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.
ABT Short
ABT looks like something straight out of a book on technical
analysis: First, prices became overbought and an extended move up
within this large ascending channel with negative divergences on the
MACD and RSI put in place at the recent highs. After forming a very
bearish Evening Doji Star candlestick pattern around the highs (with the
doji kissing the top of the channel), prices then made a large gap
below the bottom of the channel.
ABT went on to set up in a very clean
bear-flag pattern just below the channel and a solid break below that
pattern would likely spark the next wave of impulsive selling. Note how
the pattern measurement for the bear-flag lines up nicely with my third
target, which I had added before adding the pattern projection. Nothing
is 100% in trading but from a charting perspective, it just doesn’t get
much better than this.
I will consider ABT an active short at the open tomorrow unless the
stock opens above today’s close of 65.04, in which case I will wait for a
confirmed break below the flag pattern. Those targeting T3 might
consider a stop not far above the 66.80 area while a stop slightly above
the 67.60 area might be more suitable those targeting T4 (my preferred
swing target).
Bearish Engulfing Candlestick Patterns
The SPY & QQQ both put in Bearish Engulfing Candlesticks
at the close today. Looking at the previous similar patterns circled on the QQQ daily chart above, both were
followed up by a substantial gap down the following day (one on a
Friday, the other on a Monday). Therefore, although I can't give
specific investment advice, I can tell you that I certainly won't be
trying to buy the gap down if we happen to get one on Monday. On the contrary, I
will most likely deploy what little dry powder I have left after adding
to my short positions yesterday and today.
-RP
Trading the Market vs. Trading Stocks
Early in my career as a trader and even long before that as both
an investor and stock broker, I found it very difficult to successfully
outperform the stock market with my trades/investments. When I began my
career as a full-time trader, I was largely focused on outperforming
the market by out-trading the market (via the broad index tracking
vehicles such as the futures, options, and etf’s such as the SPY, QQQ,
etc..). However, I gradually learned that it was much easier, and
profitable, to focus on only trading the best looking technical patterns
on individual stocks and sectors vs. trying to successful game the
broad market.
MA Short Setup
MA is setting up to offer a very nice R/R short on a break below this very extended ascending channel. Negative divergences were put in place on what looks to be the final Draghi/Bernanke QEternity pledge induced thrust to new all-time highs in the stock. Note that there is a decent shelf of support
just below the channel around the 445.80 area so one might consider
shorting a 1/2 position on a breakdown of the channel, adding the other
1/2 once that support level goes. Stops TBD once the short entry is
triggered (a break below the channel). The weekly chart below shows
just how overextended MA has become this time around as well as the
clear pattern of sharp corrections following the breakdown of these
ascending channels.
