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Apologies for the lack of a post last week. Some of you know my wife has some health issues at the moment and they have me distracted. I’m doing this post tonight because SPX is at a key inflection point and because the way this breaks may deliver the direction for the rest of January.
Before I start I have a quick announcement. We (theartofchart.net) have launched a new options service run by an old friend of the site Paul Frey. This is an educational service looking at options trade opportunities in real time run by a thirty year veteran of options trading. If your interested you can read about the service and access the free trial here.
Thanks to TK’s posts about the “Unicorn Stocks” starting to gain in volume and price, I noticed that many of these newer stocks are starting to make bottoming formations. This lead to me to look through my watchlist for other basing patterns, in particular, thecup with handle formation.
Some of these stocks have fallen due to earnings, some may be due to Trade War fears. Now they appear to be bouncing back. Most of these patterns still need to complete the base, and form the “handle” if there will be one. Either way, here is the list of stocks with the patterns drawn in, all forming over varying time scales.
Although Uber had a terrible time after its IPO, two things have happened over the past couple of months. (1) It seems to have completed a pretty good basing pattern (2) It has done so recently on much, much larger volume than before. I can’t remember seeing such a large increase in trading on a specific stock in recent memory.
The holidays are ending and volume should be coming back into markets next week as players return. New Year’s Day on Wednesday is obviously a holiday as well, and the five trading days after that will be closely watched to deliver an indication of how the rest of 2020 might go. I’ll be looking at that stat closely later in this post but first I’ll review SPX and NDX and the position as traders return for the last two trading days of 2019. I would note again that the last trading day of the year is the only historically strongly bearish day in December, with SPX closing down 67% of the time, and Nasdaq down 15 of the last 19 years.
Well the holidays are upon us, and many of those of us with lives, or even just social lives, have taken a couple of weeks off to do non-market stuff. Even the algos seem suspiciously quiet and may be taking a few days off too. I’m still here because …. well ……. it’s my job, and someone has to stick around to switch off the lights and lock the doors after the last buyer has departed for the holidays. In the meantime I’m doing an update for anyone still around to read it.
I was originally going to entitle this post “Rich Fruit“, but I immediately suspected it would be badly misinterpreted, so I came up with a second choice title. In any case, it just seems to me that Apple is awfully expensive, judging from its relative position to its long-term channel.