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.

Watch Those Metals

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There is little I'm watching more closely these days than precious metals. My view – – and this is an extraordinarily unpopular one – – is that precious metals are topping out and are at the cusp of turning lower. The charts below – GDX, GLD, and SLV (respectively) are ones I am keeping a very close eye upon.

1105-gdx 

1105-gld

1105-slv

Now, please, I'm begging, don't start the religious drumbeat about why gold is going straight to $5,000. I know that 99.9% of the public is crazy about precious metals right now. I was looking through a widely-respected newsletter on technology stocks last night, and 30% of it was about gold and why he's ga-ga over owning it. And I know about Paul Tudor Jones. And India. And all the rest of it.

But I'm a contrarian at heart, and when everyone on the planet just knows gold is heading straight up, I'm inclined to look the other direction. Appropriately enough, the front page of MarketWatch this afternoon featured an article on why gold was going to triple in price (in the midst of all kinds of other optimistic stories).

1105-optimism

In any case, I've got bearish positions on gold and silver right now, and I'm also monitoring their behavior as a sign of equities rolling over. Friday – – and its pre-opening jobs report – – is bound to be interesting for traders.

The Softer Side of Retail (by Fayssoux)

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On the one hand:  shares
are hard to borrow, puts are very expensive, famous and aggressive hedge funds are heavily invested,
this stock has squeezed many shorts.  On the
other hand:  target consumers are under
stress, competitive position has been deteriorating for a generation, valuation is
tied in part to commercial real estate in an overstored America,  frequent management turnover, empty stores, questions about cash position, does not report same store sales regularly;
big earnings announcement on November 19. 
What do you do?

Shld

The Boom-Boom Room

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I tend to maintain a large number of very small positions, as opposed to a handful of huge positions.

In doing so – particularly these days, when I am focused on finding high-quality shorts – there are usually a few stocks each week that bear fruit in a big way on the bearish side. Here, for instance, are a couple of shorts I am in which tumbled nicely today:

1105-pl
1105-wfmi

What I try to remember about events like these – – as with my STEC example yesterday – – is that big drops often establish a new, predominant trend in the security. I shorted these stocks in the first place because I felt there was as lot of room between their present price and their support levels. I'm hanging on to both of these – with tighter stops now – based on this assumption.

The Long Bond (by biiwii)

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Hello again, biiwii Gary posting a most important long term signpost for your viewing pleasure, the USB Long Bond and its deflationary 'backbone', the 100 month exponential moving average.

Against the backdrop of the long bond's uninterrupted rise from the 1980's, Alan Greenspan was able to portray himself as the great Maestro, always at the ready with inflationary policy when the market and economy needed it most.  This is what I have viewed as a wellspring, compliments of Paul Volcker's tough inflation-fighting policy of the late 1970's and early 1980's.  This policy sprung a new bull market in paper stock and bond certificates as confidence was restored in a secular way.

Greenspan used this sound policy as a lever with which to self-aggrandize and inject moral hazard into a global economy ever more dependent on debt and leverage to keep itself afloat.  The new bureaucrats in charge, Bernanke, Geithner and Summers, have taken Greenspan's play book and run with it.

But they will run as far as the long bond says they will run.  

Usbmo
 
It turned out that Q4, 2008 was merely an opportunity to push the mother of all panic buttons and introduce inflation policy into the system like never before.  This was a lay up as Larry Summers implored the public to buy treasuries right into an inflationary impulse that has been nearly equal to last year's deflationary one.  This trade has been like taking candy from a baby.

And the game of hide the cheese will continue to frustrate both the 'inflationists' and 'deflationists' at important turning points, as long as the secular trend remains intact.  I am of the opinion that there will never be outright deflation as long as the public maintains its…… I can't call it confidence… as long as the public maintains its penchant for thinking in conventional terms. 

Because as the public does so, it makes no effort to stop the ongoing and official gaming the long bond, which sees policy makers ramp the money supply every time treasuries rise strongly, giving them license if not imperative, to do so.

The game will end if and when the EMA 100, the secular backbone of the trend, is broken.  Then we are in uncharted inflationary waters.  I am looking for another test of the 100 as per the daily chart of 30 year yields shown in this post.  At that point, I will have to say the risk is substantial for the inflationists as another deflationary liquidation is probable.  From this event would come future inflationary policies in a continuation of the wash, rinse, repeat cycle.

Either that or the game ends and a new era begins.  That would be the era of hyperinflation.  We should be hoping the current trend holds.

EUR/USD Review (by Alex)

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First let's review our post from last week (10/27) and see how projected support/resistance levels played out.

Review_c 
Now lets see how the history repeated itself once again. We are comparing Aug.2008 price action and present:

$eurusd 11_4_2009 (450 min)2a 

No doubt there is a similarity. Current swing high(FOMC day high as well) is 1.4908-to the tick the same as the swing high in August 2008.

Will the history keep repeating itself and we see lower prices in the coming days? We shall see.

Does This Look Vulnerable?

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Here's a chart of SRS, the ultrashort real estate instrument. I have – as I am wont to do with big movers – flipped it upside-down to give you a different perspective.

1105-srs

Does this look vulnerable to a "fall" to you? (I put fall in quotes, since the chart is flipped). I think it does. Let's keep in mind, though, that it has shown vulnerability before (see blue tinted area), only to move more.

I bought SRS earlier today, and the fact that it is showing a profit (albeit a small one) in the face of a nearly 200 point burst higher on the Dow is pretty encouraging.