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.

Evil Mole Strikes Again

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Actually, 'Lazy Mole Hibernates' would have been a more apt title but that's no way to make an entrance. Anyway, I'll get right into the meat of things which is the reason I haven't been touching equities with a ten foot pole for the past two months now:


Yes, that dreaded zero indicator again. The daily version of my evil creation has kept me and my crew out of doing anything silly for the past nine weeks or so. The smoothed panel provided very important clues by exhibiting a complete lack of bearish divergences. What do I mean by 'bearish divergences'?

For an example look no further than the middle pane during late spring of this year. Despite equities pushing higher the signal started to show some clear disturbances as it kept dipping below the the zero mark. It was clear that volatility was increasing and that the up trend was falling apart. This portended an impending correction, which is of course exactly what we got.

What's even more important is how the zero flagged the tape when every bear and their mother expected a slide into the abyss: Just look at the time period between June and August as the signal kept gyrating higher and eventually lifted above the zero mark. It was clear to us then that more upside was in the works (or at least no major drop was pending) and that the bears had lost the battle for 2010.

In case you wonder why I have not been going long: Well, that's my personal trading style – I only go long when I see a convincing signal accompanying it. Although the recent ride up looks like a great opportunity for the longs in hindsight it hides the fact that the systemic risk in this tape is considerable, which is why I cannot justify taking long positions for more than a few days.

On a long term basis the slowly unfolding divergence (i.e. the slowly sloping line I painted in the middle pane) will at some point either be broken or will lead to a fast correction. I cannot predict when that will happen, especially going into the looming Santa Rally season. I prefer to take long or short trades when I see the odds clearly on my side. As of right now – the odds neither favor the longs nor do they greatly favor the shorts. Which means I continue to watch and wait.

The good news? At least I haven't tried to short this rally 😉

Anyway, if you want to give the Zero a test ride – well, you know where to find me.



Newest Improvements to Comments

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There are a couple of big new features in the comments section on the test site (not live yet).

The first is the ability to enter a trading idea, either long or short. All you need to do is click the Trading Suggestion radio button, choose "buying" or "shorting" from the dropdown, and enter a symbol. The system will track all your longs and shorts, and you're able to close them out at any time. This is just the very beginning of a much larger feature, but it's a cool start.

Also – – and this is one I'm really excited about – – you can now Highlight or Ignore any Slopers.

For instance, if you really like someone's comments, you can go to their profile and choose Highlight, and from then on, all their comments will be highlighted (emphasized) in the comment thread.

On the other hand, if you've really had just about enough of any Sloper, you can click Ignore in their profile section, and none of their comments will appear (their avatar and name will, just to sustain the hierarchical integrity of the thread, but whatever they typed won't show up).


If you are not a total n00b and want to tinker with the new features, please try them out on the test site. I've said it before, but it bears repeating – – your account on the test site has nothing to do with your regular account, so if you've never used the test site, you'll need to create another account. In addition, your username and password on the test site are not the same as on the real Slope.

Any bug reports or suggestions, please leave in the comments section on the test site, not here. Thanks, and I'll release these new features to the production site once they're polished up!

The Value of Stops

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I mentioned this in the comments section, but it merits repeating: I am a big believer in stops. I think the notion of "mental stops" is ludicrous, since the entire basis of stops is for them to take you out of a position without any thought or emotion. It's way too easy to talk yourself into "hanging on" if a position moves against you.

Earlier today, I bought a small position (3700 shares) of ONP based on a nice saucer pattern. Not long after, the stock absolutely fell to pieces (which is something one hardly ever sees in the middle of the day). I got stopped out where the arrow is pointing (this is an hourly graph). Even a person who was sincere about executing a "mental stop" would have got a much worse price.