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.

LQD Lunch

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My understanding is that the bond market tends to be a good deal wiser and less prone to chicanery than the stock market, and thus it often serves as a vital clue to when a market is about to head lower.

On March 16, LQD – the ETF based on investment grade corporate bonds – had a nice bullish breakout which should have presaged a steady series of much higher prices. Instead, on March 24th, the breakout failed, and the pattern is invalidated.

Failed bullish breakouts at the top of hugely upward runs are a favorite of mine, so I shorted this a day or two ago. It's a slow mover, but I think it could easily be worth a couple of points on the downside.

0330-lqd

Sloper Profiles: Biffermas (by Leisa)

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(Note:  Biff has been a tireless chronicler of the affairs of Slopedom. 
I wanted to turn the table and interview him for Slopers.)

Leisa: 
Biff, I still remember very vividly your entrée into the SOH. I found
you to be a very fresh and interesting voice–I have to say, too, that
your moniker, Biffermas, had a certain odd crispness to both my eye and
ear. I'd like to start by asking you how you found SOH.

 
Biff:  I merely stumbled
upon it while doing a Google search of some financial thing or another. 
It immediately struck me as something unique given the large community
that actively participated in the forum.  Until then my only exposure to
trading forums was through Yahoo Finance, which is inhabited by various
trolls, stock pumpers, and generally unpleasant people from the
internet underground.  Slopers were respectful, intelligent, and
committed to the site.  Weird! 
 
In the community trading blog
genre there are many excellent sites, but most are focused primarily on
the exchange of trading ideas.  This is valuable, but I find such
interaction kind of dry after awhile.  Besides, I have a trading plan
and style, so I'm not looking for "hot tips" and new ideas.  I like the
waffle house / neighborhood bar feel of the Slope, where random
conversation occurs alongside trading topics.This seems kind of dry, but
I don't know quite how to make it interesting.

Leisa:  What aspects of your
personal life would you like to share with Slopers?


Biff: This is a tough one
to answer, since personal life stories can be quite boring.  I was born
in Utah in 1970, and spent my early childhood in Northern California
while my dad suffered through a medical residency in Santa Rosa.  My
parents divorced when I was seven and I moved back to Utah with my
mother.  I was raised Mormon in various backwater locations until I
declared war on authority at 14.  Ironically I received my Eagle Scout
award just prior to this phase!

During my teenage years I exerted full
independence from mankind and made all kinds of bad decisions, which
took years and needless stress to recover from (I won’t go into details,
here).  Being a young fool I joined the Army Reserves at 17, and went
to basic training upon graduation from high school.  College was a much
needed clean slate and I capitalized on this by playing the academic
game as well as possible.  

During this time I married Mrs. Biff at a fairly young age (22), and she
gave birth to little Biff five months later.  We’ve had a great life,
the three of us.  After finishing at the University of Utah we moved to
Milwaukee for dental school at Marquette University.  Four years later I
graduated and was accepted to the orthodontic residency, which took
another two years.  We moved to Colorado, bought one practice and opened
another, and we found ourselves in our early thirties with well over a
million dollars in debt (since paid off).  I should note that Mrs. Biff
is a pediatric dentist, and we share a practice together.  
 
I’ve
had many hobbies, which I consider to represent on of life’s great
pleasures.  Among my favorites are: brewing beer, distilling hard
liquor, making wine, hydroponic gardening, construction / wood working
(I built the trading room / tiki shack shown in the picture, below), skiing,
mountain climbing.  I even went through a brief quilting phase, which
I’ve been mocked for incessantly!
 
Leisa: I've enclosed a picture of your wine room.  Is that
one of your quilts on the floor?
Biff: The quilt shown is something we
purchased at a
charity auction.  Boulder Dental Aid holds an annual fund raiser that we
support.  The money keeps a practice for low-income children
functioning.
 

Leisa:  I'm quite fond of the FatBoy Slim Weapon of
Choice video that you introduced to the Slope.  With respect to
trading, what would you describe as your Weapon of Choice? Are you a
futures, ETF, single equities guy, or a Renaissance man?  Also, what
time frame (short, intermediate, or long term) time frame do you use?

 

Biff : With any new profession or serious endeavor it’s
important to initially expand your knowledge base and be open to a huge
spectrum of ideas and styles.  Many assorted professions (including my
field of orthodontics) follow this philosophy.  What ultimately happens
to any effective professional is they submerge the vast majority of what
they’ve learned and focus on a single, predictable technique that works
for them.  This often takes years of practice to achieve, and some
never quite arrive.  The most dangerous surgeons are those that never
settled on a coherent, reproducible style for any given procedure they
perform.  Having a patient on life support and splayed open is no time
for contemplation and second-guessing oneself (insert your own trading
analogy here…)

 
Following
this process I very effectively formed a tremendous cloud of trading
information which led to my “paralysis by analysis” phase.  This lasted
many years, and I’m still shedding needless “baggage”.  I eliminate
concepts and ideas that don’t suit my purposes in a very Darwinian way. 
Through my experience trading I’ve tried countless methods for various
lengths of time, but ultimately always returned to what suits my personality:
day-trading with futures.  I’m not altogether comfortable in what that
says about me, quite frankly!
 
My trading knowledge came from
persistent personal study, but my trading style is assembled largely
from what I learned here on the Slope from people like you, Market
Sniper, Giledain, ComicFX, Viscous, and many others.  The willingness of
our friendly community to share and help others out is quite
remarkable.

Leisa:  We know that with most of things that we
undertake in life, those that challenge us help us develop needed
skills.  However, those challenges also unearth some weaknesses.  Would
you be willing to share with Slopers your single greatest strength and
how you've developed that in addition to your single biggest weakness
and how you have compensated for that?
 
Biff:  Ironically my twin strengths
also periodically become my twin weaknesses.  They are, 1- my
obsessive-compulsive focus / stubbornness, and 2- my comfort level with
risk taking.
 
If
compelled, I can tackle a single subject or problem for 18 hours a day
and months / years on end.  I refuse to give up until the issue is
solved to my satisfaction.  Naturally this becomes a net liability at
times as well, since virtually every other aspect of my life falls
dramatically on my priority list.  Trading is unique because it's been
my major extra curricular passion since 2002, far longer than any other
obsession has retained such a lofty status.  My comfort with taking a
risk has been a huge benefit in my life in general. I've never minded
moving to a new city, opening a business, taking on debt, initiating a
trade, going to school for protracted periods with no income,
etc.  Occasionally this risk-taking backfires.  I’m ashamed to admit I
purchased my house in May 2007.  Talk about lousy timing!  My penchant
for risk taking has also caused some hardships in a few areas. Starting a
practice from scratch resulted in zero income for two years, and I blew
out my trading account as a noob in 2002.  Overall, however, one must
take a chance or remain stagnant in life.

Leisa: If you had only one minute to spend with an aspiring,
avocational trader, what would you want to say to that person?
 
Biff:  Focus on defense.  This game
might appear easy, but it isn't.  You will come face to face with the
darkest aspects of your personality.  There are some basics that you
should follow until you become comfortable with your own trading
psychology and methods.  If you find yourself violating these, you
should seriously question whether you have the makeup for trading,
because you are heading for disaster.

  •  Have a reasonable
    stop for every position you place.  Allow your stops to be hit without
    flinching.
  •  Don't use excessive leverage, and don't attempt to
    hit home runs.
  •  You are a student, and you must be willing to
    spend the time to learn.
  •  Avoid “gurus.”  Have faith in
    yourself.
  •  Eliminate the risk in any trade early by taking
    partial profits and raising your stops.

 
Leisa:   You trading room looks very
inviting! Biff, thanks for taking the time to share a few things with
Slopers. There is a reason why I call you Bifferific!

Happy 5th Birthday, Slope of Hope!

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Well, it's finally here. Today – this very day – Slope of Hope is five years old.

I started this blog under some pretty happy circumstances. I had, just two months prior, finally sold my company (Prophet Financial Systems) after growing it over a thirteen-year period. Those thirteen years were filled with big ups, huge downs, and a few miracles along the way. It was the farthest thing imaginable from an overnight success story, but it was a testament to persistence and the talent of those who worked at the firm.

I had been reluctant to start a blog, even though I had been a writer in other forms for many years. I felt that starting a blog was just a "trendy" thing to do back in those days, and there wouldn't be any point to it. After quite a bit of external urging, I finally signed up for a free Blogspot account and put together my first post for an audience of zero people. You will not be surprised to know that the post was about a bunch of bearish trades I had put on.

The audience grew from dozens (friends & family) to hundreds (Prophet users) to thousands (as word of mouth spread) to millions (OK, that's not true – but it seemed the natural next step).

Slope has, over the years, developed its own culture (and even its own language). Even though the markets have been through what seems like fifty years of changes in the past five years, a few things have remained constant on this blog:

+ A certain level of bearishness (ranging from jumping-up-and-down apocalyptic to, more recently, tempered and mildly skeptical ruminations about the state of the world);

+ Plenty of charts;

+ A deep level of commitment and, when needed, protectiveness amongst Slopers

It would be more mirthful – is that a word? – to be celebrating this quintet of solar cycles were it not for the preceding annus horribilis. But God knows we've gone through worse and, in the end, prospered. I want to extend my humble appreciation to everyone here for being a part of this little corner of the web.

What we're doing collectively is important, I think, for our mutual edification. You helped build it. Thank you.

From this day to the ending of the world,

But we in it shall be remember'd;

We few, we happy few, we band of brothers;

For he to-day that sheds his blood with me

Shall be my brother; be he ne'er so vile

0329-birthday 

10 Year Yield Inverted H&S (by Gary Tanashian)

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Excerpted from the March 28th edition of Notes From the Rabbit
Hole, NFTRH78:

When viewing the current market situation through a lens of
inflationary policy vs. natural deflationary forces seeking to correct
sublime levels of excess, a geek like me looks at the chart of the TNX
and is absolutely transfixed.

Tnx

Pictures like this, rather than the likes of the nominal Dow above are a
big reason for the ongoing ‘risk is high’ droning in NFTRH. It is no
coincidence that the risk profile was raised from the previous bullish
stance as the TNX spiked to form the neck line at 4% in late
spring/early summer, 2009.

The crux of the issue is that a
breakout from the Inverted Head & Shoulders targets 6%. A
correlated rate on the 30 year bond that we usually watch is close to 7%
off of a potential H&S of its own. The problem is that these
levels trigger our biggest picture monthly ‘line in the sand’, the 100
month exponential moving average, which changes something that has been
assumed for decades (the US government’s ability to use its treasury
bonds, its confidence, to inflate at will by selling debt and printing
money). The implication is that the change would be a secular thing,
possibly introducing a hyperinflationary spiral.

I must admit to
being confused by Captain Bernanke’s ‘damn the torpedoes’ inflationary
approach in the face of a bond market on the verge of rebellion while
certain Fed members sound increasingly hawkish tones. The wizard’s
‘backbone’ is that line – the monthly EMA 100 – under which treasury
yields have remained for all those decades of confidence. The neck line
shown above, if broken, triggers a level that busts the backbone.

We
are at an extremely high risk juncture for both hyperinflation and
deflation, because we are right on the line between the two with no
confirmation yet as to which way this thing is going to break. Some Fed
officials have expressed concerns that relate to the picture above, but
thus far, the one who matters most, Bernanke remains unconvinced that
inflation will become a problem.