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.

GEX Says “Hammertime”

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For those who don’t know, GEX stands for Gamma Exposure. It is an options-based LEADING indicator that is derived through a calculation of all the gamma at all strikes and expirations on any given day in the S&P500 Index. The chart is free to access and can be found here.

High Gamma = high pushback against selling and Low Gamma = low pushback against selling.

As of Friday’s close, Gamma Exposure hit a very low point. A key point in a couple of ways.

The first is that it was less than 1.5B. When gamma gets this low it tends to be associated with falling prices and increased volatility.

The second is that GEX broke its uptrend line. I’m the only one I know of that uses it this way. You see, a little while back, I was doing some ongoing testing and analysis of the GEX and noted that it seemed to trend along with the SPX. Out of curiosity, I drew some UTL’s and plotted what happened when they broke down. I was surprised and amazed at the results. It was consistent going all the way back to the start of the data in 2011. Red dots are when GEX is <1.5B (GEX above, SPX below).

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What It’ll Take

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I know it’s impossible to believe – – absolutely impossible – – but there will be a bear market in equities one day. There will come a time, I promise you, when people will recall the “Stonks Only Go Up” phrase on everyone’s lips these days and laugh at how foolish everyone was. But whether the bear market begins on Monday or in ten years is anyone’s guess, because the Fed knows just how badly screwed they are if this charade ends. We’re talking end-of-the-road for the U.S. at that point.

The key is to keep an eye on even minor changes. Below are ten index charts and a few words about what’s require in each case for even a small breakdown to take place.

Couldn’t be simpler. The horizontal line whose price I’ve shown.
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Support Test and Inflection Point

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The research I am doing on the 45dma over the last 25 years is a bigger job than I expected so I should have the post out on that next week.

In the short term though, equity indices have been looking pretty interesting and and are at a significant short term inflection point here. The first part of that is that the daily middle band was tested on SPX at the current low today, and that is the key short term support level. There have been a couple of breaks below that in the last few weeks but there has been no daily close below it since SPX broke back over it in early November. If seen, a clear daily close below it would be a significant technical break. Without that break, a retest of the current all time high would be the obvious next target.

SPX daily chart:

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Optimism Unwind

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I guess $2 trillion doesn’t mean as much as it used to. After yesterday’s “leak” of the latest hurricane of free money came out, the small caps exploded to a never-before-seen level (green arrow). Pretty much the moment Biden talked about it for real, things started to unwind. The whole thing is a comic farce. Free trillions out of thin air. This nation has absolutely zero dignity left at this point.

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