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.
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…)
Volatility, which spent so much of 2018 mired in the doldrums, painted out a series of higher lows late in the summer (see trio of green tinted areas). After that third touchpoint, it exploded higher over a hundred percent, only to have the excitement evacuate as swiftly as it appeared. I’ve tinted a horizontal, however, to suggest that perhaps we’re in a new volatility zone. I hope so, at least. Let’s keep an eye on that level to see if it holds, because this chart would suggest bullishness on volatility going forward.
The misery index – – chartable, of course, with my superior SlopeCharts creation – – has been nothing but good news for our really smart, super handsome high-achieving President. Did I mention how smart he is? OK, good. Just want to be clear on that. Seriously.
In my pre-market, it’s-still-dark-outside post from this morning, I wrote, in part:
Animal spirits still abound, and there’s a certain subset of the “investor” crowd which are simply gamblers that love stuff like IQ and TLRY. Now that cryptos have crapped all over themselves, they are no longer a suitable place for the casino crowd to get their adrenalin rush. So it’s focused on stuff like TLRY which, I assure you, will look like the chart of IQ soon enough.
In case anyone didn’t really buy the notion that the same psychology was driving gambling in crypto and gambling in pot stocks, observe the intraday action today from TLRY:
In the beginning, Facebook connected the world. It brought new hope for humanity and individual, human connections. But the dark, underbelly of the Facebook Beast would be revealed in an unprecedented and extraordinarily jarring manner. A soulless serpent would slither in, unnoticed, and disrupt the otherwise innocent processes, effectively co-opting, undermining and exploiting the intended use of the “gift” Facebook had bestowed upon us, for darker, more nefarious purposes.
Hmmm… that sounds vaguely familiar.
Okay, there’s the requisite melodramatic opening scene that effectively outlines and condenses the evolutionary story and subsequent disruption of the Mother of all Social Media platforms. Fast forward to today, and we have an out of control, unmanageable behemoth of a company, whose right hand still doesn’t know what its left hand is doing. Although, to its credit… it’s trying. But it’s too little, too late. Users are dropping like flies in the haze of a media pest spray discharge. And, distrust of the platform in light of its many convoluted tools and rules, is rampant. Suddenly, the household name of Facebook, has become a household scourge.
However, Facebook continues to espouse the virtues and benefits of its life-changing, relationship-forging platform that started it all. Ah, Facebook… the originator of the great Social Medial Experiment. We were the first. Trust us. We’re trying… really. (more…)
There was a time, many years ago, that Netflix was this scrawny little small-cap stock of a firm that mailed DVDs to monthly subscribers. I was an early user of Netflix, and I absolutely loved it. (They are based here in the Bay Area). No one dared dream they would have a market cap of over $160 billion, as they do today. If you told someone ten years ago that Netflix would dwarf General Electric in terms of value, they would have laughed you right out of the room.
Although it’s a darling these days, six years ago, Netflix was absolute dog meat. They had introduced a product called Qwikster, which was considered the biggest product debacle since New Coke. By late summer of 2012, the stock had fallen 80%. Now just take a moment and consider that. Try to imagine, say, Amazon falling from 1844 to 377 in the span of a few months. On top of this, it’s not like they were in the throes of an economic meltdown. This was 2012, when the recover and QE fever were all the rage. So NFLX was garbage, and the news media reflected it: (more…)
Looking at the past decade of volatility, the trend is clear:
(a) occasional spikes every couple of years
(b) even during the spikes, a high which is lower than the prior high
(c) a gradual grind down to a $VIX almost at single digits, lingering around 11-12
Those of us of a certain age will recall a frequent television commercial for paper towels illustrating how much more absorbent they were than the competition. They were described as “the quicker picker-upper“, and their absorbent qualities would be illustrated thusly:
It occurs to me that this is precisely the kind of market we are in right now. If bad news comes, sure, there might be a day or two of rumbling and hand-wringing, but it all gets absorbed, it all gets digested, and everyone moves on. Recent history has been just another example of this resilience. All the horror about a global trade war seems to have been shrugged off in a matter of three days. (more…)
TPO stands for Time Price Opportunity. By using a TPO profile chart, you are able to analyze the amount of trading activity, based on time, for each price level that the market traded at for any given time period. The Point of Control (POC) is the price where it spent the most time during that period and in that timeframe.
If you look at the following monthly chart of the VIX with the TPO profile study added to it along the right hand side, you’ll see that its POC (on a monthly basis) since 1986 is 20.53.
Whereas, the TPO POC on a daily timeframe from 1986 is 14.66, as shown on the daily chart below.
This tells me that the average “normal” range of the VIX during the past 33 years is between 14.66 and 20.53, regardless of its trading activity on either a monthly or daily timeframe.
I’d also go a bit further and say that any time it traded outside that range for any length of time, it was “unusual” and, therefore, unsustainable…something to consider when you’re taking longer position trades in equities.
As of Thursday’s close, the VIX was trading in “unusual” territory at 13.23…below the “normal” range, where it has spent most of its time since the November 2016 general election.
The last time it spent the majority of its time below the “normal” range was from 2005 to 2007 leading up to the 2008/09 financial crisis. (more…)