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.

The Inchworm Cometh

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I didn’t manage a post in RTH today, but I thought I’d use this opportunity to do an after-market post looking at the strong resistance that is (very slowly) being retested here on RUT and TF, and to review the shorter term setups forming as the market vaguely meanders towards those retests.

On RUT the original rising channel expanded by a third into a new channel. This also intersects longer term rising wedge resistance on a pattern from the 2009 low. This is formidable resistance and I’m assuming this holds until demonstrated otherwise. I’d note here that while wedges and megaphones routinely overthrow at highs, channels tend not to. RUT daily chart:

161220-C RUT Daily

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Triangles within Triangles

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Friday didn’t go as I expected, with the bullish triangle breaking down and backtesting broken triangle support at the close. That was a distinctly bearish setup but the overnight action made it clear that all we have been seeing is since Friday morning is Friday morning’s bullish leaning triangle evolve into a larger bullish leaning triangle. That has broken up at the open today and the normal sequence here would be a backtest back into the triangle, currently in progress, and then the main triangle thrust up with an obvious target at a retest of the all time high, and then after that thrust up completes, not necessarily at that retest, the thrust should be entirely retraced back to the 2257/8 area.

If we should now see a break below triangle support, currently in the 2252 area, then something else is happening, but for now my working assumption is that this triangle scenario will play out over the next day or three. ES Mar 60min chart:

161219 AM ES Mar 60min

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Retest, Probably

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No retest of the highs yesterday, but I’m still optimistic about seeing that today or Monday. ES and TF both look encouraging for seeing that, though NQ is showing a more bearish lean.

On ES there is a likely bullish triangle forming that should deliver a retest. I have triangle support currently in the 2253.5 area and will be looking for support there if reached. ES Mar 60min chart:

161216 AM ES Mar 60min

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Meanwhile, Back on Earth

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Same old FOMC yesterday with a lot of wind, a lingering smell, and a vast amount of analysis of a move that was difficult to detect without a microscope, and is largely irrelevant to real world interest rates in any case. Moving on …

SPX tested my target trendline for this move on Tuesday and I was watching for likely resistance there. With the 29 handle decline into yesterday’s low from there I think it’s fair to say that there is resistance there, and SPX may now be in the topping process for the December high, and as I’ve mentioned, we are expecting this high to last well into 2017.

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The Fed Wind Always Blows

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FOMC day again today and as ever I’m astounded by the number of people hanging onto Yellen’s every word, and what a market moving event this tends to be. Even more amazing is the importance that everyone seems to attach to the Fed’s ‘control’ of interest rates, and in the event that they show a small sliver of backbone today and take the tiny step of increasing the fed rate from almost nothing to a little more than almost nothing, then this will be extensively debated over coming weeks as though it really matters.

The truth is though that the fed rate only really impacts very short term interest rates, and that anything longer term is determined by markets in the form of the yields on the ten year (TNX) and 30 year (TYX) treasuries. The Fed has little influence over these as far as I can tell, and doesn’t appear to employ any technical analysts good enough to allow the Fed bigwigs to comment intelligently about them. On a good day their forecasts for these are fairly random, and on a bad day (late 2013) almost perfectly inaccurate. Anyone genuinely interested in bond yield direction should be watching Chart Chat at theartofchart.net twice a week, or at minimum coming to our December forecast for the next year, which this year (for indexes, bonds and currencies) is after the close tomorrow and free to all. You can register for that on this page here if you’re interested.

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