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.
As I posted a month ago on rare earth companies being in a bubble are now playing out. MCP has just broke the 50 and REE is hovering over it, with both sporting very weak relative strength and accumulation. These stocks have a long way to fall and I will participate in this decline.
I also believe that the rare earth ETF marked the top.
I have been watching the grain markets with great interest since 2008 when we entered into this cyclical cooling period. As the earth cools it has a great impact on three major grain markets. Canada, Russia, and Australia. Russia has suffered a devastating collapse in their wheat harvests due to drought, Australia has gone from extreme drought to excessive rains and disease, and Canada's growing season has compressed due to early winter onset.
Two other macro issues are also in play, grains like all other hard assets are being bought to preserve wealth in the fiat folly policy underway around the world, and increasing middle class members around the world is raising consumption of said grains. As a result, grain inventory around the world has slipped to 90 days, a 11% decrease over the past year.
So in my view a perfect storm is coming for the grains.
Looking at the chart of JJG, it is ready to reengage its upward channel. When it broke below the channel the 20 never broke below the 50. I am a buyer (scale in) as it slips back into that channel.
Personally, we have been stockpiling flour and sugar to give us a cushion, if need be (remember the rice shortage).
Well resistance was well and truly broken yesterday, and both ES and NQ made short term higher highs after higher lows. For my money the Santa rally is on and the question now is mainly about how far that will go.
Short term I'm looking for some retracement today, though there are some very bullish patterns in play and there is a risk that ES might spike up to 1220 or higher today if they play out. On ES I have a tentative rising channel with the upper trendline hit yesterday and again at a higher level overnight. The bull pattern here is obviously the bull flag indicating to 1222+, and I wasn't happy to see that breaking up this morning. However ES has since given up those gains and the higher high was on declining RSI so I'm still thinking a retracement looks likely. NQ made a lower high overnight which was also encouraging. If ES falls back to break 1200 then I'm expecting a return to channel support in the 1188 – 90 area,which I'd be regarding as a good buying opportunity:
The other bull pattern that I've been looking at this morning is the IHS that has formed within the EURUSD declining channel. The neckline hasn't been broken on an hourly basis yet but if it is then the pattern indicates to declining resistance in the 1.34 area, and I'd expect to see that made, as IHSes formed at a channel trendline tend to be very good performers. If that happens we might well see ES testing the recent highs by the end of the week:
I haven't much to add to that in the short term, so I've some other interesting charts to share this morning. The first is my chart of the bull market since March 2009, which has been a move of simple technical beauty. The recent highs and lows on SPX fit very well within the established internal support / resistance internal trendlines and it would suggest a target for this December rally in the 1250 area, unless of course it breaks up through into the next range:
The next chart is the long term copper chart, where we are just under massive long term resistance. A weekly close above $405 would look very bullish but right here just under $400 this looks a very courageous long:
I've been watching the recent meltdown in bonds with interest and found a nice broadening descending wedge on the TLT 60min chart that looks very tradeable:
The steel stocks look weak, and this miner is a big supplier to this industry. It broke the 50 EMA today, and if it closes below that level, I am placing a short on it. 47.50 is my target, although the 200 MA will be an intermediate stop IMO
Irish whiskey, inventory levels, currency wars, and FOMC – whoopee!
Other than that, crude oil has been light, sweet, and volatile. As a quick followup to our prior post, we continue to watch the net positions of commercial entities on CL (now trading the CLF1 contract). Imagine our surprise when we see the commercials are actually increasing their net short positions to record levels based on the latest weekly Commitment of Traders (COT) info. These are airlines, producers, transportation companies, and other big hedgers.
Same rules apply as last time:
Red=commercial traders, yellow=small spec traders, blue=large non-commercial traders.
Green vertical lines show relatively high COT readings by the commercials. Red vertical lines show relatively low COT readings for these slick oil hedgers.
Just for kicks, we highlight with nice blue circles what happened previously when commercial net short positions hit new lows.
We cannot short at lows, and the snake oil salesmen haven't made it easy to get short, doing things like initiating the moves during Asian or European session hours at some crazy-o-clock in the middle of the night, blaming it on a supply disruption in Irish Whiskey as an excuse. But boy, any micro bull intraday retracements sure look interesting, especially if we can get some confirmation on smaller intraday time periods.
Even if all else fails, oil bulls would have to believe that somehow, this time things will be different and nearly 200,000 oil contracts net short of the nastiest, slickest, smartest traders in this business are just kidding. The best part is, an increase in the yellow line representing small speculators tells us that retail traders have been buying it.
Of course, in these markets anything is possible. In October/early November they marked price up by nearly $5/barrel before selling off, just to prove they could. The entire time, the commercials just kept establishing even larger net short positions. Someone's either going to get taken to the cleaners or make a fortune. Just stay alert if you're trading stuff based on oil, like USO, RIG, BP, XOM, etc. If CL sells off, they stand to make a nice profit. If not, end of year could get interesting.
