Slope of Hope Blog Posts

This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.

For-Profit Education Scamboozle

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In my large, personal database of personal opinions, there are a couple of rows relevant to this post:

+ Educating and/or retraining people to do different jobs is usually an exercise in trying to fit a square peg into a round hole;

+ Any time the federal government injects itself into free enterprise, it mucks things up, usually bleeding money to the corrupt and losing money for the taxpayers it ostensibly represents.

This weekend, I was reading about how the for-profit institutions (the kind you see advertising constantly on daytime TV to the people in their lounge chairs who are out of work) depend very heavily on federal handouts to cover their exorbitant tuitions. I (naively) never knew that these places actually sucked down federal money, but they actually account for 25% of all the higher education handouts (whereas the other 75% go to students of real institutions of higher learning, like Stanford and Princeton).

It turns out that these very fishy enterprises are starting to wither away quickly, now that a little scrutiny is being applied. Recent investigations showed that 100% (yep, 100%) of all these public for-profit institutions had some level of corruption in their operations, and forthcoming regulations are going to cut off federal handouts to those places whose "graduates" default on their loans (the default rate is currently around 75% at some of these places!)

It's nice to see that, at least in a small way, a tidbit of accountability is starting to see the light of day. Below is recent price action for Corinthian "Colleges" (COCO):

Picture 1

When Will the Analog Terminate?

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One of the very few unpleasant aspects of doing a widely-read blog is that, from time to time, I get a nasty email. Here's one I got yesterday:

from Mark Everett <markeverett00@yahoo.com>

to trader.tim.knight@gmail.com

date Sun, Aug 15, 2010 at 12:10 PM

subject 1937-42 Scenario

Tim,

You're a naive idiot if you think the market is going to exactly repeat the 1937-42 pattern, and the way you've "counted out" the moves and presented them in your blog says you're basically expecting an exact repeat. This just shows that you're an example of how moronic most traders are nowadays, looking for a pattern on a historical chart and lining it up with today's chart and saying "that's the future." I'm as bearish as anyone and have been for over 10 years, but the "Big Picture" section of your website is idiocy and show that you could use a class in logic.

Mark Everett

I guess I should be flattered that Mark took the time to create a new email address just to send me a nasty note (this is a common practice among trolls), but this does raise a point I've been meaning to make about the analog.

I've been very vocal about the 1937-1942 analog, but some might wonder what happens when "1942" is here (e.g., the bottom, which I imagine is going to be somewhere between 600 and 650 on the S&P).

The short answer is: we'll be in a different market then, and I have no idea what will be next. I consider the analog to be useful for this bear market; after it's done, I'll have to think hard about what to do next.

Because the general outline of the analog has held up so well, I'm keeping my faith in it until it is completely broken (which might never come; we might make it all the way to the terminus of the analog without missing a beat).

I have, along the way, been updating my Big Picture page, and I've kept all the "amendments" in there, which includes plenty of misfires. But The Vision has kept its course beautifully, and I am looking forward to the next big move down.

Chart on Silver (by Mike Paulenoff)

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It is interesting that silver prices and the iShares Silver Trust (SLV) are up nearly 2% this morning, in sympathy with higher gold and a pullback in the dollar, but perhaps most importantly in sympathy with a sharp upmove in the Shanghai Composite Index (+2%), which suggests strongly that China is not slowing down nearly as much as the financial press would like us to believe and could very well become an increasingly supportive factor for industrial (and precious metals).

Let’s notice that the SLV is pushing up against its near-term resistance line at 18.12, which if hurdled and sustained should trigger a run at its more important May-Aug resistance line, now at 18.43. In that all of the action off of the May 13 high at 19.44 has taken the form of a large coil-type congestion pattern, a sustained upside penetration of 18.43 will argue that the price structure is emerging to the upside from the coil and is in the early stages of a new upleg that has measured upside potential into the $20 area next.

Only a failure to climb above key resistance, followed by a downside violation of last week’s low at 17.43, will damage the developing bullish pattern.

GGOfVlkKE
Originally published on MPTrader.com

Starting to Bounce Perhaps (by Springheel Jack)

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I'm expecting the week, broadly speaking, to play out as follows. Today
I'm expecting to close up, though that definitely doesn't preclude a
heavy fall in early trading, we may see a retracement downwards
tomorrow, and then I'm expecting to rally from Wednesday into opex. The
strength of that rally will tell us a lot about what comes afterwards,
but increasingly I'm leaning towards seeing a strong fall below last
week's lows next week.

EURUSD held wedge support and may well bounce here to form the right
shoulder on a big H&S pattern indicating to the 1.213 area. If
so, I'd expect a bounce into the 1.30 area to make the shoulder:

100816_EURUSD_Daily_BA_Wedge_and_Potential_HS_Pattern

AUDUSD bounced at the important 88.5 support level overnight and I'm expecting a bounce back up into the 90 area:

100816_AUDUSD_Daily_Rising_Channel

GBPUSD pinocchioed through the wedge support trendline overnight, which
was a signal that the wedge may well break soon, but has regained 1.56
since then and looks likely to bounce here:

100816_GBPUSD_Daily_BA_Wedge

Oil reached the lower trendline of the rising channel and has bounced at support there:

100816_Oil_Daily_Rising_Channel_and_BGP

So the USD currency pairs and oil are looking cautiously bullish for the
start of the week, which fits in with my expectations so far.

I'm not at all convinced that ES has found a bottom overnight however,
and even though I'm expecting a fairly high degree of inverse
correlation between USD and ES over the next few weeks, that won't
necessarily be the case every day. A number of EWers were looking at a
bounce level at 1069 SPX. We may see that level near the start of
trading today and if it is broken with much confidence then we may fall
to test the next key support level on ES at 1050. This support level
looks very attractive because it marks the neckline on a potential
H&S pattern that would indicate to 970, and in the cold light of
day it looks the obvious target for ES from here unless we see a strong
bounce on ES / SPX from near the open today:

100816_ES_60min_Possible_HS_Pattern_Forming

Something that backs that target up is the chart for 30 year treasuries,
which I've been looking at again this morning. These have been flying
up over the last few days, and have made a lot of progress overnight. On
the daily chart I've marked in a rectangle which I posted in mid-May,
and that has a target at 134. In the shorter term I have a rising
channel with a target at 1.35. This move up doesn't look complete to me,
and if it continues to rise strongly towards 135 today, then I could
definitely see equities falling in response, and as I said, 1050 ES
looks like a very strong target if that is the case:

100816_T30Y_Rectangle_and_Rising_Channel

Overall the charts are starting to look very bearish, and we're close to
the point where I may upgrade the bear scenario for the rest of the
summer to being my primary scenario. In the interim buying the dips is
looking increasingly dangerous.

Fickle Futures

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It's still pitch-dark here in Palo Alto, but I'm eager about the week ahead. As I went through all my charts (which I actually did twice this weekend, just to smoke out all possibilities), I was amazed to see how many bearish setups have formed, even with the recent selloff. The market looks exceptionally vulnerable.

Although Mondays have acquired a reputation for Always Being Up, that truism is – as Bernanke might say – unusually uncertain today. Futures have bobbed between being up 6 points to down 6 points since /ES trading opened late Sunday. As I sit here, it certainly doesn't look like the bulls will be off to the races at the opening bell.

0816-es
 

I've highlighted the long series of black candles from late in June to illustrate how we seem to have clicked into the same mode again. I'm pretty sure we're going to get close to 1,000 again. The real question is whether we will break it and get to my long-hoped-for 925 level. It's going to take some new news to get us there, and nobody knows what that could be.