Posts Tagged ‘slope of hope’

Understanding Robert Prechter’s ‘Slope of Hope’

Understanding Robert Prechter’s ‘Slope of Hope’ 

By Elliott Wave International

Almost everybody who follows financial markets has heard about climbing the "wall of worry": the time when prices head up bullishly, but no one quite believes in the rally, so there’s more worry about a fall than a rise.

What’s the opposite condition in the market?

Bob Prechter named it the "slope of hope," meaning that as prices head down, no one wants to believe the market really has turned bearish, so there’s more hope for a rise than fear of a fall.

The market has been rising recently, following a bearish decline from late April through the end of June, which makes now the perfect time to learn more about the slope of hope.

* * * * *

Excerpted from The Elliott Wave Theorist by Robert Prechter, published June 18, 2010

According to polls, economists are virtually unanimous in the view that the “Great Recession” is over and a recovery is in progress, even though “full employment will take time,” etc. Yet mortgage writing has just plunged to a new low for the cycle (see Figure 1), and housing starts and permits just had their biggest percentage monthly drop since January 1991, which was at the end of a Primary-degree recession. But the latest “recession” supposedly ended a year ago. How can housing activity make new lows this far into a recovery? The answer is in the subtitle to Conquer the Crash, which includes the word depression. The subtleties in economic performance continue to suggest that it “was” not a “recession.” It is a depression, moving forward, in punctuated fashion, slowly but inexorably.

Number of New Mortgages Plunges Again

Despite this outlook, keep in mind what The Elliott Wave Theorist said last month: “Even though the market is about to begin its greatest decline ever, the era of hope is not quite finished.” For as long as another year and a half, there will be rallies, fixes, hopes and reasons to believe in recovery. Our name for this phase of a bear market is the Slope of Hope. This portion of the decline lasts until the center of the wave, where investors stop estimating upside potential and start being concerned with downside potential. Economists in the aggregate will probably not recognize that a depression is in force until 2012 or perhaps beyond. That’s the year the 7.5-year cycle is due to roll over (see April 2010 issue). Stock…
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Timeframes and Actions

Latest thoughts by Tim Knight at The Slope of Hope

Timeframes and Actions

Since – and I’m being my typically overly-polite self here – some people seem confused as to my attitude toward the market, allow me to explain. Again.Short Term (Hours/Days)

  • Open to the possibility of S&P getting as high as 1120
  • Have opened up about 10% of intended short positions already. Vast majority of accounts in cash.
  • Have a small number of long positions, and a pretty big SSO position to soften the blow if the rise continues; occasionally briefly trading ES for pops and drops. Long /ES as of this writing.
  • Opportunistic day-trading ETFs when risk/reward seems heavily in my favor

Medium Term (Next Few Weeks) 

  • Think likelihood of trend change very strong;
  • Going through all stocks in advance and preparing target entry points and stop prices;
  • Intend to hang on to already-established positions and ratchet stops down as needed

Long-Term (Months/Years) 

  • Believe people who are planning on a new bull market are incorrect;
  • Think slow, grinding bear market will continue several years;
  • Believes major government policy shifts and social unrest will accompany bear market;
  • Will trade infrequently once bulk of positions are in place

Got it? Good. Thank you.

A Close Look at the Russell 2000

The /ES continues to grind uncomfortably and annoyingly along its descending trendline of resistance. It could, of course, pop above it at any moment. Given the fact the trendline isn’t even a week in length, a break above it wouldn’t be explosive, but it would be another carpet tack in the coffin of the bearish argument.Some might assume, based on my disposition, that I am massively short the market. I’m not. I have about 10% of my buying power deployed in short positions. I’ve got 3000 shares of SSO to ameliorate the market’s strength. I’ve been spending virtually all my time getting ready for, but not executing, the trades which interest me.The Russell looks like this right now:

1007-rut 
 

Operating in the favor of the bulls……… 

  • Broad uptrend still very much intact;
  • There’s about 8% upside from here before the major resistance at that rectangle
  • And, just now, AA reported earnings which the market seems to really like.

In the bears’ favor…….. 

  • Trendline breached;
  • Massive resistance overhead

Looking closer, we can see the series of lower lows and lower highs, but one good strong day higher could break this:

1007-rutclose 
 

 


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Everything’s Coming Up Roses

Everything’s Coming Up Roses

Courtesy of Tim Knight of Slope of Hope

As regular readers know, I’m counting on a countertrend top between 1050 and 1200 on the S&P, and we’re within spitting distance of it. Today’s high was barely 1% underneath 1050. I maintain my belief that this is nothing more than a countertrend rally unless (God forbid) we were to cross above 1200.

The folks over at Elliott Wave provided a very interesting graph on sentiment today:

0824-optimism

Not to put too fine a point on it (.…..say I’m the only bee in your bonnet…….), investors are now even more doe-eyed optimistic about the prospects for equities than they were when the S&P peaked at 1576! All this crap about tons of cash on the sidelines and people waiting to pile into the market is just that: a load of crap. They’re already in! And they’re expecting things to keep soaring! (Just like, ummm, in October 2007).

The "cash on the sidelines" thing drives me nuts. The "cash" was destroyed in the 58% decline – remember? The notion that people:

  1. Sold at the top
  2. Tucked their "cash" away somewhere really, really safe
  3. Now have all that cash at-the-ready to buy stocks

is…….that’s right!…………utter crap.

It’s lovely that today was a good day for me, but I’ve been through the past five months and know it doesn’t mean squat. You know the last time we had a good, solid down week? June! So it pays to take it one day at a time and assume Goldman is just playing games with us all until things start to seriously, seriously crack.

And, I assure you, ladies and gentleman, that is a day to which I eagerly look forward.

****

Song for Tim :-)

 


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Zero Hedge

EU Walks Back Embarrassing Claim Of 150,000 Russian Troops Near Ukraine Border

Courtesy of ZeroHedge View original post here.

Authored by Dave DeCamp via AntiWar.com,

The European Union had to correct a claim made by its foreign policy chief, Josep Borrell, concerning Russian troops near the Ukrainian border. Borrell told reporters on Monday that there were "over 150,000"&nb...



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Phil's Favorites

A Trader's Federal Lawsuit Against JPMorgan Chase Offers a Window into the Crime Culture at the Five Felony-Count Bank

Courtesy of Pam Martens

Jamie Dimon, Chairman and CEO, JPMorgan Chase

Donald Turnbull, a former Global Head of Precious Metals Trading at JPMorgan Chase, has filed a doozy of a federal lawsuit against the bank. Turnbull worked on the same JPMorgan Chase precious metals desk that was deemed to be a racketeering enterprise by the U.S. Department of Justice when it handed down indictments in 2019. This was the first time that veterans on Wall Street could recall employee...



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Biotech/COVID-19

No, vaccine side effects don't tell you how well your immune system will protect you from COVID-19

 

No, vaccine side effects don't tell you how well your immune system will protect you from COVID-19

It’s not a bad sign if you feel fine after your COVID-19 shot. Luis Alvarez/DigitalVision via Getty Images

Courtesy of Robert Finberg, University of Massachusetts Medical School

If someone gets a headache or feels a bit under the weather after receiving a COVID-19 vaccine, it’s become common to hear them say something like “Oh, it just means my immune system is really working hard.” On the flip side...



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Digital Currencies

A Unifying Theory of Everything

 

A Unifying Theory of Everything

Courtesy of Scott Galloway, No Mercy/No Malice@profgalloway

This week, New York Magazine let me go full stream of consciousness on … everything. Their editor pitched me the idea to articulate a unifying theory on “this whole crazy techno-fiscal moment.” Problem is, while I understand crypto better than 99 percent of people, I do not understand crypto.

On Wednesday, crypto pioneer Coinbase listed shares on the NASDAQ, and closed the day at an almost $100 billion valuation, making it nearly as valuable as Goldman Sachs. Coinbase’s big day made a bunch of wealthy people wealthier, but it also poked several bears — ...



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ValueWalk

Managing Investments As A Charity Or Nonprofit

By Anna Peel. Originally published at ValueWalk.

Maintaining financial viability is a constant challenge for charities and nonprofit organizations.

Q4 2020 hedge fund letters, conferences and more

The past year has underscored that challenge. The pandemic has not just affected investment returns – it’s also had serious implications for charitable activities and the ability to fundraise. For some organizations, it’s even raised doubts about whether they can continue to operate.

Finding ways to generate long-term, sustainable returns for ...



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Chart School

Money Printing Asset Price Targets

Courtesy of Read the Ticker

The FED giveth and the FED taketh away. Right now the FED is giving a lot into 2022 US Mid Terms. 

Unless the FED breaks the market, here are some BRRRRR asset price targets, not normal price targets but money printing adjusted price targets. 


BITCOIN 175,000 to 500,000 USD

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DOW to 40,000 to 50,000

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Politics

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

 

Colombia gives nearly 1 million Venezuelan migrants legal status and right to work

Venezuelans wait at the Colombian border to be processed and housed in tents in 2020. All Venezuelans now in Colombia will receive a 10-year residency permit. Schneyder Mendoza/AFP via Getty Images

Courtesy of Erika Frydenlund, Old Dominion University; Jose J. Padilla, Old Dominion University...



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Kimble Charting Solutions

Will Historic Selloff In Treasury Bonds Turn Into Opportunity?

Courtesy of Chris Kimble

Long-dated treasury bonds have been crushed over the past year, sending ETFs like TLT (20+ Year US Treasury Bond ETF) spiraling over 20%.

Improving economy? Inflation concerns? Perhaps a combination of both… interest rates have risen sharply and thus bond prices have fallen in historic fashion.

Today’s chart looks at $TLT over the past 20 years. As you can see, the recent decline has truly been historic. $TLT’s price has swung from historically overbought highs to oversold lows.

At present, the long-dated bond ETF ($TLT) is trading 7.8% below its 200-...



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Mapping The Market

Suez Canal: Critical Waterway Comes to a Halt

 

Suez Canal: Critical Waterway Comes to a Halt

Courtesy of Marcus Lu, Visual Capitalist

The Suez Canal: A Critical Waterway Comes to a Halt

On March 23, 2021, a massive ship named Ever Given became lodged in the Suez Canal, completely blocking traffic in both directions. According to the Suez Canal Authority, the 1,312 foot long (400 m) container ship ran aground during a sandstorm that caused low visibility, impacting the ship’s navigation. The vessel is owned by Taiwanese shipping firm, Evergreen Marine.

With over 2...



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Promotions

Phil's Stock World's Weekly Webinar - March 10, 2021

Don't miss our latest weekly webinar! 

Join us at PSW for LIVE Webinars every Wednesday afternoon at 1:00 PM EST.

Phil's Stock World's Weekly Webinar – March 10, 2021

 

Major Topics:

00:00:01 - EIA Petroleum Status Report
00:04:42 - Crude Oil WTI
00:12:52 - COVID-19 Update
00:22:08 - Bonds and Borrowed Funds | S&P 500
00:45:28 - COVID-19 Vaccination
00:48:32 - Trading Techniques
00:50:34 - PBR
00:50:43 - LYG
00:50:48 - More Trading Techniques
00:52:59 - Chinese Hacks Microsoft's E...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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