An ES up over 50 points. An NQ up over 200. It was an absolute mauling of the bears today, .as the bulls celebrated – – umm – – the Democrats taking over the House? I guess that was it. In any case, fear absolutely left the building, as shown by the VIX;
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The bulls have absolutely trampled the bears today. I’m proud of the fact that I suggested ERX, XLB, KBE,and some other longs near the end of October at what turned out to be great prices. I’m not so proud of the fact that, personally, I sold them only a few days later! Because it’s clear that “the bounce” is still going on, nearly two weeks strong now.
A number of horizontal lines have been simply blown away. As I’m typing this, the Dow is up well more than 300 points, the ES over 40, and the NQ over 150. It’s quite a bonanza for the bulls, particularly considering the House is back in Democratic hands. So the “last lines standing” are shown below for the Dow Jones Composite:
Well, for our latest Total Waste Of Time, may I present to you the past twenty-four hours:
I spent a lot of time recently looking at the long-term index charts. We’re all familiar with the history of the Internet Bubble and the Housing Bubble. How gigantic they were, how they were fueled by puffery or outright lies, and how the housing bubble in particular was made possible through completely bogus credit ratings. Both of these prior bubbles were powered by Alan Greenspan and his multi-trillions of largesse, and they both had historic wipeouts.
But what struck me – – really, really stuck me – – was how PUNY those two bubbles were compared to the ascent we’ve seen over the past nine years. I mean……..just look at this!
Seeing this table over on ZH made my jaw just about drop:
The image I have in my mind as I sit here now is an opening scene in the old television show Kung Fu, in which the monastery has hundreds of candles burning and flickering. Metaphorically speaking, each one of those candles represented, for me, hope that this incredibly highly-valued market would actually turn lower in a meaningful way. Indeed, early in February, it seemed that the few candles that were allowed to remain suddenly starting shooting three-foot flames toward the ceiling.
Sadly, I think there’s about one birthday cake-sized candle left, and the market has already unzipped its pants and is standing over it. Virtually every major index, as I’ve written with increasing despair lately, seems poised to rocket higher on another meaningful upleg. Volatility, the very essence of the sort of fear that is my stock in in trade, has been smothered in its crib for the whole of 2018, as it approaches single digit levels.
I hate to say it – – and I’m probably the last one you expect to say it – – but indexes looked poised to go roaring higher if they get a reason to do so. There are just too many broad bullish setups. Such as retail:
Well. Here we have it.
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As for the markets, the bears (like me) have been getting their heads beaten in every day since May 3rd. No matter what the news is, good, bad, or inconsequential, the markets go up. Even if there is a big drop during the overnight session, it’s long gone by normal trading hours. I see no reason for this to change.
Trump is utterly unpredictable, and who knows what this NoKo Summit will bring. But at this point, he could throw cold water in Kim’s face, flip him off, storm out of the room, and the market would STILL rally due to Trump’s “bold stance”. More likely it will be all love-dovey, this-is-the-end-of-history, we’re all friends, and they’ll issue a glowing press release. The point is that bulls are going to keep getting handed free money with no risk. (more…)