Anyone insane enough to think the market might someday get rational again may consider TZA, the increasingly popular triple-X ETF on the small caps. I bought some today.
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.
My Weakness is Strong
As I've hinted, I've moved entirely away from options and e-mini trading and am focused strictly on individual stocks and ETFs. Why the change? Several reasons:
- Reduction of risk – 2009 has been very rough, and I took on this move to radically reduce risk and volatility. Aggressive trading of leveraged instruments can wipe a person out. My main goal right now is capital preservation. Boring, but safe. That's why my big account is down 2.31% instead of some god-awful amount. No one likes loses, but I can handle a 2.31% drop.
- Focus during trading hours – Watching the /ES from 3 p.m. Sunday until 1 p.m. Friday, week after week, can get exhausting. I have other things to do. And I'd rather not get caught up in the late-night shenanigans of low-volume markets.
- Plays to strength – I'm a chartist. I tend to be good at smoking out individual charts. My portfolio is currently loaded with stocks I think are highly vulnerable. So I'm trying to play to my strengths.
Below is a case in point – Whole Foods – which I shorted at $33.38, is currently trading at $26.16 (a 21.64% drop), and has a stop at 28.94. This is my kind of trade – – – one which has a fat profit, is virtually guaranteed a profit even if stopped out, and on which I can just keep ratcheting the stop down. My goal is to have a portfolio filled with issues like this. When I saw WFMI was down even yesterday, when the market was exploding to new highs, I felt that much better about the decision.
Heeeeeeeeere’s Timmay!
Even as a youngster in the 1970s, I would get irked at the increasing frequency that Johnny Carson took nights off and would have guest hosts instead. It wasn't that as a ten-year old I had a particular affinity for Carson monologues versus anyone else's. It's just that, if I made the effort to stay up late to actually watch The Tonight Show, I felt I should get "the real thing" – – – that is, Johnny Carson – – – and not a substitute.
That's why I've been feeling guilty about ditching you guys with increasing frequency. But I think the guest content is terrific, and it's not like I've seen traffic plunge due to people storming off the site.
I've got a lot of terrific designers who have stepped up to the challenge of re-doing Slope. I think we'll all be happier with the end result. It will also help clarify my posts and guest posts better.
Anyway, just one quick note on this chilly morning……….the US dollar is having a terrific day, but it's disconcerting that equities aren't falling more powerfully. As I type this, the EUR/USD is down .78% (shown in black below), but the /ES is down merely .2% (shown in blue).
Usually the move in equities is larger than FOREX so this, frankly, is lame. I certainly hope equities "catch up", because God knows we could all use a break, particularly now that the dollar is cooperating.
Heavy Metal Thunder (by cccactii)
cccactii here with update on a silver chart that I did in an earlier post. I am very long and bullish metal, but we must prepare for some lightning and thunder, especially if we find ourselves on the "slope of hope" straight up silver chart. A big picture chart of silver shows that 30-50% moves to new highs in a 3-4 month time frame have always been fleeting when RSI above 70 flashes the warning signal.
We may be entering such a time frame soon. Risk will be high! Silver and Platinum are breaking out of recent resistance ranges at $18 and $1400 respectively. The dollar index is ranging around 75 and to my eyes ripe for a quick bounce. I have bought the UUP Dec. 23 calls at .10-15c and I want more at .05c for short term metal hedge, as there is no longer talk on the boards now of a dollar bounce, and Ben could not talk the dollar up earlier today. The dollar plunge seems too steep to continue without at least a random ranging bounce, but if it continues lower I am covered.
I want to eventually sell my metal but I have to have a competing value to adequately compensate me for the risk assumed in owning paper. I will move to paper (Cash,bonds,stocks) when the price of the dollar is very low and the risk assumed in owning paper is adequate. I want to be forced to sell my metal, not by gunpoint or confiscation, but by competition via price and interest rates. I do believe silver will make a new high above the $21 level, but if it happens in the next 60 days or so it will likely be too far too fast, and the straight up silver chart will flash "slope of hope".
If one had no metal exposure I would say the same thing that I have said since silver broke out above the $5.50 mark. If you believe in the long term dollar devaluation thesis, then you should buy a small amount to have it on the sheets, and then wait for better pricing to buy more, keeping in mind that the inevitable death plunge is always lurking out there. Metal and miner prices always go higher than I think they will and they plunge much lower than I think possible. Reasonable assumptions need to be made, and now is not the best time to be buying precious metals because the risk is higher due to the price.
Volatility reigns supreme in precious metals and patience and reasonable assumptions can be rewarding. It will feel wrong selling silver at $21 or higher in the next 60 days if the DXY is at or below 72. That will likely make it a great sale. I will likely sell my trading stock and paper into such an event should it come to pass, and slowly scale out of my core paper holdings if a major blow off is in the works. I may begin to practice the selling of some of my physical metal as well, but will try and take it one step at a time. Remember that I bought it for this exact reason that is unfolding now.
I did not buy it to stare lovingly at it when the public has fully embraced the idea, the dollar has crashed, rates are high, and it is common knowledge that precious metals are the only thing to own. That is the full realization of why I bought it, and I will need to practice selling as these events unfold. It will not, and has not happened according to my script or time line, or all of these things would have happened years ago. It has not been easy getting to this point in time and price as excessive debt and intervention have caused the instability we are seeing in all markets. We must be very careful!
Possible near term silver top in the works.
Silver recently traded between 16-18, breaking out above 18 today but a fast move to 21-24 or higher in the next 60 days likely wont hold, as the recovery moves also needed more time.
Platinum breaking out with only the old slope above.
Patience – You may be surprised that almost a year ago to the day Platinum was actually cheaper than gold even though it is roughly 30 times more rare than gold. I had never owned it, but at the time I made a reasonable assumption that having never seen it cheaper than gold it was likely safe to try it on for size. There was still one more chance to buy the 800 area after the pricing discrepancy. Gold price is in the lower window.
Finally I am making what I think may be a reasonable assumption about the dollar. It has a very steep gradation that we have seen several times over the past 10 years, where a bounce off the trajectory ensued. It is unknowable to me if this is such a time. Having a very large metal position, I am willing to lose money by buying some UUP DEC calls marked down over 60% in the last three trading days, as a short term mini hedge as my long term thesis gains popularity. Good luck to us all!
