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I have noticed something about this rally off the crash low. It has a rhyme to it. I remember thinking to myself during the crash, and hearing other say, “It feels like the entire 2008 financial crisis is condensed into one month.”
We are seeing the something similar transpire with the bullish move off the crash low. The Fed is using the same playbook that launched the QE bull market, but at an accelerated pace.
First, let’s take a look at a chart of the history of QE that Tom McClellan posted to his Twitter feed on April 5th. You can see from the chart that the stock market nicely traced the path of QE up until 2017. Much of what transpired after 2017 was retraced during the crash.
I have a Shakespeare theme with the title today, which is a quote from Richard III. I am a lifelong Shakespeare lover and have been using some of my quarantine time watching film versions of some of his plays, of which I have about thirty or so in total, many of which were beautifully done. Over the weekend I was watching The Tempest 2011 with Helen Mirren, Macbeth 2015 with Michael Fassbender, and Roman Polanski’s Macbeth from 1971, controversially filmed just two years after the Manson Family tragically murdered Polanski’s wife Sharon Tate and their unborn child.
All good films, though I do struggle with Shakespeare’s great tragedies as I find the main protagonists very unsympathetic. Hamlet is forever looking for excuses not to act, King Lear brings ruin upon himself through his foolish actions at the start of the play but the strangest of all to my eyes is Macbeth.
This is a profoundly hostile environment to bears (which I suppose can be said 99.9% of the time in these completely fake markets). Even so, before the day is out, I am going to add these seven stocks to my short-sales portfolio. Every one will be a small position, as this are particularly speculative. I have placed my own stop-loss levels in the caption of each chart.
I know how hung up we all can get on the tick-by-tick of the markets. But take a huge step back with me and just drink in the long-term chart of the Dow Jones Composite. This has a mere two trendlines on it, but I think it speaks volumes. Click on it to fill your screen with the chart.
I realize that crude oil seems very cheap right now. Even so, I’d like to suggest that the oil and gas producers have already enjoyed their day in the sun, and energy bulls may want to regard the almost-closed gap with caution. Please take care note of XOP: