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 Gaps

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Interesting day so far, isn't it, folks? I strapped on for a very bumpy ride this morning, but before I knew it, a triple-point explosion on the Dow had been utterly neutered.

Earlier on, I was tempted to take on a big position in GLD, just to act as a salve, but I stopped myself. I noticed the price was simply pushing up toward a gap (and this was about when I was thinking of buying), and although I am more ignorant of gap behavior than I would like, I didn't think it would be wise to jump it, so I didn't. Thank goodness.

0129-GLD 

 

I read about trading pretty much constantly, so I think I'm going to take it upon myself to learn more about gaps, since my wispy knowledge of them definitely saved me here.

Bear in a China Shop II (by Fayssoux)

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The China bust story is gaining increasing exposure, for good reason.  The timing and character of the decline is incredibly hard to predict.  I came upon an academic study by XU Xiaonian, a professor at a business school in Shanghai.  It makes many salient points, and echoes Chanos comment that China is "Dubai times 1000," although in an understated way.  The monumental stimulus of the last year has been heavily state-funded and directed at infrastructure and real estate (not manufacturing).  The resultant loans are quite shaky. The story of when and if this investment goes bad could take years to unfold. Here is one chart from his study:

Post or Late Crisis Jan 10 

Nearer term, the Baltic Dry Index, which is one measure of the demand for commodity imports, continues to look soggy.  The "sugar high" seems to be wearing off.

 BDI 

  
 Lastly, the China-dependent commodity stocks are seeing holders vote with their feet.  PCU is one example of many:

 PCU

Strong GDP and a Firmer ES

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Well, for once the economy got a bit of good news, and the equity market's initial reaction to it seems positive. The GDP just came in at 5.7%, the high end of estimates, and the /ES – which had been down to nearly 1070 during the night, is at about 1087.50 as I'm typing this, up 8.50 points.

I think the market is definitely due for a bit of a breather, although I'd appreciate it if the PTB kept it below the weekly high of 1103.50.

0129-es