Clarity

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At the moment, I want the same thing I’m guessing you want: Clarity. Thursday’s rally was annoying. After sleeping on it, I would best characterize yesterday’s action as Wall Street feeding on itself. Nothing fundamental that I’m aware of changed in financial markets yesterday, and thus my overall view of markets did not change either. Let’s take a look at where we’re at, and where we’re heading. The market is moving fast, so I am writing this on Friday at 9:30am CST.

Let’s start by looking at the /CL to /ES analog, and the /GC to /CL analog. The /CL analog looks back at what /CL was doing 10 years ago to give us a useful echo for what we can expect directionally in /ES. I have circled on the below chart where we are currently, as well as where the expected bottom is (the election). This analog gives clues about direction, not magnitude, and it continues to point aggressively lower into the mid-term elections in November. After the election, the analog points to an uptrending /ES market into the summer of 2023.

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Still Testing The SPX 200 Week MA

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Apologies for this being the only post this week. I’m moving house in a few weeks and I’ve been really busy.

In my last post I was looking at the possible hard fail setup on SPX, NDX, IWM and Dow if the inverted H&S patterns that had broken up failed on moves back below the right shoulder lows on those patterns. On that fail there would be targets back at the retests of the 2022 lows and the last of those four low retest targets were hit at the low yesterday.

SPX tested the 200 week moving average for the third time this week and did an impressive pinocchio below it yesterday morning, though SPX recovered back over it quickly. For what it’s worth that was the largest pinocchio down through it since the low in 2009, excluding of course the hard break below it in 2020.

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