If a fifteen hour non-stop flight is not enough to tire out anyone, I had to deal with a snow storm in the morning and two hour drive back to hotel. But after a twelve hour rest, here I am, catching up with what happened while I was in transit.
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.
Head Fake? (by BBFinance)
Regular readers know that I am neither a Bull nor a Bear. I take trade based on expected market direction. Most of the time the trades give positive results fairly quickly. However there are times when I have to sweat it out a bit. Sometimes bad karma hands out a loss. Now is the time for sweat. As I wrote yesterday, I took the short trade 4 days ahead and now 16 SPX points wrong. Out of many parameters, few key parameters gave an early signal of market turn and I think I was impatient. Lessons learned and system strengthened. But I am fully committed to the short trade.
In the morning post (http://bbfinance.blogspot.com/2012/01/now-is-not-time.html) I wrote that now is not the time to close the short on equity. Remember the saying; “Be fearful when others are greedy and be greedy when others are fearful”. Now is the time to be fearful. In the early morning when Emini futures were flying past 1300, was there someone dreaming of SPX 1400 very soon. Obviously retail is chasing the rally. VIX is in 20s and for 2nd day running, index only put/call ratio is at 1.25 and equity put/call ratio is at 0.57. In other words, retailers are super bullish and why not. SPX 1400, here I come!
Patience, Bears (by BBFinance)
The force of correction is being held back artificially to lure in more late stage bulls. It is like a overflowing dam which is now ready to burst and sweep away everything in its path. The market is way overbought and way out of schedule for correction. I expect that prices will correct more than normal to bring it back on the track.
In the morning post (http://bbfinance.blogspot.com/2012/01/exciting-wednesday.html ) I said if for whatever reason the correction does not starts today do not be disheartened if you are short. I said it will make another attempt to re-test the high and so it did. Although technically SPX closed in green, it did not take out yesterday’s high. And SPX is showing seven consecutive green hourly bars. Also VIX and SPX both closed in green today. From past experience I think the selling will start very soon, may be from tomorrow.
Treacherous Tuesday (by BBFinance)
As I mentioned in the morning, it was the third push up from the triangle and the pushes are now complete. Before today, the last seven trading days was a churn. The market was going round in circle and was making it difficult to find any direction. With today’s price action the direction of the market is becoming much clear. I will have to wait for tomorrow to decide whether I will close my short position on January 12 or 20. But either way I expect the market to go down from here. But may be one last attempt to retest today’s high will be made tomorrow.
It was just 11 point gain in SPX for the day. And I think the market will soon give back those 11 points and some more. The interesting thing to notice is how the sentiment changes. Before the year end, when I was talking about Santa Rally, there was general skepticism around. Not many believe that SPX will come close to 1300. And yet today, there is talk of SPX crossing 1400!
Sleepy Monday (by BBFinance)
January seasonality is being played out true to textbook. And the earning season is upon us. So while the top is in, do not expect major downside. There will be correction alright but I do not think it will be very deep. Let us look at SPX chart from various time frames. The 1st one is the daily chart.
