Defeat – Page 121 – Slope of Hope with Tim Knight

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 Bulls Gain Power

By Tim Knight - 15 years ago (04, Aug 2010 1:32:03 PM)

I confess to a growing fear that the bulls are going to take this market and run with it for the rest of the year. The action for the past month has been very positive for the bulls, and the next hurdle – across above 1130 – looks to be just about effortless at this point.

I’ve tinted that easy goal in green. The magenta tint, if crossed, would be even more profoundly damaging to the bear case. Finally, a cross of the cyan tint would firmly entrench bears in their role as a laughingstock. It’s not a pretty picture.

At the same time, the volatility index is back to levels that were very typical before the 2007-2008 crisis even took place. It’s as if nothing ever happened.

It seems to me that all eyes are on the jobs report, so Thursday might turn into a relatively quiet session ahead of that Friday morning report. Of course, the chatter now is that the jobs report is basically moot, since a bad report will goose the government in yet-another-bullish-stimulus, whereas a good report will excite people about the “green shoots’ yet again.

So, in spite of a bevy of really attractive bearish charts, the fact is that if the market in general (that is, the Dow and the S&P) keep pushing higher, that overall strength will snuff out the bearishness of even the most tantalizing patterns. The Dow 30 is not far away from rendering its entire head and shoulders pattern irrelevant.

So I’m in pretty low spirits right now. I think I’m going to call it a day at this point. If you guest writers out there want to pick up the pace, I’d appreciate it, because Springheel Jack is about the only one writing these days (which I appreciate, of course). Good evening, all.

Road to Nowhere

By Tim Knight - 15 years ago (22, Jul 2010 1:39:54 PM)

With the exception of commissions-based brokers, it's hard to believe there's anyone out there who has really enjoyed the stock market over the past few months. I mean, just look at the ES below. I don't care what kind of implausible hockey-stick-shaped equity curves might be out there on the web (cough, cough); neither bull nor bear can consistently accumulate profits with whipsaw action like this.

It's no better on a longer-term scale. How has the Russell 2000 done for the entirety of 2010? Let's take a look:

That's right………..zilch.

It seems almost impossible for me to believe that just 18 (very long) months ago, I was racking up extraordinary triple-digit percentage returns for myself. These days, even the greatest hedge fund managers in the nation seem to be struggling to eek out returns that resemble nothing more than passbook-savings rates from the old days. People are satisfied with even just a few percentage points.

It's a huge amount of work for very little reward.

I guess you can sense my frustration. One day everything will line up. The next day it'll all get taken down again. The real stickler right now is that we're in kind of a no-man's land of prices. The index charts themselves are not clearly bullish or bearish. They're just in the middle of a huge morass.

Individual charts are a different story. It seems that these days, I'm getting one or two "blow-ups" a day among my short positions. Yesterday there was CMTL. Today there was NFLX. It looks like tomorrow it's going to be AMZN, which I'm also short.

Indeed, AMZN is down something like 15% after-hours as I'm typing this. That means that tomorrow, in the span of three months, Amazon will have lost one-third of its entire market capitalization! So it seems like the darlings of earlier this year (NetFlix, Amazon, etc.) are getting shellacked.

One thing I will say is that I have avoided, and will continue to avoid, any of the "ultra" ETFs. With this constant up-one-day, down-the-next, over and over again, people hanging on to such instruments are going to get destroyed. I'd rather hold fast to my current short positions, knowing that these are nominal price levels that will not get eroded by the machinations of day-to-day action.

I'm pretty tired of charts right now, so I'm going to call it a day. Someone let me know if we ever have a trending market again. It would be a nice change.

Big News in Small Briefs

By Tim Knight - 16 years ago (15, Jul 2010 1:46:00 PM)

(1) "Change We Can Believe In" has proved itself to be an utter wheelbarrow full of crap. It's the same old story. The same countries, the same companies, and the same chosen people are going to get all the protection they demand. The fine should have been ten times this amount. Obama sold out. Again.

(2) The stock is down over $23 after-hours as I am typing this. Will it stick tomorrow? Who knows. But the NQ is, incredibly, UP! It seems true that the bears are simply never going to get a break.

(3) This is good news. I hope it stays plugged. BP has gone up nearly 50% is just two weeks!

(4) Watered-down. Meaningless. An empty gesture.

Meh Bar

By Tim Knight - 16 years ago (11, Jun 2010 1:02:04 PM)

This week had its high points and low points for me. I must say, the market's direction is much, much murkier right now for me, which drove me to scale back my positions and adopt more of a wait-and-see attitude. In any case, here's Friday's bar………please drink and comment responsibly.

SPX looks fairly bullish in the short term (by Springheel Jack)

By springheel_jack - 16 years ago (23, Apr 2010 5:29:51 AM)

A very strange day yesterday with a plunge down to channel support and
then a wild recovery. As ever lately the buy the dippers had a good day.

I’ve been having a careful look at the charts overnight and am becoming
increasingly doubtful about seeing a meaningful retracement in the next
few days. On the SPX 60min chart we saw another bounce off channel
support yesterday morning and though it could be tested again today, the
chances are that we will see a retest of resistance near the high last
Thursday at the upper trendline of the blue channel:

The main current channel however is clearly the red channel, as we hit
the upper trendline at the high last Thursday, and hit the lower
trendline at both lows since then. If we make a new high on SPX, the
next target is clearly to hit the upper trendline of the red channel in
the 1230 SPX area.

I mentioned after hours last night that I was watching a potential IHS
forming on ES, and that we might see an RS on it form overnight. Here’s
how it looks this morning:

Now until the neckline breaks any head and shoulder pattern is just
lines on a chart, but we have seen a lot of IHSs play out over the last
year and I am seeing a lot of big IHS patterns at the moment on
individual companies. If the neckline breaks today and we make a new
high on SPX, then this IHS is indicating to the next obvious upside
target and I would expect it to be reached.

Looking at the SPX daily chart I had a close look at the key resistance
trendline over the last few months. I mentioned that it had marked the
last four significant interim tops on SPX and was hit again at the top
last Thursday. Resistance would now be in the 1225 SPX area but I have
noticed that there is a possibility that this resistance trendline could
be the neckline on a very large IHS that could indicate to the 1360
area. If so that would suggest that we would be trading sideways for a
few weeks while the RS forms:

I’m not seeing that as a serious possibility at the moment, but it is
worth keeping an eye on.

EURUSD made a new low after hours while the bulls were celebrating a
major turnaround yesterday, and I had a look at that to see what is
likely to happen on it now. While the inverse correlation between SPX
and USD has been weaker recently, equities still tend to trend up while
USD is trending down, and when USD is trending up equities tend to trade
sideways or correct downwards. The short term direction of USD is
therefore still important.

As the majority component in the USD weighting EURUSD is always worth
watching and I had another look at the EURUSD weekly chart.
Unfortunately for the bears, it reached recent declining channel support
at 1.32 overnight and bounced strongly there, recovering over a cent at
the time of writing. My next upside target is in the 1.35 area:

Looking at USD, that target would fit perfectly with another potential
IHS that is forming there on the daily chart that would indicate to 83.6
after a probable retracement to the 80.6 to 81 area. That would
therefore be my highest probability scenario over the next few days:

So on balance my analysis today shows a bullish picture, and I think
that SPX is now likely to break up towards the 1230 area in the next few
days while EURUSD retraces to the 1.35 area. After that I am expecting
to see consolidation or retracement while EURUSD breaks down towards the
1.30 area and possibly considerably below it if that IHS on USD plays
out.

One last thing to consider is that the trading day after today is
Monday. That shouldn’t be significant but on recent form at least it is.
I’ve had a look at the trading record on Mondays over the last few
months, and while there was no consistent picture before September last
year, since then Mondays have been consistently bullish. I came up with
the following stats:

The last eight Mondays closed up
Twenty six of the last thirty Mondays closed up, and of the four
days that closed down, two of them closed down less than than two
points, and the other two closed down ten and fourteen points
respectively.

It is a courageous bear that shorts on a Monday nowadays!

I’m going to be out for the first half of the trading day today. Good
luck trading everyone.

Leisa here: I will be away some of the day today. I will be scheduling posts so that they appear and give you some fresh content and me some free time Happy trading. If this does not work…here’s my shrug and hug in advance.

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