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.

Dark Stormclouds (by Springheel Jack)

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Friday was always likely to be a retracement or consolidation day as I mentioned on Friday morning. SPX rallied to close at the IHS neckline and that was neither bullish nor bearish really. A strong Sunday night on ES to follow through would have been bullish, but ES has dropped to make marginal new lows at the moment. That delivers a potential W bottom on strongly positive 60min RSI divergence, but that's only IF we see a reversal back up here. If we see Thursday's low undercut by much during trading hours that will look bearish, and will become rapidly more so if we drop further as I was saying on Friday. Here's the setup on the SPX 60min:

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Moments of Truth (by Springheel Jack)

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As SPX was testing rising support from the low yesterday I did a chart on the SPX 15min showing the three important short term support levels on SPX to watch. I was going to post this on twitter but that was down for quite a while yesterday so I posted it on slope and BlueChipBullDog instead. The first level was that rising support from the low of course, the second level was at the IHS neckline in the 1335 area, and the third level was in the 1325 area, that I gave as a line in the sand yesterday morning on the basis mainly that none of the five reversal IHSes that made target since 2008 had retraced more than ten points below the neckline. Here is that chart:


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Testing Resistance (by Springheel Jack)

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I was asked yesterday whether we might see a gap and go day, and I replied that the chances of seeing a very strong up day here look limited, with SPX testing the upper bollinger band and in some need of retracement. That’s still true today though somewhat less so. Until we see a break with real confidence over the 100 DMA at 1359.5, this remains an obvious area to see some retracement or at least consolidation:

NYMO has hit some very overbought levels this week and I was looking at this as a reversal signal since the start of 2009. At best this looks mixed. This level on NYMO has been hit five times previously in a downtrend or during the bottoming process, and it was a reasonable reversal signal then, albeit the hit of the 75 level did not usually mark the high, which followed higher and a few days later. There were three hits during an uptrend and these then signaled at best minor retracements. A higher high with negative divergence on NYMO is a better signal historically:

There are a lot of bloggers looking for a rally high here and I don’t see that as likely. Taking short positions with an IHS setup like the current one has very grim results historically. That said it’s still possible of course, and as none of the previous five successful reversal IHSes since the start of 2009 has seen a neckline retest that went more than ten points below the IHS neckline, I would put a line in the sand there at 1325. That fits well with the middle bollinger band on the daily chart just over 1320:

Looking at the Vix action yesterday, it closed lower, so the Vix Sell (equities) Signal did not confirm. Vix retested the H&S neckline and closed back below both the neckline and broken channel support, which still looks bullish for equities:

TLT broke below rising support from April briefly yesterday but is still holding the very important 124-5 support range. A break below there would look very bearish for bonds and bullish for equities. There is a decent declining resistance trendline from the highs at 126.5 today and a close above would look bullish for bonds:

Looking at Dr Copper today, it is unimpressed with this rally on equities so far and the giant H&S pattern that I’ve been posting periodically there is still forming. This looks weak and to the extent that this is an indicator for equities it still looks bearish. A rally to 1400 or so on SPX however would not change this picture on the weekly chart significantly so that’s not immediately bearish:

Oil is also positively correlated with equities and also looks depressed here, with a huge potential double top that would trigger on a break below 75. Again, that’s not immediately bearish though:

Overall I’m still leaning towards this being a strong rally rather than a new impulse up from a major low, and it has to be said that we are now testing the area that I identified as the key resistance level to watch a couple of weeks ago. The pattern setup here indicates higher however, and even if this is just a rally there is no real reason to think that SPX could not test 1400 within that. I’d like to see a decent support trendline established  with a retracement or consolidation here, and I have rising support currently on SPX in the 1340 area, the IHS neckline retest in the 1335 area, and the middle bollinger band slightly under 1325. Until we see a move below 1325 I’ll be viewing this rally as ongoing. If we see a close over 1370 then resistance at the SPX 100 DMA may well become support. 

Very Bullish Pattern Setup (by Springheel Jack)

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I gave three targets for the bulls yesterday and they were to break rising support on Vix just over 18, to break over the IHS neckline at RUT at 776, and to break over resistance in the 1357/8 area on SPX. Vix broke support and retested it, closing at the trendline, RUT broke over the IHS neckline to close at 886, and SPX broke over 1357/8 to peak at 1363 and close just under 1358. I have to say that was impressive and the short term pattern setup here is unambiguously bullish. 

Many tops or near tops are being called this morning across the blogosphere, and equities are significantly overbought short term. Is it possible that we are seeing a top here? Of course it is, pattern setups are only ever probability setups, but as I said on Monday, of the five decent IHS setups like this one since the start of 2009, including a 17% fall in 2010 and a 21.5% (technical bear market) fall in 2011, all five made target. 

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Looking Increasingly Bullish (by Springheel Jack)

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I was watching for a possible strong reversal yesterday but there was nothing to see, with the day following the standard bull format of early weakness followed by a rise for the rest of the day. On the daily chart SPX tested the 50 DMA, walking up the now rising upper bollinger band, and getting closer to the next serious resistance level above at 1357-8, with the April low at 1357.38 and the 100 DMA at 1358.72:

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