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.

Interesting Commentary on the Chinese RMB (by Ultra Trading)

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Part if not all of the goal of quantitative easing is to force China's hand at revaluing the RMB, thus making US exports more competitive and bringing jobs back home.  China has refused to revalue and as a result has faced growing inflation at home.  Bernanke has even hinted at times that if countries do not like the results of "our" monetary policy they should adjust "their" currency.  That's about as direct a central banker can be without writing down a country's monetary policy for them.

The choices for China are rather difficult.  Inflation, especially in the face of the global unrest that has developed recently threatens instability within their country.  Rice has now started to move up in price as well adding further pressure.  Tiananmen Square was partly a result of inflation concerns and the last thing China wants as they try to become a more dominant player in the world are pictures of tanks rolling in the street at protesters. 

Should China decide to raise the value of the RMB they can fight inflation, to some extent but they risk losing jobs.  Is there much of a difference between higher inflation with a job or lower inflation without a job?  Additionally China is trying to slow down its own economy to manage what many see as a bubble in asset prices.  Chinese Premier Wen Jiabao seems somewhat concerned with the precarious situation China finds itself in a recent speech (from Reuters).

"Rapid price rises have affected the public and even social stability," Wen said.

Wen said maintaining social stability was also central to the country's foreign exchange policy, requiring a step-by-step increase in yuan flexibility so that Chinese businesses could adapt to the changes.

"If the yuan saw a one-off large appreciation, that would cause many closures of our processing enterprises and make many export orders shift to other countries and many of our workers will lose jobs."

"Let them think about that: if businesses go bankrupt, workers become unemployed and rural migrant workers go home, then what do we have to expand domestic consumption, where will increased consumption come from?"

"I have in fact said before that if price rises become linked to the problems of graft and corruption, that will be enough to spark public discontent, and even create serious social problems," Wen said.

The war between Bernanke and China is clearly on per Wen's comments.  He seems to take a soft tone and almost concedes that China will revalue the RMB over time but I suspect their timeline is not that of Bernanke who needs jobs in the US immediately, not in two years.  No one ever holds all the cards in a negotiation but clearly Wen is showing a weaker hand, something  that may unfortunately inspire Bernanke to continue QE in June.

Lastly, another comment regarding growth forecasts was rather interesting and clearly shows China is concerned about an overheating economy and managing a goldilocks scenario which many have tried and I don't think any have succeeded.
Wen also said the official GDP target was 7 percent per year for the 2011-2015 developmental plan. That rate is significantly below the average annual 11.2 percent growth during the last five-year period, but growth targets tend to undershoot actual performance.

 

Submitted by Ultra Trading.  If you would like to read more, please visit - Ultra Trading

Slopefest III Update AND SPY Guessing Contest! (Market Sniper)

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Quick update on SlopeFest III. The official dates are Saturday and Sunday, May 14 and 15, 2011 in Las Vegas, Nevada. 

I was unable to get any deal from Bally's. Seems that unless there is a 30 room guarantee, no dice. So you are on your own with room accommodations. Tim and I will be staying at Bally's. Suggestions for meeting(s) are open. Think maybe dinner on Saturday night. Will give updates on that as we get closer to the event.

SPY Guessing Contest

In a tradition established last year with Slopefest I, there will be a contest open to ALL Slopers. Active participants as well as "lurkers." Some rules a bit different this time. It will be based on the S and P 500 ETF, the SPY, this year. Since Tim is now going long as well as short, it will be closest to the closing number regardless if under OR over.

1. Your guesstimate will be for the CASH close (4 pm EST) of the SPY on Friday, May 6, 2011.

2. All entries must be sent PRIOR to 4 pm (EST) on Friday March 4, 2011. No entries will be accepted after that date or time.

3. In the event of a tie, the winners will be based on time and date the guesstimate was received so get your entry in early!

Prizes:

1. First place: two circulated US Morgan Silver Dollars (common date).

2. Second place: one circulated US Morgan silver Dollar (common date).

3. Third Place: a nice selection of crisp, uncirculated German Not Geld. For those unfamiliar, here is a site to get acquainted. http://www.notgeld.com/

There will be a special prize awarded to the Sloper with the closest guesstimate in physical attendance at Slopefest. Think gold!

I will not, of course, participate in the contest. I will email all entries to Tim also for verification.

Email all entries to me at slopefest3@gmail.com

Best of luck to all and I look forward to meeting a LOT of you in Vegas for Slopefest III. Going to be a blast! Be there or be square!-Market Sniper

PS..please include your Slope handle, should you have one, in your email.

Hanging By a Thread

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Over the last months, the meltup has resulted in a low volume grind…which can be seen in the volume analysis at the bottom of this chart. Last week gave us a high volume down week and a hanging man candle on the weekly chart of the Russell 2000 similar to candles that have spearheaded other significant declines on the Russell… Certainly is starting to look interesting…

2011-02-26_1920_TF-01 
there is a lot of detail on this chart please view a high-res view by clicking here

Wall of Worry (by Springheel Jack)

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It's rare that the path for any market looks entirely clear, and that's as it should be, as if more upside were guaranteed it would already be priced in and historic. It is a concern that last week's decline looked like a single wave down, and is entirely possible that there is more downside coming as many expect. Fortunately there is a decent looking line in the sand drawn on ES in the 1320-1 area, as an IHS has formed there with a target at 1347. If 1321 is broken with conviction today then the path will look clear to new highs, with Mondays being historically strongly bullish and the first of the month (tomorrow) also historically strongly bullish:

The picture is slightly less clear on NQ, with a resistance zone in the 2335 to 2365 area, with the key levels in the 2335, 2350 and 2365 area. A break with confidence of Friday's 2350 high will look bullish, and a break with confidence of 2368 will open up a retest of the 2400 area:

Copper broke up on Friday and the next obvious target is strong resistance and the potential IHS neckline in the 451 area. There's significant negative divergence on the 60min RSI however and I'm wondering about a retest of broken resistance:

Silver broke up from resistance at the close on Friday and may be forming an IHS with the target at 35.7. There's some negative divergence on RSI suggesting there might be another test of broken resistance and I'll be watching the current short term support trendline:

Oil has a lot of geo-political risk at the moment and increasing unrest in the middle east may well push it up further. It has made the broadening formation target from last week and negative divergence on the chart looks weak short term:

A lot of people, including myself, are looking with great interest at the longer term short setup on Yen, and I've been suggesting for over a week that Yen might have another last push up to deliver a good entry level. USDJPY (inverted Yen) has now reached my highest probability target and reversed there so this looks like an attractive entry for those scaling in to a longer term short Yen position. If I have room I'll post the longer term chart tomorrow to show the full setup

I'm leaning strongly bullish on a break with confidence of the IHS neckline on ES today. Until that happens I'm seeing this as the highest probability reversal area if we are to see another wave down on equities so longs should be cautious until we see that break up.

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