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.

Bad Breadth and the Market (by Biffermas)

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Bad breadth 
The McClellan Oscillator is a market breadth indicator that is based on the difference between the number of advancing and declining issues on the NYSE.  It is primarily used for short and intermediate term trading.

The McClellan Summation Index is a long-term version of the McClellan Oscillator. It's interpretation is similar to that of the McClellan Oscillator, except that it is more suited to major trends.

 

 Mcnasdaq 

Both show great value when the major indices make new highs or lows, but the McClennan's fail to validate the movement.  This indicates lagging participation in the ongoing trend and shows the possibility for reversal.  Recently, the S&P 500, Nasdaq 100, and DJIA all made new yearly highs, but the MO and MSI failed to follow.  I’ve marked the divergences on the following charts.  Upon closer inspection many sub-sectors failed to make new highs, including small caps, industrials, materials, banks, and homebuilders.  Truly this bull is suffering from market halitosis.

 

McNyse 

As always, obey your stops.  This market has proven it has staying power and routinely ignores bad internals to blast higher.  We’ve seen many bounces off oversold McClellan readings over the past 6 months, so be careful at these points.  Taking partial profits, hedging, or closing positions should be considered.

(Editor's Note: I am in awe of the quality Slopers are generating here; wonderful stuff; thank you so much! On a less cheery note, sorry Disqus is stinking so badly. I know how important comments are to the Slope experience – Tim)

Trading Failed Breakouts

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Camel1

 

When casually observing the markets recently, anyone with a single firing neuron can recognize two things are happening:

  1. The market is making a moon shot.
  2. A crooked scheme is being implemented in the highest reaches of government and the banking system.  Fraud, deception, opacity, and tape painting through liquidity injections represent the modus operandi of our leaders.

Da' Boyz have gone "all in" during this historic period, so extreme caution must be used if trading counter to their wishes.  We all know their shenanigans won't last forever, and when the tape turns south it could get ugly in a hurry.  Getting on board the train once it's left the station will prove risky, since violent rallies from dip buyers and POMO stooges often materialize, wiping out precious capital.  The strategy I use during bear market rallies to time short positions is a simple failed breakout entry.

 

Brash

Failed breakouts are a nice technical entry.  The risk is well defined, and a comfortable stop can be placed.  At a minimum, failed breakouts increase the odds of a successful swing trade.  With any entry, false signals and whipsaws are frequent (especially lately), but setting your stop and sticking with it has minimized this problem.  It's wise to take partial profits at achievable positions so that stopped out positions still yield some gains.  Don't be too upset if you're frequently stopped out, because the losses are small and the gains are potentially quite large.

 

Iyt 

 

Many etf's have recently made new highs, I'll be looking to add short positions if they fail.  I recently added XLF on such a setup.

XLF 

Thanks, fellow Slopers, and thanks for all the concepts and ideas you've shared.  I'm very happy to write for such an intelligent group of traders.