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.

Cloudbusting

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I’ve dropped out of sight for a while, apart from my usual work at theartofchart.net, and my apologies for that. My divorce has been playing out in the background and I’ve been finding that rather depressing. Hopefully in a few months it will be finished and I will be free to move on to a better future, but in the meantime it is heavy going.

I do love writing these posts though and at the very minimum it is good for me to be writing them, so I am making an effort to restart doing these often, and today is a very good day to restart.

Why is that? Well after this impressive move up over 4000 on SPX, breaking the very nice looking topping setup that had been developing below under that obvious resistance, the market could use a retracement and all the indications are that we are about to see that.

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Likely Bull Flags Forming

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My last post was a couple of weeks ago now and in that time the retracement that I was expecting has been playing out, though the main target, rising support from the March low, now in the 3745 area, has not yet been tested, and may well not be before we see a high retest.

Why is that? Well the patterns forming here look like bear flags, and while the low this morning overshot my ideal bull flag channel support on SPX by five handles or so, the action today has only strengthened the case that the next move is likely to be a retest of the all time high on SPX.

Before the open this morning I was noting that hourly buy signals had fixed on ES, RTH and YM, and since then hourly RSI 5 buy signals have fixed on SPX and IWM, with another brewing on INDU. There is a lot of upward pressure building here, and as well as the clear bull flag , the retracements so far on RTY, DAX & ESTX50 all also have the look of bull flags forming.

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So Here We Are Then

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Firstly my apology for the lack of an update last week. As I’ve mentioned, I’m negotiating my way through a difficult divorce at the moment, and some weeks are harder than others. On the harder weeks I struggle to get any posts done. As the weeks and months pass everything should be resolved and I can just move on and I’m really looking forward to that.

So what has happened since my last post? Well I noted wryly that I lost several twitter followers as soon as I published my last post, and I assume that was because I was looking for a support break and retracement on SPX, and that is exactly what we have seen. I think that the low we have just made is what I would call ‘the low before the high’, just a sort of stretching of recently unused muscles before a larger retracement gets going, and I’ll be looking at possible targets for that retracement in my next post.

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Hitting Wedge Resistance

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I was saying in my last post on Friday afternoon that the low made that day looked nice, with touches of the daily middle band and shorter term (from Nov low) rising wedge support on SPX. I was leaning towards seeing a retest of the all time high, which we have seen and more.

Now the rising wedge support touch on Friday was confirmation that the obvious rising wedge resistance trendline was the obvious target on a break up to a higher high with any confidence, and that was tested in the last hour yesterday, and then retested at the high this morning. That second retest held the resistance trendline again and SPX reversed on a high quality 15min RSI 14 sell signal:

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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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