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.

Greetings from The Jersey Shore

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Jerz shore 


After reading countless postings on numerous blogs (don’t worry, Tim – SoH is still #1 in my book) it’s abundantly clear there’s no shortage of opinions out there. And we all know what they say about opinions, right? Some of these bear case scenarios are well-articulated and thought-provoking. Hell, some of them might even end up being correct too! For example, we can all provide plenty of reasons why China is going to be the new economic powerhouse. But it’s just as easy to explain why over-investment in China will hinder their economy. And the list goes on. We can theorize and debate, but ultimately it’s the charts that tell us how right, or wrong, we are.

Below I have included a chart of the Wilshire 5000, a very broad measure of stocks. You will see one window has the weekly bar charts for the past 11 years. The other window has the 50, 89, 150 and 200 day exponential moving averages. Normally, I add the standard deviation of the moving average as a buffer, but I will forego this for now. If we’re in a bull market, the chart should look like this: 50 day EMA on top, followed by 89 day EMA, then 150 and finally 200. The reverse is true in a bear market. As these averages transition from bull to bear mode, you should also be seeing a change in the chart pattern (ie: head & shoulders tops, broken trendlines). I marked bull & bear based on the golden cross or black cross (50 EMA crossing the 200 EMA). Simple, simple stuff.

Greetings from the Jersey Shore Chart

The big patterns (which no one can manipulate), the multi-year trendlines and the moving averages are all telling us the same story: we’re in cyclical bull mode. I’m not Pollyannaish enough to tell you we side-stepped the crisis and from here on out everything’s “coming up Milhouse”. I’m all for speculating as to what the next macro-catastrophe will be, but I’m also interested in keeping my head long enough to trade it.

That’s all for now. Happy New Year.

With love (the kind you pay for),

Scalded Chimp


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Twenty-Ten has arrived, and of course I wish all Slopers a Happy New Year. I had a pleasant – although typically quite tame – celebration, and I'm going to spend the day packing up and taking the long drive home.

If there's one graph that, in a nutshell, captures the essence of 2009 for me, it is the one below. It's nothing fancy – just the UCPIX mutual fund, based on the double-inverse of the Russell 2000. It nicely expresses how 2009 was a fantastic, virtually uninterrupted, bull run.


But there's another graph with meaning for me. Yesterday, when I was involved with something else, I glanced across the room and happened to glance on my big screen a graph of DIA (the Dow 30 ETF). It was almost like a cheesy romantic moment ("across the room, their eyes met…….") because I was absolutely struck at what a marvelous graph it was. More on this in a moment.


OK, the moment has passed, so I'll continue: if I had been simply dropped into January 1, 2010, having missed 2009 altogether, I would look at a graph like the above and start doing handsprings. I'm a chartist. I rely on them for my decisions. And a chart like the one above is a slam-dunk, jumping up-and-down, scream it from the rooftops short.

Now, since I did not in fact give 2009 a miss, it's a little awkward expressing these sentiments, because just about every bearish notion and postulate in 2009 led to little more than looking and feeling foolish. But, even with all the ruckus last year, I am trying to see things clearly. And I really, really like what I see.

Added to which, it agrees quite nicely with my long-term chicken-scratch about the market, which has been spot-on since I scribbled it together 20 months ago (newer readers, please note the date axis is meaningless). I am entering the new year with 50'% of my capital committed, virtually all of it to bearish positions. I intend to augment the positions that do well as time goes on.

Now, I don't get real hung up on any kind of magical meaning to the new year. Those people that pledge to lose weight? Most of them will stay fat. Those folks who want to kick smoking? Most of them will keep puffing away. Personalities, habits, and dispositions are difficult to change, and human nature isn't known for its strength and determination in the face of inertia.

Likewise, just because 2009 was brutal for the bears doesn't mean that 2010 is destined to be great for them. But I'm cautiously optimistic, and if I may offer my own attempt at a resolution – in spite of my cynicism about the tenacity of such things in general – it is to more fully accept responsibility for my trading successes and failures. I think I've been pretty good about this, but I could definitely do better, and I think such a frame of mind is healthy for a trader.

So with that, I will commence a long day of packing and driving. Enjoy the long weekend, and I'll be back on the blog first thing Saturday morning.