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.
The first week of the new year saw the broad market index advance 1.05%, and some big winners and losers among the sectors. Let's take a look (click on images for enhanced viewing):
Automobiles and Parts was the big sector winner. GM (+5.75%) and F (+8.8%) were big contributors along with LEA (+7.18%) and MGA (14.83%). HOWEVER, the auto parts stores had a drag of a week. Big sector losers were Gold Miners and Platinum and precious metals–largely a reaction to the USD's strength. Here are the top/bottom performers (using sub-sectors):
Home Construction experienced a surge with KBH's good news. This sector is heavily shorted and the bears got caught with their hands in the honey jar. I created a chart book for you with the short interest and the weekly charts.
Let's take a look at the broad market index:
There is some negative divergence between the oscillator and the price action; however, the daily chart is not extended relative to the trend line. Earnings will be coming out soon and will feed the charts with new information. As we know, it is not the news, but the market's reaction to news that is instructive.
For your weekly research, I've prepared a chart book for you on the major sectors as well as some weekly change in price and short interest on subsectors. You may download it here (9.1mb).
Disclosure: I have no positions in any stocks mentioned.
The last week of the year saw the broad market index eek out a .03% increase. However, we know that the action is in the sectors, so let's see which cylinders are firing in the market's motor (click on all images for enhanced viewing):
Basic Resources, Oil and Gas and Telecommunications were the winners. Healthcare, Personal and Household Goods and Travel and Leisure were the losers for the week. Taking a look at subsectors, here are the 10 top/bottom performers:
I was interested in the Mobile Telecommunications sector's performance. There are some interesting chart set ups in that sub-sector. I created a chart book for you with the Communications Equipment tickers which you can find here . You can also visit FINVIZ to get a deeper profile for the names in this sector by clicking here.
Short Interest: Here are the sub-sectors with the highest short interest. Note that short interest is updated 2x per month.
To close, I want to present a chart of DWCF, which is the Dow Jones Total Stock Market Index…it includes all US listed stocks that have a readily available quote. You can see a linkable version of this chart here
I created a chart book for you, which you can access here.
Best wishes for the New Year!
An interrupted trading week: interrupted by our American Thanksgiving tradition, some spit spat between N/S Korea as well as continued concerns about sovereign debt. The broad market index was down .61% with quite a bit of push and tug in the underlying sectors. Here's the sector summary (click all images to make larger):
Banks, Financial Services and Financials were hardest hit. With the USD strengthening in the wake of these concerns, Basic Materials and Resources also suffered. Retail stood tall, and the results of Black Friday will certainly impact this sector. Let's take a look at the weekly chart of the total stock market index:
It was a light volume week due to the holiday, and the market continues to consolidate at this level. It is going to go one way or the other. Would that I had a crystal ball! Mine's in shards; perhaps yours is in better shape.
I want to point out the the lower part of the chart where I've consolidated two indicators (that show up on the detail charts). The purple dashed line shows the performance of this index for the time period shown (Jan 07- current). The broad market is still 20% below those highs. It is a cogent reminder that "not-losing" is the key to winning.
The market is gathering energy through this consolidation for a move. I don't mind being marginally committed (a/k/a standing aside) to see which way that might be. If the N/S Korean conflict and the sovereign debt issues get cleared, the move is likely to be up. If not, a pullback will be in store. I've prepared a chart book for you which you can access here. It is a large file, so please be patient with the download.
We had a nice evening session exchanging tickers and charts. Sloper, Bleak, mentioned this name. Because it is such a beautiful example of how one can combine Volume@Price bars to find some moves with exciting potential, I wanted to do a brief post about it.
Here's the chart (data is a couple of days old):
As you can see, the intersection of volume@price (bars on the left hand side of the chart) combined with chronological volume (bars on the bottom of the chart) AND a beautifully forming basing pattern, resulted in an explosive move upward (the equivalent of the stock chart's stars coming into perfect alignment!).
Another tool for managing these moves is the %B. 1 is the top of the Bollinger Band; -1 is the bottom of the band. Here's a chart with the %B included as an overlay behind price.
Any +/- move beyond 1 means that the standard deviations is exceeding 2 (on exponentially weighted price data). Accordingly, such moves, by definition, are unsustainable. Therefore, there are a couple of things to mindful of:
- Thing 1: if you are already in this move (and these ARE worth your time to ferret out), then you simply MUST sell systematically a portion of your position into the rocketship launch if the %B is over 1 because such moves cannot be sustained. I typically sell 1/2 of my position in 3 tranches into such moves. Why? I have already entered into a full position when I see such set ups. Regrettably this was not a chart that I had found! If you are reluctant to sell, simply remember that by the nature of the extension of the price OUTSIDE the Bollinger Band, the probability of a pullback is quite high. Accordingly, you can lock in some profits (and you still have a portion of your position if this is a 'gap 'n go' and re-enter at lower price when it pulls back. Look for support at your preferred moving average time frame.Even when it pulls back, it will need more sustained volume coming in to propel it forward. If there is no follow through over the next several days, then it might be a fizzled move.
- Thing 2: DO NOT BUY stocks that are in this price level. (I say this to newer traders) Buying this stock here at this price is a very high risk entry. Employing patience here is required. If it runs, do not chase it. There are several other set ups in the making. Go find them!
The lowest risk entry is the spider entry—you find the chart; you see the volume probes coming in; you establish your entry; and you wait.
A brief word on stop losses for these types of set ups—it is not unusual to see a bit of a shake out before the real move. This stock had fairly wide range in the days before the move. If your entry is such that you cannot withstand a whipsaw, size your position so that you can withstand a shakeout of 10-15%. It is a little easier to have some conviction when there is a chart set up as beautiful as this. BUT….the reaction was also news oriented: earnings coupled with a 9% short interest. That adds both risk/reward and your trade size should be adjusted accordingly.
These charts also work on the flip side. Stock prices crawling along long volume@price bars means that there are lots of holders invested at that price. As everyone is admonished to use stop losses (and my own theory is that because everyone uses them it increases volatility and key points in the chart), there tends to be clusters around such bars (above for shorts, and below for longs). Powerful moves often result from the igniting of those stop losses.
Thanks Bleak for this beautiful example.
The total market index was basically flat at .15% change. Within the total market, banks, other financials and utilities were the most notable underperformers. Below is a graphic of the 23 sectors and the total market index. (Click all images to make larger).
Let's take a look at a WEEKLY chart of Total Stock Market Index that includes the volume@price bars:
The markets continue to work off overbought conditions. As we saw last week, the market is still very fragile to news that surprises regarding sovereign debt. It is also worth noting that for the first time, bonds and stocks have diverged. TLT has fallen with a falling stock market. So while the flight to safety might be in the USD, it is not going into treasuries. I have created for you a chart book with the daily, weekly sector charts in addition to the table of 148 industries sorted by performance as well as short interest per sector. It is a large file, so please be patient with the download. You may access it here.