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.

Peachy-Keen

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The mood out there is really getting to be something.

People with whom I speak – – -  even really serious, doom 'n' gloomer types – – – are starting to have real doubts that the market will ever weaken in a meaningful way again. The tone in the comments section has become giddy (for the bulls; welcome back, Beanie!) and scary for the bears (I don't think I've ever seen the word "suicidal" used until last night). And TBTSNM's comment section has been pushed into an entirely different dimension, with physical threats and racism being hurled around. It's really ugly.

In early March, the cries from the bulls were the same: when is this going to end?!?!? Well, the shoe's really on the other foot, now. I think hardly anyone, even the most enthusiastic of bulls, expected the rally to come this far, this fast, with no pause. Even as I type this, before the opening bell, the /ES shook off the deficit that I saw when I went to bed to be sporting a handsome rise, and many of my stupid IRA stocks are showing pre-market gains in the low double-digits. More and more, that IRA junk has become my canary in the coal mine.

The folks over at Elliott Wave International do a good job tracking sentiment, and this graph (used with permission) caught my eye:

Notice how the percentage of bulls went from 2%, a never-seen-before-low, to 80%, in just a couple of months.

They believe – – and I agree – – that until sentiment gets into the nosebleed area of the 90s, this rally still has room to run. In the meantime, the bulls are going to keep running the show.

FAS, FAZ, and their Charts

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Between FAZ and FAS by themselves (which didn't even exist half a year ago), nearly 900 million shares changed hands today. 900 million! Forgive my bluntness, but I'm starting to think that going long FAZ, like buying lottery tickets, is a tax on stupidity. Or at least one of the most efficient wealth transfer mechanisms ever created.

What's apparent to me (a skosh too late) is what a superbly "technical" pattern FAS (its profitable brother) has laid out. Indeed, although a lot of people completely dismiss the ideal of using technical analysis on "ultra" ETFs, it holds up remarkably well in some cases. Just look at this:

There are all kinds of cool things going on:

  1. The very clean downward channel;
  2. The upside break of that channel around $5, which was a great buy signal;
  3. The steadily ascending volume which led to the breakout;
  4. The ascending right triangle, completed today, showing a pronounced breakout

I cringe to say it, but if this were a "normal" stock, it would be a pretty obvious buy. It's hard to fathom that a triple-bullish ETF based on financials would be a buy at this point, but it's a really sweet chart.

FAZ, on the other hand, is a complete catastrophe:

Over the past couple of months, this has been good for nothing except losing money. Can you believe this was a $200 security at one point? The volume today – a new record – was made as another 20% was hacked off this pathetic pile of garbage. Billions of dollars have been moved out of some pockets and inserted into others.

This countertrend rally has been a huge, huge grind. The NASDAQ is the only index showing any signs of weariness. I truly thought we'd see a move up to 850, and then a retracement to 750, and then a push to 1050 on the S&P.

As it is now, there hasn't been any meaningful interruption, so the retracement to 750 seems like a distant memory. I do think we will still get a meaningful retracement at some point before we make the final countertrend peak, but I'm starting to think that the peak – – based on the strength of this rally – – might not be 1050 after all, but something even loftier, like 1200. It is difficult to ignore the power and viciousness of this rally.

With bullish sentiment having moved from 2% to 80% in the span of two months (just look at the New York Times to read all the flowery stories about how great everything is now), I don't think we're going to keep going straight up. But I'm the first one to admit that getting this far without a single pause has left me shocked and more than a little disappointed.