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.

Slip Sliding Away

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Starting last Friday, I began executing a strategy I had been waiting a long time to commence. Specifically:

  1. Cull through a list of over 1,000 individual charts and set aside those I felt were best-positioned for short positions into a Bear Pen watch list.
  2. On a daily basis, going through the Bear Pen to draw from that list the lowest-risk items (I am not endeavoring to go "all in" all at once; I am starting off with the least risk items first, and installing those positions in blocks).
  3. As I continue to establish my short position, in tranches, I will – from time to time – update stop prices in order to further mitigate risk. Naturally, all positions have stops in place at all times. When I'm done, I suspect I'll have about 150 positions in place.

This is quite different from how some other traders – – even bearish ones – – are going about things. Some of them are "one-instrument" traders. Sol, for example, over at xTrenders, primarily trades monster-large positions on the /ES and with some amazing results. He has had a breathtaking recovery, after getting pummeled during the summer, and my hat is off to him.

But that's just not my style of trading. I'd rather get entrenched with a large number of positions (spreading the risk very thin) and ratchet stops down along the way, as opposed to doing "Hail Mary" kinds of trades. Take STT, for example, which is a position I established on Friday. This chart is very representative of the kinds of positions I am entering.

1020-stt

I shorted 190 shares of this at $52.81, and the stock is down nearly 10%. Now, the profit in absolute terms isn't huge…..$944 as of this moment. However, (a) get those kinds of profits across a platform of a couple of hundred positions and (b) keep reducing the risk by ratcheting stop-loss prices down as the stocks move down, and I'll have a winning combination.

All this is predicated, of course, on the market slowly moving downward. But it isn't dependent on a crash, or even a tear 'em up bear market. All I need is for prices to erode which, given the entire suite of circumstances, I am highly confident they will.

As for the idea of others contributing to Slope – – I got a lot of emails, and I invited those which seemed promising to contribute. I am keenly aware of the importance of retaining the social fabric and personality of this place, so don't worry about me wrecking that. I imagine some "outside voices" will appear from time to time, as space (and the quality of posts) allows. I, for one, am looking forward to seeing what our Guest Editors have to contribute!

Canadian Pop

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The dollar and the equities markets have never been, in my experience, so closely tied together.

Prechter's latest Elliott Wave Theorist (and it truly is one of the best I've read in ages) speaks eloquently about what they view as an imminent bull market – and a massive one – in the US dollar.

We got our first serious "Green Shoot" today with USD/CAD. Just look at this:

1020-cad

For a stock, a 2.23% rise is good news, but nothing earth-shaking. In the foreign currency markets, that is an enormous move – – the equivalent of Google moving $60 in terms of shock value.

By no means will the dollar's ascent be straight up; there is plenty of resistance. But today's move is a very encouraging sign for dollar bulls (and precious metals bears, like me).

About Those Watch Lists

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A couple of weeks ago, I decided to remove the watch lists widget from the right column of the blog.

Many people wondered why I did this. Some people supposed that it is because I am managing money for others now, and they figured I didn't want to show my positions. That actually was a pretty minor factor in the decision.

The real reason is speed. I was noticing how having the watch list module on the site slowed down its loading.

I will share, however, my list of shorts positions one last time – "one for the road", as it were. If the market goes south, this is an act of munificence. If the market pushes higher, this is an exploding cigar. In any case, the format is simply "symbol……stop price", and here's the list of all the current shorts in my biggest account.

As a side note, many thanks to those who have written me, volunteering to contribute to the blog. I'll be getting back to you today.

Pushing on a String

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I read a quote from Robert Prechter's Elliott Wave Forecast (10/19/2009) in which he described how he felt "calm" for the first time since the low in March about the markets.

I absolutely agree. Recently, I have been more "at peace" with where we are at in the markets than I have at almost any other time last year. In spite of 2009 being very rough for me, I am viewing the markets with a quiet, firm confidence. Even in the face of heckling posts and emails, I know firmly where I need to be positioned in the markets.

And I will say this: the kind of reaction we're seeing at the opening this morning is the best recipe the bears could hope for. Because blow-out earnings may send the markets spiraling higher shortly after they are announced, but it's a flash in the pan. AAPL earnings are great (for the moment) for those long AAPL, but it's not going to save this market. I think the feeding frenzy going on with stocks right now is wonderful.

Thanks for all your feedback last night on getting other contributors to the blog; I haven't read the comments yet, but I will, and I will take what you all have said very seriously.

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