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.
Preface from Tim Knight: just to be really clear, this is a contribution from an outside writer, and is neither my piece nor my opinion.
As the media highlights the potential impeachment process in the coming weeks, many are so concerned that this will be the “cause” of the market drop we are expecting. Yet, history suggests otherwise.
The narrative will certainly play out as follows: The market likes certainty and stability within our government. (Please ignore that this was the same reason many claimed that the market was going to crash if Trump was elected – yet we were pounding the table in expectations of a large rally). However, an impeachment proceeding places us into a very uncertain and unstable situation within our government. Therefore, the market will react negatively to that uncertainty.
The pundits and the media were debating for several weeks leading up to the last Fed meeting about what the Fed was going to do and the effect they thought it would have on the market. And, it amazes that the great majority of the market does not realize how much of a waste of time these debates really are.
But, as I often note, many market participants and analysts are simply not burdened by the facts. If they really would review the facts of market history, they would learn that there is no one that can control the market. PERIOD.
I am simply amazed at how much email I have been getting asking my opinion regarding the latest “manipulation” cases. And, many of those are asking me if I am finally convinced that the metals market was manipulated to drop from 2011 to 2015.
Well, let’s try to walk through the issues together.
Let’s start this article by identifying that about which we are speaking. You see, the great majority of those who read these manipulation cases believe that the manipulation addressed in these cases is what caused the metals market to drop from 2011 to 2015, and what caused a 70% cut in the price of silver. So, if you have clicked on this article to read me changing my position regarding that type of “manipulation,” you will be quite disappointed. And, if you actually believe in that perspective, I suggest you read on with an open mind, as you will see why you are 100% wrong in that belief.
Back in the 1930s, an accountant named Ralph Nelson Elliott discovered that financial markets are fractal in nature. This means that they are variably self-similar at different degrees of trend.
To that end, he explained that when a market is trending, it will most often display a rather predictable 5-wave structure. As an example, this structure is what allowed us to predict the rally from the 1800 region on the S&P 500 (SPX) to over 2600 back in 2016, along with our expectation for a “global melt-up,” which we reiterated at election time “no matter who won.” It is what also allowed us to predict the bottoming to the bond market in late 2018, wherein we bought TLT in the 112-113 region, as well as the rally in metals in 2019.
Originally published on Sat Aug 24 for members of ElliottWaveTrader.net: Personally, I love trading metals and have been doing so for quite some time. In fact, the best trade of my entire career was in silver many years ago.
But, the one thing that we commonly see in the complex is that when the market strikes a top, it most often spikes into and then strongly reverses at that top as a culmination signal. Thus far, I have not seen that in the metals.
The Fed gave us exactly what the market expected in a .25% rate cut, and even gave us a “gift” with the early cessation of Quantitative Tightening. Normally, most would view this as a bullish catalyst. However, with market sentiment topping out in a bullish extreme, market participants interpreted the Fed action as bearish (despite its positive substance), and the market sold off this past week.
Based upon my analysis, we now have a top in place, as I have been warning to expect. The question is what will that top represent?
With the market at all-time highs, we are now approaching another Fed meeting. But, this one will likely provide us with a change in direction for rates, if you believe what most pundits are saying. In fact, there seems to be 100% certainty that the Fed will lower rates. Imagine that . . . the Fed is going to lower rates when the market is at its all-time highs. When was the last time this happened?
While many view a rate cut as being akin to the Fed “blessing” this market rally, history tells us a different story. What is most interesting is that the last time the Fed changed direction in rates near all-time highs was in 2007. And, when the Fed began to lower rates in 2007, it was just before the major stock market melt-down.