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.

Another Day, Another Rumor (by BBFinance)

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If you want to understand today’s market action, just look at the following chart.

It is the movement of AUD VS SPX. SPX basically moved tick for tick with AUD.

For the 3rd day in a row, rumors pushed the market higher from its depth. Today’s rumor came not from FT but from Nikkei.

Which of course is not true (how otherwise it is a rumor) and AUD is giving back its ill gotten gains.

SPX once again tried 1265 area and was rejected.  Today’s low shows that the top was in fact reached yesterday and tomorrow we shall see a re-test of the lows. What rumor are they planning for tomorrow? I think this situation will continue till Friday, December 9, when another team Merkozy dog and pony show will come out big on words, small on actions.

Sarkozy-merkel 3

Although I called for a top yesterday, I was surprised to see the speed and depth of the fall in the morning. Because at the same time, I have been telling readers that this is a very short term trading and I do not expect much to the downside.  However when I looked at the price movement of gold, I noticed the huge divergence between the price action of gold and SPX.  Ideally all risk assets should move in tandem. But look at the price movement of gold between 9 AM and 10 AM. Gold was in a range where as SPX was going down.  Again between 1PM to 4 PM. Ultimately SPX did catch up.

Gold vs SPX Dec 7The reason I am looking at all risk assets (AUD, Gold, SPX) is because the HFTs and Algo Bots are programmed with that correlation in mind. So any divergence should be viewed with suspicion.

In any event, someone is trying hard to keep the market up.  If they let the market correct now, we can expect a bigger push in the year end. Otherwise Santa will be unhappy with the naughty children in Wall Street and will not give any Christmas bonus.

I borrowed this chart from Capital Context to show the divergence between various risk assets.

Capital Context 1 dec 7

Also look at the Context model. I can bet that the market will catch up with the model sooner rather than later.

Capital Context 2 dec 7

I will be shorting gold by this week end, if I see Gold holding or crossing $ 1750 level.  The major correction is expected between Monday, December 12 and Wednesday, December 14 for all the risk asset class.

Do not fall prey to the rumor mongers. Rather consider this as an opportunity to profit. The MOMO chasing lemmings will surely die.

Thanks everyone for joining and following me on Twitter. ( @BBFinanceblog).

The Wisdom of the Unwieldy Portfolio

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Given all the insanity of this day, I was reminded of this post that I wrote a year and a half ago about why I have so many positions. The quantity of my positions have been the butt of a lot of jokes by my detractors (most regularly by erstwhile vistor The Hun), but I have my reasons for holding on to such a wide variety of positions.

A day like today, in which I've definitely caused myself a bit of self-harm by chasing a rally, was largely saved by the fact that the vast majority of my shorts were left in place because, frankly, it was too much time and trouble to close them out in the first place. Here's how I explained my style in the aforementioned post: