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.

What’s a Reasonable Target?

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Let's say – just for the sake of argument – that the market actually gets a little bit of softness that lasts for more than 17 minutes. How far down will it go?

I'm personally using the 950 level on the /ES as my target. I have a couple of reasons for this. First, that represents an important prior breakout level; and second, it is approximately where the fan line is (which is the same fan line as the one representing support from the oh-so-painful failed H&S pattern).

0805-es

Is that the lowest it would go? Well, obviously I'm counting on much lower prices before the year is over, but I'm not sure if we'll make another dim-witted lunge higher (to…….1050? 1150? 1200?) or slip below the fan line and start withering away. Based on the manipulations from our dear friends at Goldman Sachs, I'd lean toward another lunge higher

Rental Cars

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The biggest "lottery winner" of all, it seems to me, are the rental car companies. Firms such as Thrifty and Avis were penny stocks just a few months ago, and they have absolutely exploded higher. Just look at symbol DTG, up 3100% in five months!

0805-dtg

Somewhere out there are a handful of people who bought at the bottom and have held on to this day; you have my admiration!

Double-Top for $CRX?

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The Morgan Stanley Commodity Index ($CRX) seems to have pushed up to a double-top. Even better, this top is just a little lower than the one on June 11th, which bodes well for bearishness. It's also (again) at a major retracement level.

0805-comm

Today had been going quite well for me, but we're already into the "final 90 minute profit-erosion". We'll see where things wind up at the end. Yesterday's last-minute push was just embarrassing to watch, but we could be in for it yet again (which would make it, what, the 87th time in a row?)

Rigged Game

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Another interesting article from a Sloper………

Aug. 5 (Bloomberg) — Goldman Sachs Group Inc. made more
than $100 million in trading revenue on a record 46 separate
days during the second quarter, or 71 percent of the time,
breaking the previous high of 34 days in the prior three months.

Trading losses occurred on two days during April, May and
June, down from eight in the first quarter, the New York-based
bank said today in a filing with the U.S. Securities and
Exchange Commission. The company made at least $50 million on 58
of the 65 trading days in the period, or 89 percent of the time.

Goldman Sachs, which was the biggest U.S. securities firm
before converting to a bank last year, posted the biggest profit
in its history during the second quarter as revenue from trading
and equity underwriting reached all-time highs. The company,
which has returned $10 billion to the U.S. Treasury and paid
$1.42 billion in dividends and to cancel warrants, also made its
largest market bets during the period.

So……….out of 65 trading days, they had 61 winning days – – 58 of them with profits over $50 million, and 46 of them with profits over $100 million. So on any given day, they had nearly a 95% chance of a profit – – pretty good odds, wouldn't you say?

How about that! This is a shining example of Private/Public partnership. Too bad only a tiny handful of people actually make money from it, while the rest of us wind up holding the bag.

New Short Ideas

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AFL …………….stop 45.97
ALB …………….stop 31.31
ALV …………….stop 37.21
ARM …………….stop 7.63
CBE …………….stop 36.44
CCI …………….stop 30.36
CE …………….stop 27.55
CLC …………….stop 34.51
CNW …………….stop 47.77
CSIQ …………….stop 15.99
CSX …………….stop 42.43
CVH …………….stop 24.42
CVS …………….stop 35.51
CYH …………….stop 31.47
DNR …………….stop 18.85
DO …………….stop 92.99
DTV …………….stop 26.51
ECLP …………….stop 19.50
EMN …………….stop 53.01
FII …………….stop 26.50
FOSL …………….stop 27.26
GES …………….stop 30.22
GIL …………….stop 17.70
GNTX …………….stop 15.34
GSK …………….stop 39.19
HXM …………….stop 37.02
IR …………….stop 29.40
ITW …………….stop 42.49
JCI …………….stop 29
MCHP …………….stop 27.72
MTD …………….stop 87.11
NFX …………….stop 41.77
NNN …………….stop 22.92
OI …………….stop 38.60
TEN …………….stop 20.04
VFC …………….stop 69.04

Mark to Market

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A fellow Sloper sent me this article from the Washington Post – – an excerpt……

A controversial change in accounting rules earlier this year has
allowed banks to claim billions of dollars in additional earnings
simply by tweaking their bookkeeping, greatly enhancing the appearance
that the industry is returning to health.

The proposal, which the standards board will consider issuing for
comment later this month, would require banks to report the value of
all loans and other assets based on the prices that buyers are willing
to pay. This process is called marking to market, and the result is
called a fair value. At present, banks are not required to report the
fair value of most loans. They can instead report a value based on the
original purchase price.

I'm sure we all remember when this goody was given away during the market's swoon. Reverting to the old method seems sensible, don't you think? I mean, if you bought $1 million of FAZ last March, and I asked you on a balance sheet to tell me how much that holding contributed to your net worth, don't you think it would be more proper to say its value was $28,000 (which is the truth) and not $1 million (the original purchase price)? Doesn't that seem beyond the most basic definition of "obvious"?

Dollar Sentiment

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One of the charts I enjoy in EWI's Short-Term Update is the US dollar versus sentiment. It has proven to be a reliable contrary indicator. Monday's issue showed that just about everyone hates the US dollar (and, given its performance, that is no surprise):

0805-dollar

The red "8.7" figure – a record low on this chart – shows how miserably low sentiment is toward the dollar.

The good news for the bears, if this contrarian notion pans out, is that a strong dollar will weaken most other assets (including equities). The EUR/USD has been quite strong since March 3rd, and is has brought the entire stock market up with it.

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