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.

Google Has Gone Full ‘Tard

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Well, if you didn't think the Silicon Valley was in the midst of a bubble, I offer incontrovertible proof: this article reveals how two Google VPs were offered $100 million and $50 million not to leave the company for Twitter.

These are middle managers, people. We're not talking about Steve Jobs here.

I would never want to be starting a company in this environment. I've been there before, and it's awful. You have to do everything in your power to hang on to people. My challenge in 1999 was to keep people around for their $80,000 salary when they were being offered $90,000 elsewhere. That's a battle I can win. But I would not want to be dealing with a situation where mid-level managers were being offered nine-figure retention bonuses (!!!!!!!!!) just for sticking around at their normal jobs.

Take it from someone who has built a small business; this is the worst environment for entrepreneurs. The easy VC cash may make it seem like a panacea, but it's not. The time to start great businesses is in the middle of a recession when people are happy to work hard for reasonable salaries. What's going on now is grotesque, and we all know how it's going to end.

Google is making a horrible cultural mistake. How would you feel if you were one of Google's 20,000+ employees that weren't being offered a huge fortune to not leave? A little resentful, perhaps? A little less interested in doing a good job? And maybe a lot more interested in applying to Facebook, Zynga, or Twitter so that you could extort cash from your employer as well?

Google, Google, Google. I thought you guys were smart. You are shooting yourself in your multi-colored foot.

News/Equities Correlation

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As a public service, I offer an updated guide to news events, their correlating effect on equity markets, and the longevity of aforementioned effects:

Event: Calamitous nuclear plant catastrophe following epic earthquake and deaths in five figures

Equities: Down 5%

Longevity: 2 weeks

Event: Severe follow-up 7.4 earthquake in beleaguered worldwide economic power

Equities: Down 0.5%

Longevity: 12 minutes

Event: Worldwide nuclear war

Equities: Down 7%

Longevity: 5 weeks

Event: Five-mile wide asteroid impacting earth, destroying all life forms

Equities: Down 12%

Longevity: Permanent, but only because computer systems obliterated

Event: Steve Jobs seen walking down street without extreme signs of physical distress

Equities: Up 30%

Longevity: Indefinite

Major Resistance Breaks (by Springheel Jack)

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Equities have, on SPX and NDX at least, just been chopping around uncertainly this week. There are definitely some worrying signs of weakness on both SPX and NDX particularly. Here's the updated broken rising wedge on the SPX 15min:

Here's the updated broken rising wedge on the NDX 15min:

Both look potentially bearish, but I'm unconvinced. The Russell 2000 is still within a strong rising channel, though the latest touch of the lower trendline without an intervening touch of the top trendline is a possible warning signal. Here's how it looks on the RUT 15min:

Elsewhere though, there's little to suggest that we're seeing anything more than consolidation before another move up. My EEM vs SPX daily chart looks very solidly bullish:

On copper my resistance target at 438 was made yesterday, and there was a reversal there to start forming what I was expecting to be the right shoulder on an IHS with the neckline at that very significant resistance level. Overnight however copper broke up and broke the 438 level with considerable confidence. That was a very significant break, as copper broke the big declining channel from the high that I posted last week. The next upside target is 445.6 but we may well not see a significant retracement until copper hits the next major resistance level (and potential IHS neckline) at 455. Either way this break up looks bullish for equities:

The resistance breaks with the widest implications this week however have been on EURUSD and gold. I posted the EURUSD resistance trendline in the 1.428 – 1.43 area yesterday morning and it was broken yesterday. EURUSD has returned to test the trendline overnight, and I'm waiting to see the weekly and monthly closes for full confirmation, but if sustained this break is very bearish for the US dollar, and has wide downstream implications for the bond markets and commodities particularly that I'm going to need to give some thought. Here's how that looks on the EURUSD weekly chart:

Reinforcing that resistance break on EURUSD is the big resistance break on gold. Looking at the daily chart the broken resistance trendline was retested yesterday, and more upside for gold looks very likely:

There's some scope for further weakness on equities this week I think, and if ES and NQ can break 1320 and 2315-20 then they could retrace back to the daily 20 SMAs in the 1300 and 2290 areas respectively. I'm doubtful about seeing any retracement that deep here though, and any further dip here should be bought in my view.

Chart on Oil Ultrashort DUG (by Mike Paulenoff)

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The most recent downleg in the ProShares UltraShort Oil & Gas ETF (DUG) from 31.93 to 25.73 looks like a completed bearish structure.  The fact that prices reversed sharply to the upside today after first hitting a new low suggests strongly that the DUG hit downside exhaustion at under 25.80 earlier today.

For the time being, DUG is in the midst of a run-of-the-mill recovery rally. That said, the energy sector is so overbought and vulnerable to a period of retrenchment that this run-of-the-mill recovery rally (in the inverse DUG) could easily and quickly morph into a powerful countertrend rout, as holders of long energy positions take some of their very substantial profits.

In terms of the DUG, my initial upside target zone is 27.60-28.00.

 

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Originally published on MPTrader.com.