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.

Bye-Bye, Buy

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When I was 16 years old and a junior in high school, there was a kid in the class above me named Tommy McWilliams who, among other programming feats, wrote a game called Outpost which netted him about $60,000. This was back in the early 1980s, and believe me, it was a very big deal at the time. He even got his picture in Newsweek.

Tommy used some of the money to buy a brand new Porsche 944, which had just been introduced. I wanted that car so bad I could practically taste it. I wasn't jealous of Tommy – he was a friend of mine, and I admired him. But, at that age, I definitely was a materialistic kid.

I spent pretty much all the money I earned on the latest stereo equipment, computers, and so forth. And, yes, I eventually got enough money (through writing books) to buy the same car, albeit a 1984 instead of a 1983 model. I remember well the teacher in the computer class announcing to the other students, "Let's go outside and see a good reason to learn about computers." And he led the entire class outside to admire my new car and watch me zip it up and down the street a couple of times. I was so proud, but in retrospect I imagine a couple of people thought I must have been a real jerk to be showing off like that.

The point which I fumbling toward here is that I shucked my materialism very early in life. A lot of things have contributed to my minimalist nature. Part of it has to do with recognizing the truly important things in life, like love and family. I used to think such notions were the claptrap of losers who didn't have money and just want to assuage themselves, but I realize now that the wisdom of the ages is right after all. I was, as everyone is at some point, a fool and coveted material things, but I really don't care anymore.

I drive an eight year old Volvo sedan, and I don't care if I ever get a new car. God knows I don't bother dressing in expensive clothes. I don't want any more gizmos. I don't want a bigger house. I don't want a boat, a fractional jet membership, or a sports car. As long as I've got my laptop and a decaf coffee, I'm a happy guy. I'll gladly let Mrs. Bear and the cubs spend the money I earn.

I think of these things not to tout my path to becoming a Buddhist monk but as a lead-in to my short position in RTH. I still think retail is doomed over the next year or two, and shorting RTH is my favorite way to take advantage of this speculation. I don't imagine people have become anti-materialist; far from it; I think most people are desperate to be distracted from their lives by whatever gewgaws they can find. But the money simply won't be there for people to buy Yet More Crap They Don't Need.

0721-rth1

The nightmarish failure of the H&S last week hasn't broken my confidence in this pattern, and I am relying on the H&S in RTH as the basis for my short. In addition, the gentle descent of lower highs makes for a nice, clean stop.

0721-rth2

I shall now return to my lotus position. Ommmmmmmmm.

As God Intended

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One fellow wrote me last week and suggested, unhelpfully, that "technical analysis is a crock."

I disagree, although it's easy to question one's faith during times like these. It was heartening to see at least one chart behave itself this morning – Lockheed Martin (LMT), on which I own puts.

I had a couple of different reasons for buying puts on LMT. The first was that the Fibonacci fans have been pretty helpful on this stock, and the price had climbed its way back to the underside of a fan line. But the principal reason was that the line at about $87 had been strong support before and now was representing strong resistance.

0721-lmt1

The stock finally began the coveted "falling away", and I'm more optimistic about this position. These are December $90 puts, and they're up about 45% this morning. I think these are keepers, and I'll keep ratcheting my contingent stop down as the position continues to move in my direction.

0721-lmt2

Moon Walk

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I've been so buried with "we love you man!" emails lately that I was up from 3 to 4 a.m. answering them. Some Slopers are getting annoyed, though, and I've received my fair share of "cheer the {colorful expletive} up!" emails that I figure I'll break character a moment and share something upbeat.

So this Onion article about the moon landing is, without a doubt, one of the funniest things I've ever read. The language is a bit rough and NSFW, so if you get offended at that kind of thing, just wait for a later post and don't click it. But if you do click it, read every single word. It's hilarious.

The Joy of Text

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This blog tends to be about charts, but this post is going to be an exception. I'm just going to type what I'm thinking, and this will be my last post of the day.

Today stunk for me, just like the prior five trading sessions stunk. In fact the only reason the stink is diminishing is because I am backing farther and farther away from the market. Two of my four accounts are all cash. That, for me, is extraordinary. I only wish I could wave a magic wand and turn all four into "all cash" as of last weekend!

I haven't been in the comments section in any meaningful way for quite a few days now, but I did catch a glance at one comment which stated that no real downtrend would resume until the bulls became net sellers. I hadn't thought of it that way before, but the Sloper is absolutely right. No matter how much we stare agape at the gullibility of the investing public, the fact is that they are buying stocks, and their demand is driving up prices. So no matter how many bears there are………..and there are rarely many……….their selling is going to be completely puny compared to the buying of the bulls. As long as the bulls are drinking the Kool-Aid, we bears are going to have to keep buying the drinks.

If I look at the total value of all four personal portfolios that I manage, I haven't made any net profits since February. Across the four, obviously a couple are higher and a couple of lower, but the net result is that the five past months have yielded me $0 for the countless hours I've spent on the markets. That is demoralizing.

But demoralization isn't going to do anyone any good. It isn't instructive, and it isn't edifying. When I reflect on 2008, which was an amazing year for me as a trader, I am actually more proud of my ability to pick myself up and recover than I am proud of my ability to make money during the "good times." March-May 2008 were horrible for me, and when I discovered e-mini futures in the autumn of 2008 and wiped out almost an entire portfolio in a week's time, that was horrible too. But I bounced back hugely from those mistakes, and there are times I really wonder to myself how I managed to do so.

Sometimes I get tired of being strong, though. And, believe me, watching hard-earned profits evaporate in a very public way takes a lot of fortitude. When I'm making money and offering suggestions which are scoring money for my readers, all kinds of good things happen at once. My accounts grow in value. I look good to my family. I look good to my readers. My self-esteem and confidence are strong. I am a charting wizard.

When things go badly, everything happens in the opposite direction. What is heartwarming to me is that I actually get more nice emails and thank-yous during the bad times than during the good times. I am really moved at how much people appreciate the community here.

I had an absolutely blast trading late last year, but markets go up more than they go down, and I need to be able to thrive as well in an up market as a down market. I proved this to myself, in a limited way, with my 401-k this year. But as I survey the charts, I cannot bring myself to buy. The risk/reward isn't good enough to my eyes. I have set aside a handful of charts that might look like good longs, but the ratio of interesting short opportunities to interesting long opportunities is about 15 to 1 for me, so it's hardly worth bothering.

I still think the run-up in asset classes – – – be it gold, oil, silver, or equities – – – is running out of steam, although as we threaten to bust above June's highs on the S&P, I wonder how much more upside the bulls might be able to muster. It's entirely possible that "steam" could last much longer than I anticipate. But, for better or worse, I still remain 100% short (setting aside the fact that I have a very large amount in cash, since I've been stopped out of so many things and since I haven't had much interest in loading up on a lot of new positions).

What's most important for me is to make sure I keep my confidence and wits about me. Getting some consistent profits flowing again would do me a world of good. Until then, I'm taking it one day at a time, and I am keeping both my eyes and my mind open.