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 Most Likely Path?

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The simple fact of the matter is that my profits are still coming from shorts. So while it's nice to stick with current positions, I (still) would be a lot more comfortable if we were able to tack 30-35 points on the /ES to lull the bulls back into a sense of complacency.

Where those 30+ points come from could be anywhere – Bernanke's potential confirmation on Thursday seems like a good candidate. Here's one possible path:


As I'm typing this, the /ES is up three points, but that is meaningless. Late night/early morning action over the past few sessions has been interesting in the context of the entire chart, but it certainly hasn't been a precursor to the normal session the next day.

No matter what, tomorrow (Wednesday) is just about guaranteed to be interesting. Between the JesusPad, FOMC, and the SOTU, there's going to be all kinds of fireworks. Let's hope for us traders those fireworks turn out not to be duds! I'll see you in the morning.

Meet Giledain! (by Biffermas)

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Biff:  Gil, thanks for agreeing to
this “interview”.  I suspect that Slopers are interested in what
makes the great Giledain tick.  What is your language
background, and what was your career before trading?

Gil:  Oboy, my
first interview ever! Well, Biff, I came from humble beginnings…

*agent shakes head vigorously*

Aah, er, my aptitude for languages is probably
genetic. Dad was also easily multilingual, taught me Spanish when I was a kid
in NYC. Then came French, when we moved to Belgium. Italian was easy after
that. The military gave me Arabic and, due to my being stationed on Crete, gave
me access to Greek as well. Moving to Sweden brought me into contact with the
Scandinavian languages.

My career before trading was linguistics, teaching at
the local university.

Biff: Do you primarily trade the
American markets? 

Gil: I only trade the American markets. Hence the apparent
insomnia: live in Sweden, trade in the US.

Biff: How did your transition from
University linguistics to trading occur?

Gil: My father died and left
some money behind. He had trained me in deep value investing (his father had
been a stockbroker). I couldn't be bothered reading tons of quarterly reports
and so opted for trading.

Biff: Where you prepared to live off the
trading income when you jumped ship?

Gil: Yes. I only jumped ship
after making a bundle during the dotcom craze. That was partly through pure
dumb luck, coupled with a native paranoia and market war stories passed on from
the older generations (see above).

Biff: What's your protocol and procedure
for selecting a trading position?

Gil: I trade NDX options almost
exclusively. They are not as illiquid as folks might think and they keep my
commissions low. My trading positions tend to be spreads on the one side,
hedged by a few long options on the other side. If/when the spread side starts
confirming my directional analysis, I start either hedging the hedge or, less
often, take it off entirely. This usually works like a treat; the few times
I've gotten slammed over the years (eg July 2009) is when I've let conviction
trump discipline and mismanaged the hedge. The trigger for entering these
positions are invariably new highs/lows on the index which exhibit lessening
momentum under the hood.

Biff: How do you determine lessening

Gil: I keep it pretty simple.
Among other things, I track the individual performances of the NDX components:
for example, when new highs are made but the number of components closing in
the green drops we usually have a divergence indicating the classic
"momentum high – price high" is in place. If the momentum strength
has been off the charts, I tend to err on the side of caution and await a third
or perhaps even fourth thrust before initiating the spread. Again, recent
exception was July 2009; big mistake. The long option hedge is in place in the
event I am facing a 1999-2000 situation or a shallow correction that soon runs
its course.

Biff: Do you attempt to trade broad
trends, or is your timeframe more limited? Do you have a sense for where the
market is heading?

Gil: I would say my main method
is a combination of trend and countertrend. The long options are not
necessarily there just as a hedge; they are in alignment with the larger trend
and can be used as such. The spreads can be hedged (eg via butterflies) or
pulled or even reversed if the trend reasserts itself with little or no
correction (viz. November 1999, late September 2008). One of the advantages of
this system: flexibility. And your account doesn't get blown to pieces.

I have a sense of where the market has headed in
similar contexts in the past. However, as these contexts rarely get anywhere
near a statistically sound sample (30 data points) I'm open to all
possibilities and pay close attention to my indicators. In other words, I envisage
scenarios but do not presume to guess which one the market chooses in advance.
Except in July 2009.

Biff: You've been trading for a decent
length of time over many disparate market conditions. Which components of your
trading plan  (indicators, asset classes, techniques)  have
been discarded over this span, besides the deep-value investing?

Gil: Although I do miss it sometimes,
the big component which disappeared fairly early (around 2003) was individual
stock trading. Partly due to an aversion to company-specific risk but mostly
due to my ADD, which gets sorely tested once the trading portfolio starts
moving over ten positions. I'm the exact opposite to Tim Knight in this respect
(winks). As for discarded indicators, all volume-based ones were dropped once I
realized that indices can be bid up on punk volume (at least as reported by the
exchanges) far longer than traditional TA would suggest was reasonable.

Biff: What is your life in Sweden
like?  How did you end up living there?

Gil: We expats in Sweden have a
saying about life in this country: we call it living in a giant marshmallow.
It's soft and enveloping but when you try to get out you find it's darned
sticky as well.

I enjoy living here, despite all my grousing. It's
like being in one big small town, stretching from Florida to Texas. Which is
ok, especially if you're raising a family.

I met a cute Swedish blonde in the 'ville (Chersonissos)
while stationed on Crete (Iraklion AS). She convinced me to come home with her.
I was powerless to resist.

Biff: Describe your sleep schedule.

Gil: Gosh, it's five in the morning and I've
been Sloping all night. OK, let's try to get some shuteye.

*Riinng* Hey bro, it's Joel. You gonna show up for
some b-ball tonight?

*Looks at clock. Nine in the morning* Hey, man. Yeah,
maybe. G'nite.

*Riinng* Hej mitt namn är Johan. Jag ringer på
uppdrag av…* No, dude, I don't need more insurance. Hej då.

*Riinng* No I don't need more insurance! Oh, it's the alarm clock. What,
two in the afternoon already?

*Fires up systems* Futures are up. Another day
another dollar. *Sighs*

Biff: What are you passionate about now,
besides trading?

Gils boat Gil: Sailing. Nothing like flying across the water like
an arrow shot from Apollo's bow! 

Biff: So it's sailing, pouch dip
tobacco, and the Slope, eh? Are you an ocean man, and what type of vessel do
you sail? Do you have any grand plans of sailing long distances?

Gil: I sail a Swedish-constructed classic called a
Neptunkryssare. One/two-man crew, built for speed.  I would love to
sail long distances but haven't really got the contacts for that. The
Neptunkryssare is a versatile boat but long-distance sailing? Um, nah.

Biff: Everybody has a rosy view of the
future. How do you see the rest of your life unfolding? Any grand plans beyond
what you're currently doing?

Gil: Having a rosy view of the
future is everyone's birthright, Orphan Annie tells us that. But the best I can
do for now is to trot out the old chestnut about "getting better with age,
like fine wine" and hope that is my fate. I come from a long line of men
who stay young way beyond their years but the tooth of time misses no one. I
have no plan for the rest of my life besides the end, where I die rushing down
the wind with the kiss of the sea on my mouth. Oh, and I want to visit the
Arctic, the Antarctic and the Far East and go on a safari. And finish building
that darned Harley. Grandchildren would be nice. And I have yet to taste
Lobster Thermidor. See the Yankees play again. Orbit the earth. In fact, let me
get back to you with a list; this could take some time ;-).

Biff: Who in popular culture represents
your ideal woman?

Gil: Difficult one. If popular
culture means singers and actors who are currently active, I'd go with
 Jodie Foster. She's
very smart, a talented thespian, girl-next-door cute and personable and… I
don't know if you saw her on Ellen… damned funny!

Biff: Thanks, Gil!

Move Your Money!

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Today, I put my money where my mouth is. Literally. No, no, wait – figuratively. Well, my point is that I took action based on a principle. Specifically, that big banks are evil and should be avoided.

Some of you may have heard of MoveYourMoney – – I was told about it a few weeks ago. The basic premise is that, between the bailout and the risk they entail, big banks are bad news for citizens of Earth, like us Slopers here, and it's time to move your money out of your big bank and into your local community bank.

Now, I've been with Bank of America for decades, and although I liked the idea of MoveYourMoney, my initial reaction was that it sounded like a bit of a pain. I mean…….new checks, new ATM card, changing auto-pays, and all the rest of it. But it kept gnawing at me, because I felt it was the right thing to do, and today I took the plunge………..


Now, the fine chap on your left is your humble narrator, and the fellow on your right is Tom Fehrenbach of Borel Bank. So for my fellow Bay Area citizens, Borel Bank – which received really high ratings from the research I did – has branches in Burlingame, Palo Alto, Los Altos, and San Francisco. Please call Tom at 650-463-8717 or email him at if you're interested (and, no, I'm not getting anything for referring folks his way; come on!)

For those not in the Bay Area, MoveYourMoney has a handy Find a Bank link. This will help you find a bank in your own community.

The bottom line is this – there's no shortage of huffing and puffing on Slope about the banks. If you're serious, then do something about it! My account isn't going to mean that much to Bank of America, but it's six-figures large, and that means there's a seven-figure amount that they can no longer lend out (ahem, not that they're lending much anyway these days). Take action! Leave your big bank! Take a stand! Move Your Money!