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.

Consolidation or ST Top? (by Springheel Jack)

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Shorter posts than usual for the rest of this week as I have a lot of offline stuff to do. Just four charts today but then the position today looks reasonably simple. ES is building up strength for a decent move one way or the other. Will that move be up or down? I'm leaning short but it might yet go the other way.

On the upside ES has not yet touched declining resistance from the July highs, though it can within three points of doing so yesterday. That looks a bit like unfinished business overhead and we might see a touch of that in the 1269 area today. A move over 1270 would suggest that we might be starting another move higher:

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Reversal Territory (by Springheel Jack)

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It's generally best to be wary of calling for reversals in strong uptrends or downtrends, but there are some nice counter-trend scalps to be taken in these, and equities are definitely in an area where we we would normally expect to see at least a short-term reversal.

One of the best guides for these is the bollinger bands on the daily Vix chart. There's a lot of talk about Vix buy and sell signals from these, but these tend to be mediocre performers, and in the nature of the way these signals form, frequently just tell you that a reversal has already happened, without giving any opportunity to get in as the reversal is actually taking place. A better guide in my view is to look for reversal when Vix initially hits the outer bollinger band. This can sometimes fail badly, but the hit rate is much better than on the more commonly used Vix Buy or Sell signals and the entries tend to be much better. I've marked these up on the Vix chart for the last year with the SPX as the background, and I've added arrows to the two notable failures over this period. You'll note from the chart that Vix has been testing the lower bollinger band for the last three trading days:

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Fiddling While Rome Burns (by Springheel Jack)

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I've mentioned before that I have a strong bear bias that I try to ignore as I chart shorter timeframes. Why do I have that bearish bias? A good illustration of the reason was shown in a great chart on Chart of the Day yesterday. Kyle Bass sent out a newsletter to investors and used this chart in that newsletter, while explaining that defaults on sovereign debt in much of the developed world are more or less unavoidable over the next few years, and that current policies of throwing good money after bad in order to delay the problem long enough that it might somehow disappear, are unlikely to be effective over periods of more than a few months. Here's the chart and if you click on it, the link will take you to the full writeup at Chart of the Day:

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Hitting ES Triangle Resistance (by Springheel Jack)

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Obviously we saw a huge gap and run up yesterday on the news that central banks are intervening to save the world …… again …… for a while. How long might this last? Who can say? We'll see how it goes but this might have a shot of lasting into mid-January I think, and might even run further. Are we seeing the start of a major new bull market in equities? I really doubt that but you never know I guess.

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Tweezers and Cannon (by Springheel Jack)

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Yesterday turned out to be a consolidation day and ES retraced back to 1183 overnight. Since then it has bounced to slightly over yesterday's overnight high on some mildly bullish news about Chinese reserve requirements. The article about that on Bloomberg is here, and is interesting as it's the first reference I've seen to government 'fine-tuning' in a while. That's a phrase that has grown rare in recent years as central banks have graduated from using fiscal tweezers to fiscal cannon to try and move economies.

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