Slope of Hope Blog Posts
This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.
My post of October 11 mentioned that China’s Shanghai Index broke below a major monthly swing low level of 2638.30 and that it could be headed for its next major support level at 2260, or lower.
Since then, price has fluctuated in both directions and has been attempting to stabilize, but remains just below that former swing low…a potential major inflection point.
Overlayed on all of the following three charts of the USD/CNY forex pair is the Shanghai Index (shown in pink). After price peaked in January of this year, it began an 1,140 point decline, in divergence with a rally in the USD/CNY. (more…)
Let’s look at a few major indexes and their exponential moving averages. The Dow Jones Composite is threatening (for the bears, at least) to save itself. You can practically hear the brakes squeal as the 50-day avoids cross below the 100-day.
The Williams %R has called it without fail all year long:
Last week I was talking about a backtest into the 5dma / 50 hour MA support area and we saw that, and another leg up over the daily middle band and the 50% retracement level that brings SPX up into resistance at the 61.8% retracement level at 2812 and the September rally high at 2816.94. I have a decent looking rising wedge from the low that has slightly overthrown wedge resistance and a lot of negative divergence on the 15min chart particularly. SPX 15min chart:
The close on SPX yesterday was a clear close back over the 5dma, and as it has been a decline of more than 2% since the last break down, that puts SPX back on the Three Day Rule. That means that if SPX should deliver a clear close (4/5+ handles) back below the 5dma, currently at 2684, today or tomorrow, then SPX would very likely retest the October low in the following few days.
When SPX is trending in either direction I watch the 5dma and the 50 hour MA for trend support or resistance. The 50 hour MA is currently in the 2694 area, so that and the 50dma give us the short term support area.
On the resistance side there is a possible IHS neckline in the 2725 area, and that’s still in play potentially if SPX breaks back under the 2685-95. That would have an ideal right shoulder low in the 2651/2 area, but in practical terms in the event of a daily close back under the 5dma SPX would likely deliver at least a new retracement low. (more…)
Even though I’ve given SlopeCharts a nice suite of technical indicators, I hardly ever use them. I often mention that I don’t really use indicators much, almost to the point of being strident about it.
I must say, however, that having gone through the cash indexes with the %R indicator today, I’m pretty impressed, and it just adds to the body of evidence that I think it’s bounce time (I sure hope so!) Keep in mind that you can move the horizontal line dividing the price from the technical indicator pane, allowing you to make the indicator taller, as I have done below. So here we are:
As we have noted over the many years of the gold sector’s bear market, the gold miners will not rally for real until the real sector and macro fundamentals come into place. Those fundamentals do not include commonly promoted inflation, China/India “love” trades, a US dollar collapse or especially, war, pestilence or any other human misery than economic. The more astute gold bugs do not fall for that.
The gold miners are counter-cyclical as they leverage gold’s performance (whether positive or negative) relative to cyclical assets and markets. Hence the handy picture showing the key fundamental items with the 4 largest planets orbiting the golden sun being the most important.
So the 3 Amigos (of the macro) were saddled up last year in order to guide us to the point of macro change. Linked here is the most recent update from October 19. In this post let’s look at just one macro fundamental indicator among several important macro and sector fundamentals; the ratio of gold to developed stock markets. (more…)
SPX retested the retracement low this morning, so the Three Day Rule target has been reached. This is a return to form after the first fail on this stat since the start of 2007 in April/May 2018. Still the strongest stat I follow. So what now?
From a cycles perspective there is a cycle high window in January, then a big cycle low in May 2019 at which we are thinking we should see the main low for this move. The ideal target for that low then would be a test of rising megaphone support from the 2011 low to be hit in the 2370 area, which would also be at the 50% retracement of the move up from the 2016 low. There are two very decent looking options for reversal on the way.
The first is in the the 2655-70 area, from where we could see a reversal to retest the high, to set up a double top looking for the main target area. (more…)
We began the Amigos theme last year in order to be guided by the goofy riders during the ending stages of a cyclical, risk-on phase that was not going to end until the proper macro signals come about, no matter how many times the bears declared victory along the way. The fact that grown adults see conspiracies around every corner (okay, I see them around every third corner myself, but work with me here) makes such macro signaling very necessary in order to keep bias at bay.
I think it’s only natural after a decline like Oct 10-11, 2018 for people to ask themselves a variety of questions. “Is the bottom in or not?” “Should I buy now or is it going to roll over again?” and “If it is going to roll over, how far does price bounce before rolling over?”
The question I’m asking today is, “After a decline that coincides with a $VXV:$VIX ratio under .90, how long does it take for a retracement to be put in and price to start rolling over?”
Based on the conclusions of my previous post, the likelihood of another test of the lows in approximately two months time appears to be high, even after a retested low has been put established. On the path to two months from now, however, we still have to navigate a market day to day. The paths after the ratio low signal triggered varied so much, it’s hard to really come up with anything consistent and even if there was a pretty clear repeated path, I wouldn’t want to suggest that there weren’t other paths that price could take, even a path that’s never been taken before because anything can happen. In most cases, the final peak before a decline to at least the first low if not a lower low (or bear trap) took 4-6 weeks to be reached. In the near-term, however, they all had an initial peak relatively quickly which provided a boundary for a chop zone (trading in a range). This is what I want to explore. (more…)