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.

US Treasury Bonds the Short of 2013?

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The long-term T bond could be a great short even if it remains within
its secular uptrend (interest rates in a secular downtrend) because as
the big picture monthly chart of the ‘Continuum’ shows, there is a long
way up to the 100 month EMA where another theoretical red arrow would be
painted on long-term interest rates.

tyx

Dialing in to a weekly view of the iShares long-term T bond ETF, MACD
and RSI have been sporting ongoing negative divergence for a year now.

tlt

TLT is in a weekly downtrend by AROON, but it is in a daily uptrend. 
We have have a projected 2012 target of just above 130 based on a
pattern we have been following by daily charts.

tlt

Depending on next week’s FOMC and the likelihood that the
manipulators of the macro economic environment will choose ‘inflation’
as the easy fix to unfixable structural problems, the bond could get its
final bump up to target.

By stating they will outright buy a hopelessly indebted nation’s debt
obligations, without the sanitizing effects of Operation Twist, the
herd could knee jerk into the bond amid the Fiscal Cliff uproar, get
nice and comfy and then wait to be sheared as the inflationary effects
(which would erode any perceived ‘value’ of these bonds) of such actions
become apparent in 2013.

This is a valid setup that would go against many people’s
expectations.  After all, gold is forecasting no inflation, right?  Yeh,
right.  The other side of this trade is that where ever gold bottoms, a
chance to acquire monetary insurance would once again be at hand for
people who need such insurance.  Want to bet the herd will once again
choose not to own this insurance if gold visits 1625 again?

That is a level that has been on radar all along.  Here, let’s update the weekly charts.

au

Gold is clinging to the critical 1690 parameter.  If it should lose
this level and get the majority of technicians wrangling even more
obsessively, it is going to the green shaded support zone.  It’s only 70
bucks lower after all.  Gold could do that with one hand tied behind
its back.

au euro

Meanwhile, gold is at the lower limit of the Ascending Triangle in
Euros.  The Euro is getting over bought by a global herd that, if it
could just step outside of itself and observe itself objectively, would
appear quite absurd.  Wasn’t it just last summer that Europe was
ending?  You see the hilarity of course.

But technicals are technicals and gold would preferably stabilize in
Euros now at the lower triangle limit.  Of even more importance is the
purple weekly EMA 60, which has supported Au-Euro on previous breakdowns
below the EMA 40.

This was going to be a quick post on the long bond and inflation. 
Then it expanded, I guess because I find it really interesting to see
the role gold is playing in the run up to FOMC; the same FOMC that has
stated that Op/Twist is ending this month, which would leave any future
inflationary operations unsanitized.  You see? http://www.biiwii.com

Short & Intermediate View of the Market

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The US indexes predictably rallied during the happy holiday week,
with Friday putting a nice punctuation on the bullish proceedings.  In
fact, I caught myself looking at the TECL, NUGT and individual gold
miner positions in my trading account with a big dumb smile on my face. 
Then I sold them all.  Sidetracking for a moment, I have found that I
need to get back to more active trading so I am going to further fund
this account and ruthlessly trade this market in a discreet account for
pure trading.

Back on the post’s theme, the holiday volume was suspect to say the
least.  I have a preferred macro theme for the intermediate term
however, and it is bullish for an extended rally pending a confirmation
of, or more likely a cleaning out of last week’s bullish enthusiasm.

spx and ndx

However, for the intermediate bull theme to come about, the market
probably needs to take a break first and do some consolidating or bottom
testing to build a good rally platform.  Otherwise it could be going on
to double top city and a more bearish intermediate view.

Both SPX and NDX are at visual resistance zones after retracing 50%
and 38% respectively of the sharp holiday rally.  Upside limits are 1425
on SPX and 2670 on NDX.  If they get above there then the immediate
term analysis will probably degrade on a risk vs. reward basis.  So Mr.
Market, you are advised to take a dump soon and do some bottom testing
or at least consolidate with a downward bias.

The lows from the end of May are the absolute parameter on a new bear
market or lack thereof.  Lose the May lows and these markets would be
broken.  Above them and the cyclical bull market lives on.  So we want
to see the leader, NDX not make a lower low to May.  In fact, one signal
we might look for is a higher low (to the early November low) by NDX
while SPX potentially makes a lower one on any short-term correction
that may whip up.  This would be a positive divergence by a leader and a
good bull signal.

The NDX failed (and remains below) the 200 day moving average, which I
think moved some bears to call ‘bull market over’.  But the moving
averages are trumped by lateral support, which held.  Let’s see how the
short-term plays out, because it is important to the intermediate
picture.

http://www.biiwii.com

Macro Geek Interlude

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While charting a potential bullish scenario for commodities in NFTRH
213, I became distracted by thoughts of the deflationary mindset that
has been cooked up since ‘Bond King’ Bill Gross tugged on Superman’s
cape in the spring of 2011 by announcing his short positions against
long-term US Treasury bonds, which was in essence a bet that the monthly
EMA 100 boundary (red line, chart below) that had been in force for
decades would be broken this time.

Sorry Bill, the inflation cycle into that time frame blew out right on your signal.

For reference, here is our favorite big picture chart once again; the
‘Continuum’ AKA the monthly view of the 30 year T bond yield.

tyx

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