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.
It All Lines Up
During the course of the week, I think I'm just going to create posts as drafts as leave it to Lovely Leisa to keep the rhythm of the blog going at her own chosen pace. Below are my thoughts on what I think lies ahead for the week.
Generally speaking, I am positioned for a modest-to-medium push higher followed by what I'm hoping is Le Grande Tumble. For the rest of June, I'm only going to be in a very small number of positions. I'm currently positioned for such a bounce, being long UNG, RTH, XLU, and FXE. My short on GLD seems a bit incongruous with this disposition, but I've got some my reasons for it.
I've got a bunch of charts below, so I'll just say a few words on each.
On the /ES, I'm looking for a bounce to at least 1103, if not a little higher.
A bounce on the EUR/USD might provide more fuel for the equity fire than I am anticipating. I could see the EUR actually getting as high as a little above 1.3.
The gold miners look positioned for what could be a hearty bullish breakout.
The $INDU's first target would be its 50% retracement level.
Likewise, a modest target for the MidCap 400 would be its Fib Arc. I'm expecting the most strength from the small caps, which I have not charted here.
The NQ's first upside target is shown below.
As I mentioned, I'm long RTH. A push to that long-term trendline could be followed by a very nice fall.
The 50% retracement on the S&P seems like a reasonable retracement target.
Lastly, the XLU, which I'm also long, could push to its descending line of resistance before falling hard toward that longer-term support line.
The best possible path for my positions would be a push higher, giving me a chance to reload my zillions of shorts at better prices in order to take advantage of a big fall. The worst possible outcome this week would be an immediate hard fall, since I'm not only not in position for it, but since I'm positioned (lightly) for a rise.
I don't intend to get really serious about shorting until July 1 at the earliest, and possibly not until July 6 or later, depending on price action. In the meantime, I am still going through my charts and tucking away those items which look best positioned for a hard fall after a hoped-for increase in price.
While Toshi’s Away……….
Tim will be away beginning sometime on Saturday. I will be lending a hand.
As I will be busy with client commitments next week, my time will be somewhat
limited. Nevertheless, my goal is to keep the content reasonably fresh and of
the same high quality that Tim's blog clientele expects.
To achieve that objective, I would like to prevail upon the community here to
step forward and help too. I'm going to be very specific about what I'm going
to ask you to do!
- Contribute Content: We have some talented writers and
traders here. Please contribute. Some ideas are technical indicators that you
use, good trades that you made (charts, trade reasons, expected exit,
stops)–and consider noting some bad trades that you've made and what you would
do differently in hindsight. Some of you have contributor accounts–please keep them stocked! For those of you who want to contribute, you can e-mail to me your contributions at leisa-va<at>cox<dot> net. While I will have limited time during the day to assemble your post, I will do so in a pleasing way to showcase your good work. Don't be shy about contributing.
- Shepherd others: I will use the automatic posting feature
which I deployed last time. When a post goes up, at the bottom, I will note the
time that the next one is to go up. Be mindful of the time of the next post and shepherd
others to it. If one of you could do a "new post" that would be great. Merely copy
the the text in the current post that I have up (It will be a 'new post announcement, time of next post and a link) and put it in the comments section. Friends don't let friends talk to themselves in a stale post comments section. Be a friend.
- Slope Wiki ideas: Tim made an appeal to put together some slope Wiki.
Let's put some creative thought into this! I have a dead blog on which I created a
page for you to go to and post some ideas. You can find that here.
The BP Long Case (by Springheel Jack)
Obviously there are few companies in the US less popular than BP right
now. They may even have overtaken GS as the least well regarded big
company there. Listening to the talk in the US media, and from US
politicians, bankruptcy is on the cards, along with seizure of all
assets and perhaps public lynchings for all senior executives.
Looking beyond the media storm though, BP is now dropping to a
support level that has held for many years:
In the bankruptcy talk there also seems to be an assumption that BP is a
single monolithic entity, which it isn't. The US operation owning the
well is BP America Production, which is a fully owned and limited
liability subsidiary of BP Company North America Inc, which is the same
in turn to BP Corporation North America Inc, which is the same to BP
America Inc, which is the same to BP Holdings North America Ltd, which
is the same to the overall parent company BP Plc.
That is a lot of layers of limited liability, and while anti-Brit
sentiment in the US, and therefore the US courts, is running high, the
top two companies in the chain would fall under the jurisdiction of the
British courts, where anti-Brit sentiment is at a low ebb.
Here's the BP corporate structure with the affected BP subsidiaries
in red:
Looking around for info on the web, the view seems to be that the whole
operation in the US has assets of $50bn, against BP assets of $160bn
worldwide.
Estimates of potential liability are hard while the leak is ongoing, but
the highest consensus view seems to be up to $50bn, for a company
generating over $20bn a year worldwide. That liability may in any case be shared with other companies involved with the well, including Transocean, the rig owner, Halliburton, Mitsui and Anadarko, among others.
Liability on these offshore wells is capped in US law to $75m, not
including class action and other lawsuits I think. US politicians are
looking at changing that retrospectively, but these sorts of targeted
retrospective law changes, while perfectly normal in (say) Russia or
Venezuela, have been traditionally regarded with hostility by both US
and international courts, and with good reason as they are a direct
attack on the rule of law.
However BP has been offering to effectively ignore this cap, which may
in any case be stripped away in the event that BP America Production is
found guilty of gross negligence. If gross negligence is demonstrated
(and that would be in a US court) then BP America Production and its
subsidiaries may well be bankrupted and liquidated, but the question
then becomes whether this would spread further up the line.
That seems unlikely, as unless it could be demonstrated that BP
America Production and its parent companies were effectively being
operated as one company, then the limited liability will stand legally,
and any attempt to strip it away by legislators is much less likely to
be supported in the courts than a retrospective change to the liability
cap would be, as limited liability is a legal cornerstone of US
capitalism in a way that doesn't really allow for exceptions made at
the whim of politicians.
All-in-all I don't believe BP US as a whole is going to go under, and
if it does then bankruptcy in the US wouldn't seem to threaten more
than 40% at most of BP's global assets in any case. BP's share price has
fallen 50% since the leak started, so bankruptcy in the US looks more
than priced in already.
I don't think that there's any realistic chance that BP worldwide could
be liquidated as a result of this mess, and any attempt to do so by US
legislators would be unlikely to achieve anything more than irritate the
British government, whose people are already doubtful about the UK's
very close alignment with the US in recent years, and not at all
impressed about Obama's habitually anti-Brit attitude in any case.
Support for BP at $27 may not hold, but at the least BP looks an
interesting speculative long there as it is the key major support level
for BP in the last fifteen years.
I thought that these articles were interesting, among others:
http://dealbook.blogs.nytimes.com/2010/06/15/bps-options-to-limit-liability-from-the-oil-spill/
http://ftalphaville.ft.com/blog/2010/06/14/260101/for-bp-breaking-up-is-hard-to-do/
http://www.nola.com/politics/index.ssf/2010/06/treasurer_kennedy_seeks_state.html
http://ftalphaville.ft.com/blog/2010/06/21/266581/bp-and-anadarko-turn-on-each-other/
http://www.bbc.co.uk/blogs/thereporters/markmardell/2010/06/the_gulfs_heavy_price_for_bps.html
http://www.wired.com/wiredscience/2010/06/bp-nightmare-email/
Charts of the Day (Harry Boxer)
Originally published on TheTechTrader.com
