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.

Our Own Worst Enemy?

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A Sloper wrote me this evening with a thought-provoking email; he kindly gave me permission to reprint it here anonymously:

I just want to share a thought/observation that I have had: there has been a mentality shift in your website, most crucially in the cumulative psyche of your Slopers. For the first time, instead of shorting a rally, almost everyone is waiting  for a higher push to 1100-1120 to short. I believe that is significant sentiment event, one to be approached  in the contrarian fashion.

To me, it's like the longs who waited for 600 on SPX to go long after getting hurt trying to bottom pick. 

It's demeaning to be considered part of a psyche that should be faded, which is why I am writing to you in private via email. I am by no means commenting on the skill or integrity of your site or of Slopers and do not want to offend any one. I just want to point out that I belieive that this fear of shorting now is one of many other signs that a vicious sell off is imminient. Personally, I think it is this week and we don't push past 1085-1090 on ES.

I know I am one of many many faceless names/email addresses/avatars, but I hope these thoughts help. I could always be wrong, like anyone else, but what I am pointing out is something at least worth being congnizant of. 

Decade Flashback

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As a good contrarian, I like to keep magazines which capture the zeitgeist of their day. Here are a couple from a decade ago, at the peak of the Internet bubble:


One of the articles in Money magazine, whose cover is above on the right, is The Sensible Internet Portfolio. It lists six stocks that aren't so nutty as their peers. They are:


Of the six above, four of them are delisted. I don't want to dig through bankruptcy proceedings or merger deals, but I think we can all safely agree that the four that have vanished had a substantial decline in value. As for the two you can still chart – ARBA and VRSN – I have put graphs here and here (no need to gobbling up your screen space with these things).

Am I suggesting the market is like early 2000 right now? No; the dot-gov bubble's lunacies are confined only to certain places. We're nowhere near the insanity of those days, although I do thing the systemic troubles are far worse.

My point is that it helps to keep perspective. One week from now we're going to know a whole lot more about the direction of the market than we do now. Because, frustrating as it has been, the push higher makes total sense from a charting perspective. However, if we continue to blow higher, right past the 1120 level, there are going to be a lot of confounded, frustrated, and much-poorer bears. If the balance of the week brings market action that slices us right through those lofty levels, we've all got some serious rethinking to do.

Discernment and Denouement

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If there's anything I learned from the (miserable) experience of largely missing the March-Present run-up, it is this: trying to "out-think" the charts is stupid. If you look at a chart, and technically it make sense, and if you're a practicing technician………..well, you should take action! What I did was looked at the charts and talked myself out of it.

I face the same quandry with DIG. It's a great inverted head and shoulders pattern. Period. Therefore I'm buying it. A huge asterisk next to it is the disintegrating volume, but that's just the first of the "talk myself out of it" actions happening. I could also think about how it doesn't make sense for energy to be hot in a slumping world economy, or how the dollar is bound to push higher any day now. The list could go on and on; there are always to talk yourself out of a trade.

But I've got the chart. I've got the stop. I'm in the position. And I'm going to leave it alone unless it's stopped out. Because I need to let the chart do the talking, and not my brain.


Longs I Bought

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Here are the longs I bought today (grudgingly……..) with their stop prices. Their patterns are in many cases inverted head & shoulders with a pretty clean neckline, good volume, and plenty of room on the upside. All the same, I bought these as a hedge, and in this market, I held my nose doing so.

ACI 22.06 AMB 21.17 CMCSA 15.06 CPX 11.67 CROX 6.65 FWLT 30.3 HON 36.21 OEH 10.39 PCX 12.44 PETS 18.39 VMW 41.59 WNR 5.84