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.

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

Weekly Sector Report | 01/14/11 (by Leisa)

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The broad market advanced .73%.  Much is being made of how January starts as a great prognosticator for the balance of the year.  Statistics for the first week in January and what that bodes for the entire market abound, along with analogs, ideologues and all manner of other 'stuff'.  History repeats, rhymes, and more often reminds that we never step into the same river twice, but most times our feet will get wet, sometimes the river has run dry and sometimes we just might drown.  I find that to be a useful mental model as an antidote for over generalizations and wild prognostications.

Here is how the major sectors performed (click on all images for enhanced viewing):

From the subsectors, here is a view of the best/worst performing areas:

I have created a chart book for you which you can find here. Asset Managers is the second best subsector.  Let's take a look at the sector chart:

 There are many constructive charts in this space (so long as the market remains hospitable!).  I created a chart book for you for the names in this space for those interested.  You can find it here.

Let's close with looking at the broad market chart. I'm including both a weekly and a daily chart.

The weekly chart remains in the overbought area.  On the daily chart, the daily is making a new high without the oscillator–a bit of negative divergence. As you can see from the broad sectors, money is moving into new sector leadership…and so long as this broad index moves up, that also denotes new money coming in.

I wish you good trading this week.

SPY- A Historical Perspective (by BKudla)

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SPY is entering into its quarterly correction zone, and as we enter into the zone, what can we expect?

The first chart I created looks back 11 years to give us some perspective.  The findings are actionable; The market actually goes down during each of the first quarters examined. On average the moves are large enough and long enough to make a trade worthwhile (36 days, 13 SPY points, 14% move). 

My view is this correction will be longer and deeper than normal, as the price to 200 day is extremely stretched, and the run up has been particularly persistent, and calm.

Looking at the third chart informs me when I should make my move.  Initial position when either MACD crosses or Stochs break the 70 line, and full position when both are triggered.  Looking at the second chart, we find obvious support and a rising 200 day in the same area of past historical correction percentages.

So my trade is a 14 point March debit Put spread.  I will use an initial stop loss, then look for a hammer or swing low to adjust or exit my trade.

Spy_2011-01-15_0503 
SPY_2011-01-15_0510 
Spy2_2011-01-15_0515 

www.arum-geld-gold.blogspot.com

Gold, Part Deux (by Gary Tanashian)

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No names mentioned, but for much of the rise out of the summer someone has been forwarding me analysis by a technical person talking about an explosion in gold to 2000+ sometime in February, which would be the final blow off to this bull phase.  Now, the analyst is considering going short.  It was all about nominal price, which if followed to the exclusion of the big picture, would turn the would-be sound money advocate into nothing but a momentum trader. 

Gold bugs who have been root root rooting for the home team along side silver bugs, copper bugs, oil bugs and stock tout bugs are right about now getting past nervous and on to revisions.  It is the wash, rinse, repeat cycle my friends; look like a champ while the trend lasts and then revise…

Here is the chart from the gold article that inspired the following comments as it was reproduced at SeekingAlpha, haven for contrarian analysis.  From NFTRH118, some of the comments [with my thoughts]:

“Good luck with your USD longs – you'll need it! All fiat currencies return to their
natural worth. Paper.” [USD longs will be put to good use]

“I think you have to say what you really mean. I think you don't want to say that fear has
entered your investment analysis. Remembering that fear is an emotion, and emotion is
an investor's worst enemy.” [Fear always enters my analysis when you are brave]

“Technically; this isn't even anywhere near a correction – and we're $300 bucks up on
this point last year.” [From your lips to God’s ears, but…]

“Agreed. Silver supply is VERY tight. It has been reported by Sprott that they have finally
been delivered their physical silver, for their newly created PSLV after waiting since
purchase in early Autumn.” [What do I know, I am usually wrong on silver. :-)]

“If you think Gold's correcting, how much? -10 -15% decline isn't even a Seasonality
shocker, you shouldn't be "playing" Gold if you don't already know that.” [I hear ya]

And my personal favorite, from a Seeking Alpha contributor (writer) who once
approached me with a deal to ‘follow’ me if I will ‘follow’ her. I declined, as this
appeared to be in conflict with her self-proclaimed devotion to ‘meritocracy’.

“In any case, this latest bout of Dollah! Dollah! Dollah! Baby Gaming has been
especially disturbing because it's been so transparently contrived. Listen to any of the
Gold Baiters and Haters as they mouth their scripts right now. They can hardly read
them without flushing bright red, stammering, and having their voices go up two octaves.
They're like abject amateurs in a high-school play. Or – as we've said before – yapping
little Chihuahuas.”

The chart, for those keeping score at home?  MACD weekly triggered down from over bought.  RSI on the way down from over bought but still well above support at around 50.  And STO having bearishly declined below 80.  Good stuff, because we are finally getting rid of the momo's, pumpers and 'to da moon' flight captains.

Gold

I am always more bullish in gold when the company thins out, and that is what is happening now.  The gold-silver ratio has a chance to really do some damage and get the precious metals herds scattering first and with any luck, the entire casino rushing for the exits before too long.  But for now, precious metals bulls are pretty much alone in the house of pain.

The most obnoxious outcome for me personally would be that policy makers win, are able to create a lasting economic rebound out of nothing but debt issuance and money creation.  It would be obnoxious because it would be created out of dishonesty and would imply that powerful people can manage the formerly free market at will.  Of course, I do not expect this to happen, but patience may be required in trying to rein in the pig.  If history repeats, the GSR will act as something of a credit spread, as Bob Hoye would say.  It would indicate the contraction in the spread between the speculative party and conservative, sound thinking.

The GSR, if it is indeed bottoming and turning up, should take down all parties with the first to be taken down, the gold sector, eventually becoming the first to recover.  Just like out of the 2008 destruction.  

Here's the updated chart showing a fattened pig, vulnerable to a would-be rise in the GSR.  On a risk vs. reward basis, the gold stocks are the best bet going forward.  But until near term events sort out, the going would be rough there as well and protection of positions is the way to go.  In my opinion, 2011 stands a chance to be epic, but it is not going to be as easy as 2010.  Put your thinking caps on and remember that the loudest voices at any given moment are probably the ones telling you to do the opposite of what might be in your best interest.  http://www.biiwii.blogspot.com

Gsr