Originally published on TheTechTrader.com.
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.
Bullish China Index a Harbinger for U.S.? (Mike Paulenoff)
Today's sharp 2.5% upmove in the Shanghai Composite from Friday's close shows that the price structure held above — and lifted off of — its prior (Aug 13) pullback low at 2564, as well as near-term MA support in and around 2610. Today's up-move and close near the high of the day positions the China equity index for another test of key 4-month resistance at 2700, which if hurdled and sustained should trigger upside continuation towards an optimal measured target zone of 29.25/50, and possibly as high as 3000 to 3100. At this juncture, only a decline that breaks Friday's low at 2589 will compromise the current constructive technical set-up.
The DIVERGENCE between the patterns exhibited by the Shanghai Composite on one hand (bullish) and the cash SPX on the other (bearish) is widening. My thesis is that China peaked first last year in August 2009 and led the rotation of global equity market peaks into 2010. The China equity market appears to be leading the recovery in equity markets out of corrective periods, which eventually should benefit the SPX. The SPX must preserve Friday's low at 1039.74 and climb above 1072 to get traction on the upside.
Originally published on MPTrader.com.
Bonds Tiring, Gold Moving Higher (by Mike Paulenoff)
What might Bernanke's speech have said or implied that triggered the market response that we have witnessed so far today? How about: Don't fight the Fed…The economy is anemic, and the outlook might be uncertain-to-poor, but the Fed will pump, buy, and do whatever it takes to turn it around. The Fed will keep short rates at ZERO for a long time, and force companies and investors to take risk….
If anything expressed above proves reasonable and accurate, the risk trade is where investors have to be make any return at all! Cash will continue to be trash and treated as such indefinitely. It is as if Bernanke held up a big sign that says: "Buy stocks, buy gold, buy commodities, buy houses, and, perhaps as a corollary, SELL BONDS — and take the money and put it into riskier markets…
With the foregoing in mind, let's have another look at my updated comparison chart of Bonds and Gold, two markets that could provide the most insightful reaction to the GDP data and to Bernanke's speech, are gold and 10-year bonds. Purely from a price perspective, the bond market is showing signs of exhaustion since its mid-Aug peak, while gold prices appear poised to continue higher towards a retest of the June highs at $1263/65. If my perceptions about the technical set up reflect "reality," then my sense is that Bernanke is "desperate" to create inflation, which argues for higher gold, and lower bond prices ahead.
I don't know exactly "why" bonds are weak and gold is firm, but I do know that the technical set-up coming into today's session suggested that such a scenario was increasingly likely. Right now, bonds appear to be heading for a test of the rising 50 DMA at 124-15, which amounts to another 0.50% on the downside. If the equity indices strengthen into today's close, we could see the bonds at 124-15 before the end of the day.
Originally published on MPTrader.com.
Constructive Pattern for QCOM (by Mike Paulenoff)
Let's notice that during the August corrective period, Qualcomm (Nasdaq: QCOM) has carved out a contractionary, coil-type consolidation pattern in the aftermath and atop its prior explosive upmove from the July low at 31.51 to the Aug high at 40. At its deepest corrective price of 37.45 at the 8/16 low, QCOM had retraced only 30% of the entire prior upleg.
As of this moment, QCOM is trading above 80% of all of its action since the July low, which is a very impressive feat, and a bullish sign. The overall picture is very constructive for upside continuation from the coil, which projects to 42.00/50.
Originally published on MPTrader.com.
TLT Spike High? (by Mike Paulenoff)
Based on my near- and intermediate-term work, the pattern and momentum configuration in the iShares Barclays 20+ Yr Treas Bond ETF (TLT) argue that the price structure hit a spike high this morning at 109.50, reflecting the flight to safety surge in buying of US Treasury paper despite the puny yields.
While this morning's high might represent the first of multiple "high-spikes" in the 109-110 area, I am willing to take a small, initial countertrend position long the ProShares UltraShort 20+ Year Treas Bond ETF (TBT). That said, to get preliminary confirmation that a meaningful high in the TLTs has been established, the price structure needs to violate and sustain beneath 107.50.
From a yield perspective, taking a shot at a countertrend position in the TBT's has technical justification. The most recent round of ugly U.S. economic data has pressed the 10-year yield to a new multi-month low at 2.42%, which satisfies the measured downside target off of the 10-month top pattern that broke down at the beginning of July 2010.
Originally published on MPTrader.com.
