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.

Charts From Thursday Comments (Jack Damn)

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There are a lot of great charts floating around in the comment
section that you may have missed because you were busy trading or maybe there was an avalanche of comments as the market was crashing or you were merely away looking at bacon market news.

Whatever the case I thought I'd grab a few charts from the SOH comment section. This first post is a bit of an experiment and as such, this isn't nearly a complete "round up" of charts from everyone. I hand picked a few examples to kick the idea off.

► jesterx posted:

Do we have a holiday reversal on our hands. Hmmmmm. Or will the job
numbers haunt too many and send us down the crap hole again. Here is my
homework for those interested.

Jesterx_01_sp_daily

S&P Daily (click for bigger)

Jesterx_02_sp_intra

S&P Intra-day (click for bigger)

► morrise posted a nice look of the NYSE Comp (NYA) with commentary on the chart:

Morrise_nya_01

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► ContraTrader posted a look at Goldcorp (GG):

I think Tim is playing GDX for a short term bounce place. I got into a
miner today as well.. GG.. I will probably play it up till about
42.50 and short it there on the retest of the broken wedge formation
with a stop above the 50DMA.. check it out.

GG

Click for bigger

► redvetttes posted a nice technical look at the IWM. It's a bit too large from me to grab, but it's right here.

auger posted:

Anybody consider that there's an inverted Cup and Handle on $SPX, rather
than a H&S? Target is 975-ish.

Auger

Click for bigger

Two Bears For Monday (by Jack Damn)

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MayaWhile I realize most traders are looking for the broad market to rise over the next two weeks into the July 4th holiday due to end of the month and end of the quarter mark-up, I'm still on the hunt for possible short set-ups in case the up move doesn't materialize.

What I'm looking for are stocks that fund managers might dump to make their books appear fluffier. Since GDP numbers missed expectation it might be possible to find stocks tied to the consumer or economic expansion that fund managers spuriously ran up off the March '09 lows and look ripe for profit taking (see Family Dollar below).

And I always keep an eye out for stocks that suffer from a down side event (such as a downgrade or missed earnings) … which is what my first potential short, Edwards Lifesciences (EW), looks like:

Bear_01_EW

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This appears to me to be a classic Alan Farley "Hole in the wall" swing trade. The event that triggered the initial sell off was a Goldman downgrade and after two days of catching its breath, it may be ready to continue down.

The swing trade is to get in under the most recent low with a stop in place in case you trigger in, but dip buyers push it back up. In this example I used the value of a single 10-period ATR as a stop, but any stop that fits your style is applicable. The plan is to roll the stop down daily until stopped out or you hit a profit target (if desired).

Bear_02_FDO

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Family Dollar Stores (FDO) has had a nice run up, but may be ready for a retest of its previous lows as bulls look to lock in end of the month/quarter profits. For this trade I'm using Dr. Alexander Elder's "Impulse System" via Stockcharts.com. In his classic book "Come Into My Trading Room", Dr. Elder writes that his Impulse System is not a mechanical system and it's best not to automatically trade red or green bars without some other pattern or trend confirmation.

In other words, try to trade good looking charts in the desired direction.

In this case the short signal (red bar) appears to be breaking down out of a potential triangle pattern on pretty decent volume (though not stellar) after it filled the most recent gap. Short term trend appears to be breaking down and if there is further follow through, it might make an excellent swing trade.

Trading rules.

A sell signal occurs when the long-term trend is deemed bearish and the
Elder Impulse System turns bearish on the intermediate term trend. For
example, the weekly chart shows a clear downtrend and this means only
sell signals are heeded on the daily chart. Buy signals are ignored.
Elder suggests exiting when one of the two indicators turns up, either
the 13-day EMA or the MACD-Histogram. – Elder Impulse System, Stockcharts.com

Which means we cover if a blue bar prints. Blue painted bars represent system indecision and as such, it's time to exit. As an added bit to Elder's original rules, my own recent testing of this system shows the best profits occur in a three to five day window (with an exit at the end of the fifth day).

Depending out how the futures look Monday morning, I will be entering a short on (FDO) and monitoring (EW) for a possible entry. If the futures are screaming higher, then the trades goes on the watch list for the week.

Good luck and good trading.

~Jack Damn

BP Heading For Restest Of 2003 Low?

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BP_lows

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After three brutal months for bullish investors, it looks like BP could tag its 2003 lows. What's next for for this stock? Is it a long term bargain here, a short term bounce or is it toast? Any thoughts?

BP Shares' Losses Top $100 Billion (WSJ paywall)

BP PLC shares dropped as much as 9% in London on Friday, putting the
drop the oil major's market capitalization at more than $100 billion
since the Gulf of Mexico oil spill began, as an analyst suggested the
company needs to sell stock to assure counterparties of its financial
health.

As U.S.-listed BP shares dropped more than 3% in early
trading, the hit to its market capitalization since April 20 grew to
roughly $102 billion as the oil giant plumbed a fresh 14-year low.

Point & Figure Charting The Recent SPY Correction (by Jack Damn)

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SPY_pf

Click for bigger chart

This is a look at a Point
& Figure
2-box reversal chart of the SPY (12
June 2010). At best, I think the current price action can be described
as a correction and not major top yet.

Obviously, a major top could be forming and the current descending
formation is definitely bearish, but I view it in
totality as neutral until 106.00 has been resolved to
the downside. Chart data is easily skewed, but looking at at the SPY
this way with the noise removed, we can see that the 106.00
level
is potentially pivotal.

There is a rising 45 degree trend-line coming out of a low support
zone that appears destine up to meet up with the 106 potential support
level. This, along with four recent tests of 106.00, might engender
bullish price action if it holds. In Point & Figure charting, 45
degree trend-lines are quite important, and any violation of them is
seen as an actionable event (i.e., trade worthy). Conversely, their
support is also actionable.

Considering the broadening nature of the 106 area (at the moment, a
Quadruple Bottom) and the approaching trend-line, a violation of this
confluence on heavy volume would be quite bearish and might begin a
price spiral down to the potential support zone of 85-87.

With the current bearish descending pattern in place, a retest of
106.00 isn't out of the question despite the past few days of bullish
bounce.

As always, price is king and all support and resistance levels can
(and will) be broken without warning. I view supply and demand levels
the same way as I view overbought and oversold levels: as potentials and
not absolutes.

Good luck and good trading.

Jack Damn

Originally posted on my Tumblr Blog

Percentage Of NYSE Stocks Above Their 10-Day Moving Average

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% Of Stocks Above Their 10-day MA

Above is a chart of the percentage of NYSE stocks trading above their 10-day moving average (DMA). I like to use this chart to gauge potential short term bounces. The yellow arrow points to the most recent reading, and as we can see, it's nearing the oversold area. It's possible for the market to bounce when reaching the 10-20 area. A poke into the 0-10 range is a strong signal of an oversold market.

A few aspects of this chart to note:

  • Oversold and overbought can remain in such states for long periods of time.
  • This is not a timing chart and thus does not produce strict "buy" or "sell" signals.
  • Overbought can stay overbought longer (way longer actually) than oversold. Oversold is typically a sharp jab up whereas overbought lingers as the bull trend expands.
  • The best signals are when price diverges from the current reading. Example: price moves lower, but the number of stocks trading above their 10 DMA remains the same or moves higher.
  • At best, charts are wind socks.

This post first appeared on my Tumblr blog.