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.

Technical Analysis Fund Survey

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I had promised back on April 29th to not mention The Survey That Shall Not Be Named again, but given the deluge of new Slopers, I hope old-times will give me a pass.

Anyway, for folks who did not fill out this survey before, here it is. I'd appreciate you taking a moment to fill it out, since it's only a handful of questions, so just click on the link. Thanks.

For those of you who did fill it out earlier, thank you. My prior post was much more interesting than this one, so hop back to that if you haven't read it already.

There Is No Holy Grail

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On the bookshelf behind my chair are a series of binders, one of which is labeled Tim's Trading Tome. It is thick with articles and charts, and at the very front is a lined sheet of paper on which I wrote the following last Autumn. This is the entire entry, and I've boldfaced a couple of key items for emphasis.

"There will be economic depression and deflation bottoming ~2014-2016. As of late October 2008, "A" wave is near an end and strong "B" is imminent. Ideally, the market will ascend to former failure levels. If the market ascends that much, it will create the shorting opportunity of a lifetime with a "C" wave that should crush past 2008 lows. The key thing will be patience to wait for the completion of "B". It will be hard."

Now, ten months later, I still subscribe to this thesis. I was early calling for the bottom of the market in October – – it had another, slightly lower, bottom in March. But I was certainly right with "It will be hard" – – dealing with the past five months has been exceedingly hard.

But in today's all-text post, I wanted to make a point that is very important to me: there is no holy grail for traders. I've been doing this a long time, and I've been exposed to a lot of different products, methods, techniques, and trading dispositions. There isn't a single method which is a surefire way to make money. Not one.

My philosophy on trading has this important premise: it's all about your relationship between yourself and the market. The market, you cannot control. Yourself – – to a degree – – you can. And it is the complexity of yourself vis a vis an ever-changing market which makes the entire enterprise of being a trader simultaneously fascinating, exasperating, and thought-provoking.

As the old saying goes, you never step into the same stream twice. It is the same with the markets. They are ever-changing, particularly in the present time, and there isn't a magic bullet out there which is going to let you nail profits month after month, year after year.

There was a time, particularly last year, when I thought I could find such a thing. I was open-minded about just about anything: I would gladly look at astrological cycles, numerology, and a variety of obscure techniques for ascertaining market turning points.

Some of them worked. Most of them didn't. But instead of latching on to one particular method, I have, over the years, adopted a handful of methods, and I've put them into my own unique trading stew. I am refinining it all the time – – weighting some "vectors" I am monitoring more, weighting some less. But the concoction is best suited for me and who I am. It wouldn't work as well for most other people.

It's important to embrace one's perpetual ignorance. I seek mastery by considering myself a dunce who is in search of knowledge. By no means am I suggesting piling on rule after rule, method after method. I view the act of trading not much different than making an ongoing series of bread loaves. I'm changing the recipe a little each time, and I'm kneading, kneading, kneading the dough (that is, my positions, their weighting, and their stops) in order to try to get the result I'm after. Metaphorically, a delicious loaf of bread; realistically, a nice, outsized profit.

The fact that learning to be a great trader is a very personal journey is very much why I stopped buying business books many years ago. When I was in my late teens and early twenties, I bought business books all the time. I figured they would help me become a more successful business person. They didn't.

I've got shelves of these books, and I don't think I learned a thing from any of them. It's not because I didn't read them carefully. But the fact is that most "how to" books are based on the notion that If You Do What This Person Did, You Will Be Like This Person. But you know what? That person is that person. He isn't you. And the circumstances he found himself in (whether he's Jack Welch, Tom Peters, Steve Jobs, Mark Zuckerberg, or God-knows-who-else) are unique to that person. If you want to read a biography, great – read a biography. But if you want to be like that person – well – that's spot already been taken.

This isn't to say there's nothing to learn from books. But I think books related to business or trading are best applied to either (1) the actual mechanics of trading techniques and their application; and (2) learning from the successes and failures of others in order to "template" those events to your own personal experience. That's why I found the Paul Tudor Jones videos so electrifying. I don't have any illusions that I'm going to be a Paul Tudor Jones. But I do draw inspiration from his resilience in the face of defeat and his successful use of past markets to present ones.

If you're read this far, and you're feeling philosophical, read this essay by Seneca on The Shortness of Life. We should be humbled at how wise our distant ancestors were.

ProphetCharts Questions

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I saw this comment a few posts ago:

0806-question I'll answer both of these, since they come up from time to time:

  1. If you zoom in on an area that lacks an "anchor point" of a drawn object, that drawn object simply will not be displayed. I'm not sure if this will ever be fixable. It isn't a bug; it's a simple reality. ProphetCharts needs a reference point.
  2. I don't think TOS has done their latest software release; when they do, the upside-down charts feature (and a number of other cool goodies, which I've documented in the release notes) will be there.

Learned Helplessness

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I've been MIA from comments for nearly a week, since I'm busy with so many other matters, but I happened to see this morning a mention on Slope (from which I derive pretty much all my worldly information) that ProShares was getting sued over its SRS fund. A portion from the press release states:

ProShares sells its Ultra and UltraShort ETFs as "simple" directional
plays. As marketed by ProShares, Ultra ETFs are designed to go up when
markets go up; UltraShort ETFs are designed to go up when markets go
down. The SRS Fund is one of ProShares' UltraShort ETFs. The SRS Fund
seeks investment results that correspond to twice the inverse (-200%)
daily performance of the Dow Jones U.S. Real Estate Index ("DJREI"),
which measures the performance of the real estate sector of the U.S.
equity market. Accordingly, the SRS Fund is supposed to deliver double
the inverse return of the DJREI, which fell approximately 39.2 percent
from January 2, 2008 through December 17, 2008, ostensibly creating a
profit for investors who anticipated a decline in the U.S. real estate
market. In other words, the SRS Fund should have appreciated by 78.4
percent during this period. However, the SRS Fund actually fell
approximately 48.2 percent during this period — the antithesis of a
directional play.

This is just pathetic. I mean, I'm no raging fan of SRS – – "the widow-maker" – – since I've lost money just about every time I've touched it. But, even so, I have an intuitive sense that when you are dealing with an "ultra" fund of any kind, you either have to use it as a day-trading vehicle, or you sure as hell better know that the underlying assets are going to steadily trend in one direction or another in order to make money.

Because, look, if you give me a wad of money, and I put it into an asset class which goes down 1%, up 1%, down 1%, up 1%, and so on, ad infinitum – – and I am doubling the impact of those moves – – you are going to lose money! I'm no math wizard, people – I was the first person in my high school to ever score a "1" on the Calculus AP exam – but even a math numbskull like me can understand this.

So for these attorneys to be piously stating that SRS is the "antithesis of a directional play" implies an ignorance of simple arithmetic which I find breathtaking.

Seeking Exhaustion

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Recently, I'm starting to (finally) see some shorts bear the kind of fruit I expect, falling 15% in a single day. I've been seeking issues that have exploded many hundreds of percent over the past few months and seem ready to tumble back to earth. Here's an example from today:

0806-bgc

I really like trades like this, because the amount of gravity pulling them down is immense. In some instances, like DTG, it can be hazardous shorting too early, since you never know just how close to their breakdown point they will continue to climb.

Euro Watch

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I'm a little obsessed with the EUR/USD right now, because it pretty much will answer all the questions that are important to me: what will gold's direction be? Oil? Equities? I put a lot of value in the direction of this one chart.

Even though it broke above a resistance line, it's been noodling around that line every since, tap-dancing right on top of it.

0806-eur

A close look reveals just how important this line is.

0806-eurclose

Needless to say, it is a constant resident on one of my monitors.

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