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.

China – Loveable Panda or Blood Thirsty Bear? (by Goatmug)

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Lately I've been doing more writing and have been highlighting the battle that is being waged in the economy. In my recent article Inflation Bombs, I discussed how the US central bank was using dollar devaluation to inflate assets (stocks and commodities). The next major post highlighted the Japanese experience with deflation in Why Aren't We Turning Japanese. The key takeaway in these posts is that our US FED has opted to inflate assets and the by-product of that choice is a flood of speculative dollars deployed throughout the world. The result of the deluge has been massive increases in commodity prices, tougher living conditions for the poor and retired, and an increase cost of living for US and world citizens. I received a few comments from a reader the other day and the basic thrust of his comments were that China and the emerging economies were an easy choice for us to make when compared to the recessionary economy of the US. While there is part of me that agrees with him fully we need to make a distinction between "economy" and stock or commodity investing targets (of course time frame is important too). My statement is made clear as we examine the chart below and see that the FXI has dropped some 11% from its recent highs in November.


From a fundamental long term perspective I think the reader has the correct investment thesis (of course I like it because I've had it and traded on it for the last 18 months!). However, the short-term in China has me taking a pause because the charts are telling me that we are at an inflection point. We'll talk about those technical trading markers in a second. First though, I'll put China in the same basket as all the other emergings that I like.


  • Relative Low Employment Costs (to Europe or the US)
  • Little Environmental Protection Regulation
  • Excellent Demographics (Growing Middle Class)
  • Fast Growing Economy


  • Questionable Rule of Law (Legal Rights and Copy-Right enforcement)
  • Closed markets to foreign firms Inflation (Wages)
  • Inflation (Land)
  • Inflation (Raw Materials)
  • Inflation (Food)

If you are getting the point that I'm most concerned about inflation in the emerging world, you'd be right. We don't need to look further than Tunisia, Egypt, Jordan, Yemen and Oman to see that poor, unemployed, youth ultimately rise up and look to change the leadership and rules of the land. The food inflation and poor employment may have been the final straw that broke that cause the Tunisians and Egyptians to revolt, but these are real issues that we must examine in our favorite countries like Singapore, Malaysia, South Korea, Taiwan, Thailand, Chile, India, and Indonesia. To clarify, I tend to think that China is further along in its emergence than the others that I've listed, and in fact is now had such an improvement that it is losing manufacturing business to the other Tigers because wage costs are increasing in the mainland.

I think the story I found here describes the wage situation in China quite well.

 The story describes a situation where living costs are now growing at such a clip that workers are simply walking out of their jobs and not returning from their Chinese New Year holiday since wages are not enough to pay their living expenses. The impact of this is that manufacturers are being forced to delay shipments to the world (for useless junk we don't need). This means that US retailers can't get the products that they have ordered. Finally, the Chinese government is attempting to force wages up with regulations requiring minimum greater minimum wages. In time, this will help and will create a huge domestic economy — the economy all of the US multi-nationals have all been dreaming of for the last 20 years (remember Dell salivating about making manufacturing plants in China in the late 90's).

The promise of this future huge economy is what I've discussed for a while as the reason for investing in the emerging markets. I've said it a few times, there will be really big draw downs, but in 20 years we'll be giving each other high fives for investing in these gems.


Take a look at the two charts above, but let's start with the the colorful black one right above this section. What we see here is that FXI has support at $42 and overhead resistance at $47. The biggest concern we have is the upward rising lower channel trend line that was recently broken last week. This action to me spells further weakness. If the $42 area of support breaks FXI could easily trade down to $36 —- (another 15% or 20% from here). Finally, examine the upper chart. I use this chart to examine the 14 day EMA and the 40 day EMA on a weekly chart. Typically when we see the breakthrough of the 14 day EMA below the 40 day EMA it is a harbinger of doom! (ok, that may be a bit dramatic, but it isn't a positive). For me, when this signal appears it signal is a longer term sign that the trend has turned negative. Let me be clear, it has not crossed below yet, but when it does, it may be a great opportunity to short. I've posted many articles about this signal in the past, one of the best has been VLO where it signaled a positive move up when the stock was in the $18 – $19 area in November 2010. That signal (along with good fundamentals) has proved to be an awesome long term trade. Keep watching, but with continued inflationary forces bruising the Chinese economy along with a confirmation of the 14 day EMA/40 day EMA crossover, I'd be inclined to trade this.  I'll update you when I enter the trade at



Trading The End Of Day (EOD) Ramp by Market Sniper

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Here on The Slope, we are constantly railing about the phenomena known as the "the end of day (EOD) ramp." Yes, it seems to be manipulative. Yes, it appears to be contrived and yes, it is even deplorable. In price action, this is the proclivity of the stock market to go up (often large) starting at around 3:30 pm EST. Instead of complaining about it, make some money off it! THAT is our JOB as traders, after all.

Trading edges are found when patterns repeat. Since TARP, this has been almost a constant pattern. It was a minor pattern before TARP but it has become much more pronounced since TARP. Here is how I identify the trade, how I enter the trade and how I manage the trade. Since I am predominately an ES (emini S&P futures) day trader, I will use the ES here. You can possibly trade it with other instruments but back test this with your instrument of choice. This trade is to be done with a minimum of two contracts. If you are a one lot trader, do not trade this setup.

Identifying The Trade: Your window of opportunity is between 3:30 and 3:40 pm (EST). Price at entry must be at least 3 points (12 ticks) below the session high. By session high I mean the open out cry (pit session) high which starts at 9:30 am (EST) NOT the GLOBEX high (GLOBEX trading session starts the previous day at 4:30 pm (EST).

Trade Entry: Do not enter this trade prior to 3:30 pm or after 3:39 pm. You will attempt to identify the lowest price action within this time frame. I have notice over the past three months or so that the low is coming a bit later. Around 3:35 pm. Use whatever methodology your currently using to identify breakout price and break down price action, bottoming formations on your one minute chart, etc. to identify the low during this time window. You can scale into the position IF that is allowed by your trading plan and your trading with size (more than 2 contracts) if price moves against your entry. I would not suggest this. I do not do it but it is a viable entry plan.

Managing the Trade: Upon entry, place your stop loss at two full points (8 ticks=$100 per contract) beneath your entry price. Place a 1.25 point (5 ticks=$62.50 per contract) price target above entry for one half your position size. Then, kick back and relax. IF  your 1.25 target is hit, immediately move your stop up to your entry price. Do NOT forget that you have reduced your trade size by half. Reduce your contract size on the stop accordingly. Example: your trading 4 contracts. Your stop loss is for four contracts. If you have scaled out half (2 contracts). Your stop should now be only for two contracts. Now, as price moves in favor of the trade, do NOT start trailing a stop! You want to be in this trade through cash close which is at 4:00 pm! Still in the trade? Now the real fun begins. After cash close, you have two kinds of stops. A trailing stop and a mental time stop. At 4:05 pm, move your stop up to 1.25 points below price and trail it. Still in the trade at 4:13 pm? Exit the trade at the market. Do NOT stay in the trade during the last two minutes of the pit session which closes at 4:15 pm.

And there you have it. A complete setup and trading plan for the EOD ramp. You may find that this setup will often make your trading day. Last week, it was worth over 10 points ($500 per contract) to me. Even on Friday, when the ramp did not develop, I made money with it. Target price hit for 1.25 points on half, stopped out at entry on the other half of the position. Hope this helps.

Yours in the eternal quest of The Trading Edge-Market Sniper

Newest Lowest Prices Ever!!!

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Seeing the ads on CNBC for NutiSystem's newest lowest prices ever, make me think we can solve all of the Middle East and emerging market's problems by shipping them some cheap, great tasting food!!!  Hurry now and you can have it in time to watch the Super Bowl on Sunday!!

Seriously … with proof of food inflation all around us and with shipping costs sure to rise (fuel costs!!), how is NTRI going to avoid margin compression?  Bernanke and his buddies tell us not to worry that the slack in the job market and the miracles in productivity will save the day … will it save NTRI?

NTRI_Feb 2, 2011_Weekly

NTRI_Feb 2, 2011_Daily

NTRI_Feb 2, 2011_PnF

Cheers … Leaf_West

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