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.

January Macro Update (by Goatmug)

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The January Macro Update is a bit late this month as I've been slammed and have also been writing the 2011 Outlook and other posts.  I think we are in a very critical time for the markets so it is probably good that I've delayed posting this till now.

TOTAL RAILS – http://railfax.transmatch.com/

Nothing new here, total rail traffic is an entire shift higher over 2010 levels. 

RAILS – AUTO SHIPPING –

Autos continue to be an area where we must be alert.  Shipments are at 2010 levels now and all the "recovery" has not been absorbed.  Perhaps the restocking is done and all of those great numbers reported by GM were the normal games played by car makers and dealers.  Is it time to short GM?  Admittedly, I have already been short GM several times last week.  If I have time I'll post a few charts on that stock, it looks like a great set up.

 

RAILS – SCRAP –

Similar to the tonnage of autos, scrap shipping is in decline.  The next month seasonally looks like we will have a tick up, if we don't we need to be looking for this to bleed into other areas of the economy.

CERIDIAN / UCLA FUEL INDEX – http://www.ceridianindex.com/

In the chart below we see that there are two data points that are lower and only one higher.  Let's dig into which is which.  First the UCLA Fuel Index (PCI) is reported lower again for November, the Industrial Production numbers too declined, but once again the Dow keeps moving higher.  Before we get too worried, the December release of the Fuel Index is significantly higher at a 109 level so the year end surge in Christmas stocking could have done the trick.  I'll continue to monitor this.

 

HOUSING – http://www.realtor.org/research/research/ehsdata

No real change in housing.  I continue to expect a further decline of 5% to 10% for the year of 2011.  As interest rates rise we will see yet another hindrance to the healing of the housing market.  In another event, GMAC was force drop cases against 10,000 foreclosures that were in process due to robo-signing debacle.  I bet that will help the housing market?  Karl has been on top of this and I won't go into any of this and repeat him.  http://www.market-ticker.org/akcs-www?post=177483

MIT / MOODY'S TRANSACTION PRICING – http://web.mit.edu/cre/research/credl/rca.html

A little move up in CRE transaction pricing.  All is good right?

MONSTER.COM JOB INDEX – http://about-monster.com/employment-index

The Monster.com Job Index information was released and we continue to see a decline in the number of on-line job offerings.  Jobless numbers have been coming in higher than expected so we certainly need to keep an eye out for any continued weakness in the job numbers.

 FOOD STAMPS – http://www.fns.usda.gov/pd/34SNAPmonthly.htm

Nothing new here, more and more folks coming to our government for assistance with basic needs.  For the month of October 300,000 more people were added to the roles.  Now it is critical to note that this increase is the lowest monthly percentage increase since February of 2010.  Hopefully the rate of change will continue to decline.

 SCRAP METAL COMPOSITE INDEX – http://www.scrap.net/cgi-bin/composite_prices.cgi?id=100000&num=5

Not anything unexpected, scrap prices continue higher.

COPPOCK TURN INDICATOR –

The Coppoock Turn is still signaling a decline and would continue to do so until the DJIA marked 12,350.  While this may be a great long term indicator, you'd have missed almost 1,800 Dow points since June of 2010.  Now ultimately it may be correct, but I wouldn't hang my performance on this.  I'm continuing to post it here just to watch it and see what happens.

 6 MONTH EURIBOR – http://www.homefinance.nl/english/international-interest-rates/euribor-interest-rates.asp

Euribor rates continue to climb – Everything all better in Europe?  I think not.

 FINANCIAL CONDITIONS INDEX – http://www.bloomberg.com/apps/quote?ticker=BFCIUS:IND

The Bloomberg Financial Conditions Index is now fully over zero which signals an expansion.  Happy Days Are Here Again!  The move over zero indicates that the US economy is in an expansion, not a recession.

 BALTIC DRY GOODS SHIPPING INDEX – http://www.bloomberg.com/apps/quote?ticker=BDIY:IND

The Baltic Dry Goods Shipping Index continues to move lower.  I'm convinced that this is the result of over capacity in the shipping industry.  Another thing that comes to mind is that there are rumors that business men and regular folks in China have been hording metals ranging from copper, iron, and more IN THEIR BACKYARDS!  I'm suggesting that we may be at the level where speculation has run its course and the BDI could be signaling that there is no real demand..  Of course the floods in Oz can't help as coal and other commodities certainly didn't get put on boats in the last week or so.

 

USD – http://www.bloomberg.com/apps/quote?ticker=DXY:IND

What's that?  The USD is starting to fall again?  Who would have thought that might happen?  Perceived threats to the Eurozone may have been fixed for another month or so and now we see that the dollar has continued its slide. 

 TRADING UPDATE

The market continues to move higher but signs of topping are certainly unfolding.  As I mentioned last week in the 2011 Predictions note I fully expect some kind of correction here, but a final move higher into the end of April and May.  Having said that, markets do look toppy.

Specifically, I remarked above that I had been shorting GM all last week and I'll post the chart here.  I didn't annotate it here because there is no reason to.  You can clearly see that $39.00 was a point of overhead resistance.  This could easily drop to $35 in a simple overall market correction and that is how I've continued to play it.  Any move above $39.00 will stop me out.

 

 

Metals have been weak too as the ECB and Eurozone look to have solved all of their problems……(not).  Other than the agriculture areas that I highlighted in the 2011 Outlook, I also said that energy would be a place of great gains.  I mentioned XLE, and KOL, but I want you to examine UGA (gasoline).  If there is truly a trade for the first half of the year other than the "softs" I think gas is it.  I'm not writing about natural gas as I  hate the eft for it has been a killer for anyone holding it long term and many of you kow that I am fond of calling UNG the widow-maker  I am referring to the gas in your cars.  We have punched above old resistance at $40.00 and now I can see UGA move to $52.00 or higher as we get into the summer driving season.

 

 

 

Finally, here is another view of UGA as it shows the 14 day EMA and the 40 day EMA.  This is a longer term indicator I use to show breakouts and breakdowns.  The crossing over of the 14 day EMA on this weekly chart shows that there is a lot of momentum here.  (Wish I would have been watching for this back at $36.00).  Also the CCI is showing that the trend is absolutely in the bullish camp.  A drop below 100 would tell us the momentum is gone.

 

 

 

 

 

In closing, overall macro trends are mixed to positive, but I think the trader's technical set up is one for a correction.  Despite the negative feelings I have, the indices continue to push higher and higher even though individual story stocks are pretty nasty.  I made great money shorting last week with a major gain in shorting the rare earth element companies I've mentioned recently.  Earnings announcements for the last couple of quarters have been a "sell the news" event, so that too gives me more confidence to be on the short side.  Still, blindly shorting will probably yield the same results that we've seen for the last 18 months, so you need to target weakness and sprinkle in a little luck.  Perhaps that is what many shorts will receive today as I note that Steve Jobs is taking a leave of absence and the wonder company AAPL is down pretty big in Germany and Europe (market is closed in the US today).  This may provide the catalyst for the short term correction I've been looking for in the broader market, but I firmly believe that the dip will be bought and that is what I'll be doing in the areas I identified in the 2011 Outlook.

I'll leave you with one other chart here to underscore what I mean when I am looking for a correction.  As I noted in last week's outlook several indicators have signaled just how overdone the rally has been without any hint of a reversal.  Market breadth, put/call rations, AAII investor sentiment, and more show that bulls are not only complacent, they are outright crazy bullish.  Times like these require, no, I mean demand some sort of adjustment to reign in the euphoria.  I've often included work from my friend Guy Lerner from www.thetechnicaltake.com   Below is a simple chart that reflects how bullish his investor indicator is (bottom portion of the graph – red line) and how this suggests that we should see a sizable correction (holding breath waiting now….).  Guy's work is always great and I highly recommend his paid site, it provides super information and is really cheap on the wallet.

Dumbmoney-technicaltake 

I Have a Dream, Too

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I am happy to join with you today in what will go down in history as the greatest demonstration for freedom in the history of Slope.

Five years ago, a great American, in whose symbolic shadow we stand today, began shorting the market. This momentous decree came as a great beacon light of hope to millions of bears who had been seared in the flames of withering injustice. It came as a joyous daybreak to end the long night of their captivity.

But five years later, the bear is still is not free.The life of the short-seller is still sadly crippled by the manacles of segregation and the chains of discrimination. We bears live on a lonely island of poverty in the midst of a vast ocean of material prosperity. We are still languishing in the corners of American society and finds ourselves an exile in his own land. So we have come here today to dramatize a shameful condition.

When the architects of our republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. This note was a pledge that both bears and bulls would be guaranteed the unalienable rights of life, liberty, and the pursuit of happiness. That promissory note, however, has been securitized and sold off by the great vampire squid.

We refuse to believe that the bank of justice is bankrupt. We refuse to believe that there are insufficient funds in the great vaults of opportunity of this nation. So we have come to cash this check — a check that will give us upon demand the riches of freedom and the security of justice. We have also come to this hallowed spot to remind America of the fierce urgency of now. This is no time to engage in the luxury of cooling off or to take the tranquilizing drug of gradualism. Now is the time to make real the promises of democracy. 

But there is something that I must say to my people who stand on the warm threshold which leads into the palace of justice. In the process of gaining our rightful place we must not be guilty of wrongful deeds. Let us not seek to satisfy our thirst for freedom by drinking from the cup of bitterness and hatred.

We must forever conduct our struggle on the high plane of dignity and discipline. We must not allow our creative protest to degenerate into physical violence. Again and again we must rise to the majestic heights of meeting physical force with soul force. The marvelous new militancy which has engulfed the Slope community must not lead us to a distrust of all bulls, for many of our buy-side brothers, as evidenced by their presence here today, have come to realize that their destiny is tied up with our destiny. They have come to realize that their freedom is inextricably bound to our freedom. We cannot walk alone.

As we walk, we must make the pledge that we shall always march ahead. We cannot turn back. There are those who are asking the devotees of fair markets, "When will you be satisfied?" We can never be satisfied as long as the bear is the victim of the unspeakable horrors of Goldman Sachs' brutality. We can never be satisfied, as long as our bodies, heavy with the fatigue of travel, cannot short an obviously overpriced market that is made to levitate only through the grace of the New York Federal Reserve. No, no, we are not satisfied, and we will not be satisfied until justice rolls down like waters and righteousness like a mighty stream.

Go back to Manhattan, go back to the Hamptons, go back to Greenwich, go back to Stamford, knowing that somehow this situation can and will be changed. Let us not wallow in the valley of despair.

I say to you today, my friends, so even though we face the difficulties of today and tomorrow, I still have a dream. It is a dream deeply rooted in the American dream.

I have a dream that one day this nation will rise up and live out the true meaning of its creed: "We hold these truths to be self-evident: that all traders are created equal."

I have a dream that one day on the the paper-strewn floor of the New York Stock Exchange, both bulls and bears can sit at the table of brotherhood.

I have a dream that one day even at 200 West Street in New York, a building sweltering with the heat of injustice, sweltering with the heat of oppression, will be transformed into an oasis of freedom and justice.

I have a dream that my two little children will one day live in a nation where they will not be judged by the the positions in their portfolio but by the content of their character.

I have a dream today.

I have a dream that one day, down at the Treasury Department, with its vicious POMO purchasers, with its secretary having his lips dripping with the words of interposition and nullification; one day right there in Washington, little girls and boys of traders of all kinds will regard one another as sisters and brothers.

I have a dream today.

I have a dream that one day every valley shall be exalted, every hill and mountain shall be made low, the rough places will be made plain, and the crooked places will be made straight, and the glory of the Lord shall be revealed, and all flesh shall see it together.

Let freedom ring from the tree-lined streets of Palo Alto

Let freedom ring from the curvaceous slopes of Northstar!

But not only that; let freedom ring from JP Morgan!

Let freedom ring from Chase Manhattan!

Let freedom ring from every cubicle and glass-walled office of Goldman Sachs!

And when this happens, when we allow freedom to ring, when we let it ring from every village and every hamlet, from every state and every city, we will be able to speed up that day when all of God's children, options traders and futures pit-dwellers, buy-and-holders and HFT gun-slingers, will be able to join hands and sing in the words of the old Wall Street spiritual, "Free at last! free at last! thank God Almighty, we have free enterprise at last!"

Priced for Perfection

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The only thing holding this market together is a combination of government deceit, POMO, and Blankfein baby batter. The fragility of the sham is evident this morning, as the NQ was down 23 points based merely on one man – Steve Jobs – taking a leave of absence from one company – Apple. This is one company out of thousands on the NASDAQ, but it is also the torch-bearer for hopes of everyone in the country becoming a multi-billionaire via the public offerings of Facebook, Zynga, Linkedin, Groupon, and God knows what else. Hell, at this point, Slope of Hope should go public.

In any case, the NQ was down even before the Jobs news (since we don't have the US banks interfering with the truth this holiday weekend), but it really fell on the Jobs announcement.

0117-NQ

I have only one long position – GDX – from which I expect nothing more than perhaps a small profit before I reverse it back into a short. My largest short out of sixty-seven of them is FXE, which is banking on the Euro resuming its fall. So far, that's going pretty well:

0117-EUR

This will be the day's only post – – it's a holiday, after all, and your subscription price only guarantees one post per day anyway – – so I'm going to go to Other Things now. See you in the morning, by which time the hoodlums on the Street will surely have fixed things back to normal for our bullish friends.

0117-jobs

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