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.

Have We Bottomed For The Summer? (by TnRevolution)

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Have we bottomed for the summer?  The simple answer is, quite possibly.

My work was looking for three things to come together:

  1. A break of the October '11 lows for leading stocks/indices, such as GDOW, BHP, ITUB, & SU
  2. A spike higher in VIX, possibly to the low 40's
  3. An early June low, followed by a 6-8 week bounce

So where are we now?  Stocks such as BHP and ITUB have indeed broken their October '11 lows.  GDOW and many energy related names, such as SU, have yet to break their October '11 lows.  Let's take a look at BHP first.  A global commodity megacap, it has been leading the market lower.  Of the leading stocks that I follow, it has one of the best technical structures.  It is currently overbought on the daily chart.  I would look for some selling this week, followed by a possible move higher into mid-July to backtest it's broken trendline coming off its November '08 low.

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2012 Roadmap (by TnRevolution)

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Happy Memorial Day Slopers!  Before I dive into the Revolution roadmap, I would like to offer my sincere appreciation to the men and women of the U.S. military.  Bravery and sacrifice are to be honored, and I thank you for that.  With that said, bring our troops home, where they belong.

Now, let's get to the charts.  I continue to use GDOW as the best overall view of what is truly going on in the markets.  From a fundamental standpoint, I would argue that U.S. markets have been skewed higher as money has fleed other global markets, fearful of currency/sovereign crisises.

GDOW52812

GDOW is currently resting on trendline support coming up off the March '09 bottom through the October '11 bottom.  A break of this trendline, should lead to a quick impulsive move down.  Also, notice the structure of the overall decline since the 2011 top.  From February '11 through July '11, the index formed a downward sloping head & shoulders top.  It then formed a similar structure from February '12 through April '12, as the move higher off the October bottom topped out.  Ideally, what I would like to see is another similar structure develop.  Let's take a look how 2012 might play out.

GDOWforecast

What I'm looking for over the next two weeks is a break of the trendline support, and then a quick move down beneath the October '11 low.  This would then be followed by building a right shoulder through June/July '12, backtesting the trendline break as well.  A break lower out of this downward sloping head & shoulders structure would have the potential to yield a powerful bearish move, a la 2008.  Is this possible?  Let's take a look at GDX and the VIX to see what they are saying as well.

GDX52812

As has been well documented on the Slope by our gracious host, the GDX head & shoulders top continues its breakdown.  After making an initial impulsive move beneath it's neckline, GDX has enjoyed a bit of a bounce, moving back into overbought territory on the daily stochastic.  It is ready to resume it's fall.  Looking back at the 2008 GDX analog, I would put us around the beginning of September 2008.  From September 2nd through September 11th, GDX fell from 37.19 to 27.86.  The move was swift.  I believe GDX is signaling the same thing it did in 2008, a deflationary crisis event.

On an aside, for my view on where gold is heading once this flush is finished, I encourage you to read a post TK (and Serge) made last August.  Goldy von Moldy.

VIXforecast

Lastly, let's take a look at the VIX.  After breaking out of its inverse head & shoulders setup, the VIX impulsed higher, and then has since moved back to ease off its overbought levels, backtesting its breakout as well.  Ideally, I'm looking for a quick move higher into the low 40's, before running into trendline resistance coming off the August/October '11 highs in the VIX.  Notice that the VIX has continued to honor it's uptrendline on the daily MACD.  A break beneath this trendline would be a red flag. 

A Euro, A Yen, & Gisele (by TnRevolution)

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My cousin is currently attending law school at Ole Miss.  When we get together I always ask her what she is studying.  I never forget to remind her that for graduation I intend to buy her a police scanner, so she can start chasing ambulances.  She looks at me with a smirk, but I do believe she is intent on becoming the first female governor of the great state of Tennessee.   With that said, the study of law certainly has it’s similarities to trading.  We always seem to be on the lookout for precedent.

This weekend I’m looking at a chart of the Euro/Yen.  Below is a chart of the Euro/Yen from 2000-2008. My intent this weekend is to take a look at how this trend ended, compare it to the current state of SPX, as well as take a look at current sentiment.

EURJPY

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