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.

2013 Dogs of the Dow

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There
are two types of prediction experts, says Warren Buffett.

There
are those who don’t know and those who don’t know they don’t know. 

I’m
somewhere in the middle.

I may have called the bottom and top of housing, the top
of subprime and Alt-A, the death of Lehman Brothers and Bear Stearns, the
collapse of the UK economy and the Dow’s collapse to 6,500, including its
recovery. I may have also called for gold to rally well above $1,000 when it
traded under $850.

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Back Home

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I am delighted to be back home in my familiar seat with my familiar array of monitors. I spent a wonderful week in New England, partly to take my family on a vacation, and partly to take my kids to a big fencing tournament. The whole trip went very smoothly. Here's a shot of me in the Boston Common:

0108-boston

 

0108-chubby

Except for my stay at a very noisy inn located in New Hampshire (which I reported about here on Slope), all aspects of the trip were very smooth. I particularly enjoyed walking my young daughter in the park, since the squirrels of Boston are ridiculously tame and will eat right out of your hand; as you can see, they are well-fed and content.

I'm kind of catching up and getting organized from my week's absence, but I should be running on all cylinders a little later today; thanks for your patience with me and the blog, and many thanks to contributing writers such as Strawberry Blonde, Springheel Jack, BDI, Gary Tanashian, BKudla, and others I'm too dizzy to mention right now.

Earnings Season Begins (by Springheel Jack)

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The level of expectation for equities this year across the financial world looks highly bullish. With a budget deal done and the Fed pumping newly printed money into the markets there can be no stopping the rise of equities and the decline of the dollar. 

 

There is one obvious fundamental sticking point with this scenario in that as yet no budget deal has been done, and reaching such a deal doesn't look at all easy. There is a lot of speculation that will be finessed with the threat or actuality of using a poorly worded law to allow the printing of one or more trillion dollar platinum coins. That could happen in the looking glass world of US government debt but it may or may not prove to be legal to print a commemorative coin with such a high value.

 

The key though to this bull scenario should be the round of earnings reports and full year guidance that starts today. If these are impressively good then perhaps this bullish scenario for 2013 might deliver. If they disappoint then most likely not. 

 

From a technical perspective the action on the RUT and TRAN particularly looks bullish, though in the case of TRAN that will look more bullish once we see a break over the 2011 high, but the most obvious large scale pattern setups on equity indices are still the bearish rising wedges that have broken down on Dow and SPX. These may yet fail to deliver, but they are impressive patterns that strongly suggest more downside after another big high in the next few weeks, and until we see strong evidence to the contrary, I'll be bearing these in mind.

 

Unlike the SPX equivalent the rising wedge on Dow is still testing broken wedge support. This is an obvious level to see short term retracement or possibly major failure, unlikely as that seems today given current sentiment:

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