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.

The Trendline of the ES

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For those of you who have been complaining about guest posts, take heart – – – all the contributors seem to have split. I personally like the guest posts, since they give me a breather – but oh well. Maybe there was a collective bear suicide held somewhere.

In spite of eight consecutive up days, as measured by some major indexes, the all-important /ES is still sporting a broken trendline {the nefarious thing about such an "event" is that the market can keep climbing, albeit on the opposite side of the aforementioned line).

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Looking closer, you can see the past couple of days have been spinning tops – – there's a lot of tug-of-war going on at these new highs.

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There is always – always – some kind of indicator, cycle, or gee-gaw in the world of technical analysis that can provide a person comfort that their point of view is the right one. I really try to avoid those games. I did get pretty excited about the Spiral Calender that Virginia Jim had been talking about, but as he himself wrote a couple of days ago, "1929-1987 Spiral Calendar Analog update. That's a wrap. DJIA closes above the predicted "final high" so the model is broken".  I am actually more of a "1937-1942 analog" kind of guy, but the information Jim was showing was intriguing. But I guess that's another cycle tool throw in the dustbin of history.

I also saw on EWI – – which has unashamedly jumped from the "P3 is on!" to "P2 is still going on" camp with distressing ease – – that they were presenting the Lunar Syndonic Cycle as the latest reason that the top would be in Real Soon Now. I'm fairly open minded, but when people roll out lunar eclipses, or astrology, or planetary movements, I just move on. I'm not that desperate to be convinced that the market is about to turn.

Anyway, that's probably it for Slope until tomorrow. The guests aren't contributing, and I'm burned out.

Endurance

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I was going to title my post "Sigh", since that sums up how I'm feeling right now, but I know from experience that reading a blog where the writer is groaning about things is tiresome.

All the same, I'm in low spirits right now. I work very hard on my analysis. There are times that this analysis leads to a bonanza, and there are times – like now – where I feel like throwing darts would be more effective. It is profoundly unrewarding to spend countless hours analyzing, preparing, and trading with nothing to show for it.

Today, many assets tagged new highs (either lifetime or for the past year+) – – such as the Dow 30, the S&P, and gold.

Recently, it seems like any time a flicker of hope appears, the bulls just ramp things right back up again. The only silver lining in this entire scene is that the Russell, which is really my mainstay right now, isn't making new highs. And that's cold comfort indeed.

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My principal fear is that late 2009 is becoming like late 1999. That is:

  • Everything is going up, irrespective of reason;
  • The less thoughtful the trader, the more money they make;
  • An insane final rush-up in price may be in store, and may last months

I know there was a sigh of relief when Kemal_1, who is perhaps the most respected participant here, declared P3 underway. But days like today are a grind.

I don't mean to sound whiny. You don't take your time to come here for that. But the market has been so discouraging and confounding. I've tried – – I've really tried – – to find good bull setups that I really want to hang on to, but I'm not into "momentum" investing (e.g. buying stuff that's already been bid-up huge in the hope that the bidding up will simply continue). It's not my style.

I'm going to take a break for a bit; if I get my head screwed on right and have more to say, I'll be back.

Russell 2000 – – – IWM (by Jeff)

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Just a quick observation, this is a weekly chart of IWM. Notice every time since June of 03 that IWM tested its 20 week m.a. (which is the blue line) a break of the 20 week was imminent and the target was the 50 and 70 week m.a's. Which then led to new highs. Which will lead to a test of the 20 week again and then a break of the 20 week down to the 50 and 70 week m.a.'s. and then new highs, etc. That is the rhythm of IWM. Then notice how the 50 and 70 week became downward sloping in January 08, then it became resistance and the place to short. Signalling the time to buy was done and shorting was the profitable trend.

Furthermore notice each test of the 20 week, MACD had crossed over down and the bounce off that test either made nominal new highs or fell short, which in turn gave way to further down side testing. Also of note is how MACD reset itself at much lower levels from where the test of the 20 week occured. Only once marked with the x in the price and MACD pane did the test not give way to price testing out the 50 & 70 week m.a.'s. Notice the difference MACD never crossed over down! 

Fast forward to the current day and notice the set up occurring. Looks like the same pattern is still holding true. I am looking for a few days above the 50d s.m.a to start getting short. I think $60.50 and higher is a prime place for shorting. I will wait for $53-$54 to cover, which is where the 50 week should have risen to.

I must also say, notice how the 50 week turned up in June of 03. I think that is the easiest way to spot the trend, it was clearly up and bought every time it hit that price. Currently the 50 week has just turned up and in my mind is signalling the start of a new up trend and when it does get tested it should be bought. In my mind I will keep applying this analysis in my trading until it ceases to work, but is has been working since 03 so why fight it.

For clarification the grey line is the 50 week and the red line is the 70 week. I use the 70 week for further indication of the trend. As you can see in the chart its been very reliable.Snapshot-40

Seabridge Gold

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I shorted Seabridge Gold (SA) this morning for a couple of reasons. One, I find the pattern to be very attractive…….

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Two – and this is even more important to me – any stock that has to do with gold that has actually been weak lately must be very, very prone to more weakness. I mean – for the love of God – gold keeps lurching to prices never before seen in the history of man. If you own a company that has anything to do with gold that isn't likewise enjoying these tailwinds, something is wrong.

Metal and Miners (by Steve)

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I was trying to write this up yesterday before GSS reported but I was called out on a trip. I have a full time job and am not always actively trading.

Trying to write something that may be helpful to you all or even to some of you is a real challenge for me, as I came to this site to try and learn from more active traders and especially to try and incorporate technical analysis into risk management skills. Trying to write a quality post is forcing me into a Baptism by Fire scenario and I will keep it simple as that is what has worked for me.

Lots of great posts once again preceding this one on precious metals. I have had at least 50% of my net worth in metal and miners off and on for the past several years, and this is not a suggestion, but something that I slowly became more and more comfortable with over time as events unfolded validating my views. I view it as insurance in a sense and I try to trade around core mining positions and SLV, nearly always from the long side.

I have no idea on the next 10-20% and I don't much care one way or another. That may sound flippant, but if I had confidence that I could capture that move, I would do so. I need to see greater enthusiasm in a spike like fashion for me to do much selling of my trading positions right now. Remember that I am trying to emulate the quote from the Livermore book,in the earlier post about making most of his money in the sitting, not the thinking. I rarely looked at a chart the past two years and it could have been very helpful had I done so.

Silver really seems to be the poor man's gold as the coin store keeper tells me they loved it at 20 and sold it back to him at 16 last year. They have not been back. Continuous higher prices always bring them back it seems. I will buy more at 15 and lower. Here is a view on silver, when owning a full position around this time last year felt like this.

Silver

Three of the major gold miners (NEM,GG,AEM) reported last week and the stocks had different reactions to "the news" initially. I own GG and AEM and mentioned that I was buying the initial break the next day at 58 area just above the trend line. Further opportunity followed on day two of "sell the news".

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Here is a one year view of GG

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Last year was gut check time for those of us too long metal. I had made a great sale of GG at 50 and trimmed some other gold stocks and I was looking to buy it back lower. I had roughly 10% long puts and long precious metal and I was feeling loaded for bear. I started buying GG back at 38, 33,28 23. Arms,legs and torso gone. I spent some hard time thinking it through and believed that my thesis was still intact and that the pricing was a good old fashioned "sell everything" liquidation.

I had bought a small amount of GSS at 1.50 and 1.20 on the way down and then I started putting in bids in all my accounts and wound up with nearly 70,000 shares bought between .41c -.68c. I had similar fills in smaller size on some other juniors. This was not planned but acting on the fly. I had much larger orders not filled below these levels. Looking back it would have been great to have liquidated my metal and had fresh eyes into the plunge. I did not sell on the rally and bought more from 1.20-1.80 and some Jan -Feb calls. I still have the bulk of my GSS position and have only sold 5k shares in the mid 3's.

Last post I showed the FCX Pref M as the one that got away. So far GSS is one that did not get away, and it has been very difficult to keep the position to this point. I can have 50k swings daily, but that is reflective of the volatility in the precious metal stocks. Use it to your advantage short or long.

Here is a view of GSS long,med,short term.

Gss10yr

Gss 1yr
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So far I have done well under some seriously adverse pricing. Now that pricing is more favorable I am not dancing on the clouds. I am trying to manage my way through these times and I was fortunate to have bought some things right. I will need to sell it right as well. It now feels more like this ride – – especially after writing this post.