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 Latest On the Miners Analog
A Fresh Look at an Old Analog
I feel almost inclined to apologize for the number of times I trot out the gold bugs index analog, but – – well – – I think it's important. Week after week, this analog has held together and strengthened itself. Here's a grid chart comparing the 2005-2008 period (top) to the recent market history (bottom):
Revisiting the Gold Bugs
Wednesday seemed dead-quiet compared to the excitement of Tuesday, so this evening I had to ponder a bit what to discuss. I decided the most interesting thing happening was with the gold bugs index (which, by way of symbol GDX, I trade actively).
Below is the broad view of index symbol $HUI, which shows how the analog has strengthened recently. The key, of course, is to break beneath that lower horizontal line. If we can do that, life gets interesting in a big hurry.
Looking closer, you can see the important event that happened on Monday: we broke that ascending trendline. On Tuesday, we gapped down, creating a nice window at 508.92
Looking closer still, you can see how much damage has been done since February 29th. We came dangerously close to crossing above 554.92, but mercifully we did not. The gold bugs index may seem odd and esoteric, but I am firmly confident that a failure of this index would be a crucial harbinger of a general plunge in equities.
As a final thought, here is the price chart………without the prices. This just shows a standard trio of simple moving averages and points out where I believe we are relative to the prior analogous timeframe.
So that's it from me tonight. I'll see you Thursday morning, and of course we can all anticipate the big jobs report Friday morning with bated bear breath.
Rallies from Hell (by Christopher Malach)
While this rally has been incredibly perplexing and excruciating for those who, gasp, expect markets to fluctuate, I wanted to see, statistically speaking, how out of the ordinary the run up since December 20th, 2011 has been.
Surprisingly, this type of rally is not totally out of the ordinary. From the end of the Tech Bubble collapse, I found 11 instances of “straight shot to the moon” rallies. The similarities of these rallies, and their subsequent corrections, are staggering. Almost all of the durations were around the 56 trading day range (roughly two to three months), almost all posted rally gains of 13% to 17%, and almost all corrected back 4% to 7%. Data this tightly correlated is fascinating to me.
While the bulls have had a spectacular run, this rally is historically run of the mill. As we are approaching the end of the average time duration I will be focusing almost exclusively on the bear side of trading as the corrections were very fast and only allowed for roughly two weeks of rip roaring sell-offs. Presented below is my data with the yellow indicating my projection for a coming correction.
