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.

Moral Hazard Comes Home to Roost

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Back in the days of the bailout, there was a lot of talk of "moral hazard" – – that is, by bailing out investment banks that had taken oversized risks, the federal government was simply encouraging them to do the exact same thing in the future since there was no real consequence to their action. The government went ahead and bailed almost everyone out anyway, as the notion of moral hazard was brushed aside as a nettlesome, academic inconvenience.

But moral hazard is real; we humans tend to notice social norms, be they right or wrong, and ape them ourselves.

I was reminded of this yesterday when reading this article from the New York Times. It discusses how the vast majority (like 95%) of people badly underwater on their home equity lines of credit are simply choosing to walk away from these obligations.

Now I realize there are a few bad apples in every barrel, but what shocked even me about this article was how universally shameless the Americans were in the article. It stated that in the rare instances that a lender bothers to take legal action, they can get about ten cents on the dollar (if that), and that a firm which buys loans from lenders is paying about $500 each, irrespective of the size of the loan ("Anything over $15,000 to $20,000 is not collectible…..Americans seem to believe that anything they can get away with is OK.")

Why do the borrowers…….people who supposedly signed their good name to a stack of papers committing them to an obligation……..feel it's OK to dismiss these obligations?

+ "They are simply rebuilding their ravaged lives";

+ "Banks were predatory in making loans";

+ "Banks were bailed out";

+ "I am not going to be a slave to the bank…….maybe (the loan) will just go away"

And, my favorite…….

+ Since the lender made a bad loan…a 10 percent settlement would be reasonable. "It's not the homeowner's fault that the value of the collateral drops."

Read that again. Read it a few times. It's not……..his………fault.

So let me get in touch with the douche they quoted and borrow $100,000 to buy a speculative stock. If it soars in value, I'll return his $100k. And if it collapses……..well……….it's not Tim Knight's fault that the collateral dropped, is it?

Well, is it?

I must say, I'm disappointed in my fellow countrymen. This is just wrong.

Jerking Back and Forth

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There's a new version of ProphetCharts (a product you can learn so-much-more-about here!) and I wanted to point out a couple of spiffy new features.

First off, there are "Previous" and "Next" buttons, located to the left of the symbol entry. These let you thumb back and forth through charts you have seen before. For instance, if you enter ten symbols, you might want to "flip back" to see what you were just looking at, so these buttons let you move back and forth through your symbol history, much like a browser.


We've also added Sectors, a new module. This is really terrific, not only because the sectors and sub-sectors have individual symbol components, but also because the sectors and sub-sectors themselves are chartable! I had great fun last night looking at 10-year daily line graphs of these various groups. "Top-down" traders are going to love this!


I hope you enjoy these new ProphetCharts goodies; there are more on the way all the time.

No Real Target Hits Yet (by Springheel Jack)

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I've read that after a trend day it's normal to see two to five days of
retracement unless the market is really trending strongly. ES closed up
from the low yesterday but SPX was down on the day and the opening gap
wasn't quite filled though it came very close, as was the case on
Tuesday as well. We've now had three days of unfilled down gaps and a
failure to rally after a trend day on Wednesday. That looks very weak.

Of the main retracement targets that I listed on Tuesday, nothing has
yet hit target though GBPUSD is now very close, and if SPX opens  in the
1072 area then it will have hit the lower trendline of the possible
rising channel. Here's the SPX daily chart:


Here's the GBPUSD daily chart, where we may now be seeing a technical hit, though I'd like to see it go a little lower:


As for the others I posted EURUSD is well short, oil has come close and
is only 80c short of the 75.15 target as I write. Copper and AUDUSD are
both still well short.

Looking through my indicator charts the Vix has met target if this is just a correction:

100813 Vix Daily Falling Wedge

The gold/silver ratio chart that I used to call the recent top is well
short of where I would expect to see it on a real low here though:


The SPX:Vix chart is also well short of where I would expect to see it:


I said on Tuesday that I was expecting to see the low for this move on
Monday to Wednesday next week, and I'm still leaning towards that at the
moment, as my downside targets have not been hit and and I'm not seeing
much to suggest a bottom here yet.