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.

Are We Underestimating the Bear?

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Having endured The Lunge, and now having entered The Plunge, most bears are still too scared, shell-shocked, or broke to do anything about it. Even yours truly – the bear's bear – has been holding back to some degree, committing typically about 2/3rds of his cash at any given time to bearish positions (the remainder being in cash). I had advanced to the 90% level Friday, but the day's pause and, later, strength, caused me to scamper down to a 50% position. I am back to the 60% level right now.

I truly expected to have to buck myself up today, assuring myself to be patient while the bulls bid prices up. Such a pep talk wasn't necessary. The Dow has lost its grip on 10,000, and there wasn't a single area where the bulls put up a fight today, including the battered precious metals kooky zone, which was particularly hard-hit.

I think we need to keep in mind that broad market movements don't give you chance after chance after chance to get in! I've flipped the NASDAQ Composite upside down, below. The 2008/early 2009 plunge was lightning-fast. The 2009 countertrend rally wasn't as fast, but it was just as massive. Now that we're in the early stages of a downturn, I'm wondering if I'm pussyfooting around too much.

0208-bearbull 

There are a couple of slightly disturbing bullish heartbeats out there, most particularly the EUR/USD, whose potential rise would push equities higher. The EUR/USD is on a pretty major fan line.

0208-bulleur 

Also, the $OIX (oil index) is at the support level of a Fibonacci retracement.

0208-bulloix 

Based on the bolt-from-the-blue rally late Friday, and the potential weakness in the US dollar, I tried my hand at a few bullish positions today – – DIA, DDM, DBB, and SLV – – and took a hit in every one of them. The bearish side of the equation utterly dwarfed those losses, but the bottom line is that there was definitely a cost to the "insurance" I was paying for, since the bulls utterly dropped the ball today.

The bearish argument is vastly stronger. First up, the $HUI, suggests that pain in kooky-land is going to continue for many months to come. Just look at the pattern from 2008.

0208-bearhui 

Technology looks like the tumble is just going to continue as well. I keep a set of retracement lines based on the lifetime minimum and maximum on the $MSH, and the peak we saw last month was basically 100% dead-on the money (it exceeded the line by something like a few hundredths of a percent).

0208-bearmsh 

And the all-so-important broker/dealer index seems hosed beyond all redemption. Without strength from banking and finance, the bulls might as well go on vacation for a few years.

0208-bearxbd 

And there we have it. I continue to trade nervously, looking behind my shoulder at all times for signs of any rally. But it seems to me these rallies are shrinking, having moved from lasting weeks at a time (last summer) to days (this winter) to hours. I want to profit from the market's drop as much as I can, but I want to do so without getting badly nicked during the inevitable pops higher we're going to have along the way.

An Alien Observation

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I imagine some of you have recognized that when you first arrive somewhere new – particularly a new country – you are able to observe far more interesting and unusual things about the culture and the surroundings than the natives there. It's understandable, because they have become inured to their surroundings, whereas it's much easier for a newcomer to notice things.

I had a similar experience yesterday, during the handful of instances I glanced at the Super Bowl. I was mostly interested in the ads, and I started noticing a consistency among them. They seem to be playing to an audience which:

+ Feels oppressed by others (their girlfriends/wives/bosses) and is deeply embittered by it;

+ Desperately needs a way to express their inner Id – often by way of a noisy, unattractive American car;

+ Finds people in their underwear really, really funny

In other words, it seems the target market is men endowed with the minds of twelve-year old boys (with the aforementioned oppression being delivered, at that age, by teachers and mothers). I offer Exhibit A:

Why are Indicators Important? (by Gary Tanashian)

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Hi Slopers, this is a post I just put up at my regular blog, and thought some people here might appreciate the message.  Although I am sure my geekoid status is probably more information than you want or need to know. :-) 

Here on SOH, you have seen me ramble about the importance of the Chinese FXI as it led the SPX southward, the gold-silver ratio as a measure of liquidity (or lack thereof) and other things I use as indicators to try to get a leg up.  Looking at the nominal SPX chart, I do not see a whole lot of difference from the June/July event.  But this time I expect a very different eventuality after some upside relief to around the SMA 50.  Anway, the post…

Why is it so critical to watch indicators like leading market ratios,
sentiment, the ratio of gold to silver, money supply, etc.?  Well, one
look at this nominal SPX chart provides an answer; trying to figure out
the nature of a similar downturn to that of last June/July devolves
into a mere guessing game if all you go by is straight technicals on
the SPX daily chart.

SPX dumped the neckline of a small H&S topping pattern, spent 4
days below it and then said screw this, time for hope and greed to make
a triumphant return.  It was right around that point that I began to
realize that my projections for the duration of Hope '09 might need to
be expanded.  Boy, did hope and denial ever expand… right into this
latest break.

Spx 

 

But it is more complex than simply watching indicators.  The
gold-silver ratio for example rose strongly in June/July (implying
market downside), but broke out of its weekly downtrend line for only
one week before falling back.  Current weekly GSR has now completed two
full  weeks of breakout from its most recent downtrend line, has
constructed a good looking MACD and formed an inverted H&S bottom
pattern.

Yes I know, you have to be a total geekoid get-a-lifer to be into this
stuff.  Well, if you knew me in real life you would see that I am not
very cool and do not display a dynamic personality.  But I am into this
shit because – call me weird – I just love to make money or at the
least, preserve capital and remain as detached from convention as
possible.  It's the secret recipe of succeeding in the financial
markets.

Sorry for the self-involved last paragraph but you must understand,
you, the blog reader are all I have got (aside from NFTRH subscribers
who actually assign a monetary value to my opinions) when it comes to
communicating these things.  In real life nobody but nobody wants to
hear it.  Now that's
weird if you ask me.  Most people want to make and protect money, but
when it comes to the necessary work to do so, it's not happening.

Thus ends another technical analysis post that jumps the track.