I was taking a close look at FAANG this week. It was interesting that every single one is on some kind of intermediate support. As much as I would like to bring a bearish prize to the slopeofhope ready for a mauling, I think this lends evidence to the argument that the S&P500 is in for a months long rally. Back in September, XLK, the tech ETF SPDR was in a large rising wedge. Rising wedges break down into channels. Look where we are now. (click any picture for a larger version)
Slope of Hope Blog Posts
This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.
I think it’s only natural after a decline like Oct 10-11, 2018 for people to ask themselves a variety of questions. “Is the bottom in or not?” “Should I buy now or is it going to roll over again?” and “If it is going to roll over, how far does price bounce before rolling over?”
The question I’m asking today is, “After a decline that coincides with a $VXV:$VIX ratio under .90, how long does it take for a retracement to be put in and price to start rolling over?”
Based on the conclusions of my previous post, the likelihood of another test of the lows in approximately two months time appears to be high, even after a retested low has been put established. On the path to two months from now, however, we still have to navigate a market day to day. The paths after the ratio low signal triggered varied so much, it’s hard to really come up with anything consistent and even if there was a pretty clear repeated path, I wouldn’t want to suggest that there weren’t other paths that price could take, even a path that’s never been taken before because anything can happen. In most cases, the final peak before a decline to at least the first low if not a lower low (or bear trap) took 4-6 weeks to be reached. In the near-term, however, they all had an initial peak relatively quickly which provided a boundary for a chop zone (trading in a range). This is what I want to explore. (more…)
Hey Gang, no trade suggestion this time. I’m always keeping an eye out for context of the market environment and looking through some charts tonight, it prompted me to do a little study for myself and I thought I would share it with you all. Here is the ratio of 3-month volatility to front month volatility. Today, the ratio closed at .863. Using a cut off line of crossing below .90, this has only happened seven other times during this entire bull market. I’m ignoring the bear market bottom on this chart for the moment to keep things in context of the market type. It’s too hard to really get a good sense of the daily price activity in this chart so I’m going to zoom in to each instance.
Hey Gang! I’ll work out some kind of a standard format for my posts soon, but I would always like to present a trade together with a plan for the stop, profit, and target.
I don’t have a ton of time so here’s the trade. Healthcare is the 2nd strongest sector determined by its bullish percent index rank (currently at 84% P&F buy signals). It’s a simple, but effective way to rank sector strength. The only stronger sector is utilities at 89% P&F buy signals. If you’re not familiar with Point & Figure charting, it’s basically a way of taking time out of the chart and displaying only the price moves. Being on a P&F buy signal means that the chart is making higher highs and higher lows.
I looked at the top 10 holdings for XLV and JNJ stood out for me as being in strong condition and a stone’s throw from its highs. It is clearly making higher highs and higher lows within an established channel and has broken a short-term downtrend line. Details are on the chart, but this trade risks approximately .50c to make $6. (more…)