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.

Opex Seasonality (by Trade Flight Plan)

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Happy New Year! It may not be Open Season, but we are approaching January Opex Season. We bring you another episode in our fun game of Math-You-Won’t-Find-Anywhere-Else, only this time it’s Opex Seasonality.

We compiled data from our Personal Trading Almanac to build a profile of how the major indexes perform on average each options expiration week. The data goes back 22 years and sniffs out the opex week price action from more than 5,500 data points.

What’s interesting is that January Opex has one of the few bearish opex week tendencies of the year. Over the past 22 years, the S&P 500s closed opex week in negative territory 63% of the time. Of course, this year can very well be different. Employment is stabilizing, the markets are shrugging off Euro debt zones, and it’s an election year. But for those about to short, stay thirsty my friends…

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Bang! mwDATR 2011 Edition (by Trade Flight Plan)

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(To be read while listening to Countdown)  

A TFP exclusive, it's been awhile since we published our last Margin Weighted Dollarized Average True Range (mwDATRTM) analysis of the futures markets. In the past few months, volatility has expanded, the exchanges have played havoc with margin requirements, and the world continues to revolve around government debt reactions.

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Big Oil Bell Curves (by Trade Flight Plan)

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CL is offering some nice moves between daily bell curves (value areas) lately.  89.50 lows were support set back in February.  The bottom three S/R levels were set back in February.  The others frame key price levels from the past two months.

The two most prominent bell curves the past two weeks are at 90.50s and 95.50s.  Those 95.50s were also May lows.  A break on increased volume above 95.80s can see a retest of 97.80-99.00.  A break on increased volume below 95.00s can revisit 93.00-93.70, possibly more.  We are neither bullish nor bearish on oil – all we have are targets on both sides of this middle zone.  Intraday setups will guide the way and the end of the month promises to be interesting.

With an average daily volatility of roughly $2,000 per contract each day lately, oil has been moving nicely and offering some sweet intraday setups.  These will be the topic of future posts.

2011-06-29_2304

Dusting Off An Old Context Model

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Back in February we published a context model shortly after ES made new highs.  The good Dr. Knight kept playing the Chocolate Rain video and sure enough, the market tanked shortly thereafter.  Let's see if we can get this to work again.

It's time to dust this puppy off and see where we are.  The break above prior ES highs at 1343 makes us wonder just how far the S&Ps can go with QE2 and the debt ceiling.  Back then, we declared ES 1310s as our line in the sand, which was crossed and broken several times before hitting new highs.  Believe it or not, they shall remain our LIS.  A break below 1326s can serve as a potential early warning signal.  Upside targets remain in the 1445-1450 zone.

ES Context Model Circa February 18, 2011
Originally published on www.tradeflight.com

ES

We keep an eye on ES, but our primary trading vehicle continues to be volatile, liquid, light, sweet crude.  As an aside for those interested, we are planning an upcoming gratis educational series on how to trade CL by asking only 4 key questions each day.  The questions, and the answers, may surprise you – they are a combo of herd psychology and price levels deemed important by professional money.  All those interested, say ay.

Will This Time Be Different? (By Trade Flight Plan)

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(Note from Tim: this was posted last night; my frantics posts today kept some content at bay, so please take the time of posting into account.)

Our thoughts and prayers go out to the victims of the unimaginable tragedies in Japan.

In 1989, Michael Lewis (author of The Big Short) wrote an article titled "How a Tokyo Earthquake Could Devastate Wall Street." This piece eventually appeared with a collection of other articles in one of Lewis' books, The Money Culture. In the article, Lewis describes the potential implications to Wall Street when Japan, one of the largest holders of US equities, liquidates its foreign holdings to pay for the rebuilding of Tokyo after an earthquake.

Will this time be different? We have no idea.

Judging based on the remarkable price action of the Yen the past 48 hours, and observing the large ES selloff last night, only to persistently grind higher on anemic market breadth during the entire NY session today, we can surmise the leaders of the world's economies are working around the clock to either coordinate or contain their responses.

Foreign Holdings
Just for kicks, we took a fresh look at the latest Foreign Holdings of US Securities, courtesy of the US Treasury. We then dropped the numbers into a spreadsheet and resorted in descending order according to Foreign Equity Holders. You can see the top 25 results below (not NCAA rankings).

How Will Rebuilding Efforts Be Funded?
Does this imply Japan will selloff US holdings to fund its rebuilding efforts? We have no idea. We can never know whether this time the global economies are better coordinated to respond to a tragedy like this, or whether a QE3+ will now go to prevent foreign liquidation of US equities, or whether a different impact will ensue altogether.

Will They Sell Dollars/Treasuries/Stocks/Commodities/Currencies?
Whatever the reasons, we find it interesting that in spite of the big selloffs and volatility in ES, Gold, Oil,and others the past 48 hours, the Yen is flirting with record highs and the Euro keeps retesting 1.4000s in an interesting wedge pattern.

Foreign

 

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