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.

Six Bits

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It seems paradoxical, but there are instances in which the lack of detail provides more clarity than the abundance of detail. Because we just finished up the third quarter of the year, I decided to show a variety of graphs with the extremely crude granularity of one quarter per bar, which provides a very different way of looking at the market that can yield some helpful general insights.

Of course, there are some charts in which there’s no surprise whatever, such as QID (the ultra-short on NASDAQ). This just goes to show you, it hasn’t been fruitful to fight the NASDAQ for about two decades.

slopechart QID
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Rally Time

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My apologies for this being the first post in a couple of weeks. Hoping to get this back to a couple of posts a week now.

I’ve been avoiding discussing COVID-19 much in recent months as it is very much an election issue in the US and that’s not a conversation I really want to be involved in. The progress of COVID-19 is very much a market issue as well though, so I’m going to drop in some hopefully not too controversial statistics on COVID-19 mortality rates as these are now becoming a lot clearer as time has passed.

In terms of deaths per confirmed case there have now been just over 33 million cases and about 1 million deaths worldwide at the time of writing. That puts the death rate per confirmed case at just over 3%, which will be low as there is a lag of about 16 days between a case being confirmed and the likely date of a consequent fatality. However in practical terms the actual mortality rate is likely much lower, as a lot of people get COVID-19 without having been tested, particularly those who show slight or no symptoms at all when infected, which may be as high. The CDC is estimating that the true mortality rate is in the 0.6% area in the USA, which is likely about right. What is very interesting though is the variation in the mortality rate between different groups within that overall average.

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First Retracement Target Hit

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In my last post a week ago I was remarking at how very stretched SPX was and how near it should be to a mean reversion move, and the mean reversion high was then made within a few minutes of my publishing that post. The minimum target for that mean reversion move, last reached after the June high, is a backtest of the 45dma, and that target was reached at the low yesterday. That may of course be the low for this retracement, and I’ll be looking at the setup for that today.

SPX daily vs 45dma chart:

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Nosebleed Highs

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The high earlier this year was at the main resistance trendline on SPX, starting at the low in March 2009, support at the low in 2010, broken as support in 2011 and then backtested as resistance then and several times since. The high yesterday was just shy of a full test and that has broken on the move up today, with visible breaks on both the weekly and monthly charts. That may just be a bearish overthrow on the bigger picture but it is still a huge break.

In the short term SPX is now about 8% over the 45dma, approaching the 8.7% over the 45dma reached at the June high, which was the most extreme high on SPX relative to the 45dma since 2013, though there may possibly have been more extreme highs before that I haven’t identified yet. This is a very extreme level and a retracement to the mean high must be close, and could be forming now.

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