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.
My fondness for ratio charts is unbounded. Allow me to share three of them with you that I believe illustrate how prone the market is right now to a sell-off.
The first is the Dow Jones Composite divided by the M2 money supply. The nature of the current bull market is different than the prior two. In those – – during what were relatively normal times- – – the market ascended, carved out a topping pattern, and then plunged.
Since the Fed has taken their manipulation up to “11”, the market doesn’t have the opportunity to create a rounded top. It does, however, yield a fairly clean channel, and we are mushed at the top of that channel right now.
One of the meme-iest of all the meme stocks is GameStop (symbol GME) which had been battered down to 2.57 on April 3rd of last year and closed today at 31.49, a gain of about 1100%. Not bad for a retail store that sells games. You can plainly see the jaw-dropping short squeeze that took place today on this intraday chart, which pushed prices over 57% higher.
In late May of last year, I did a post called The DMC Challenge which had a very simple premise: I would take a hypothetical $500,000 wad of cash and put all of it into my best long ideas and best short ideas, evenly distributed among every symbol, and see what happens. When I did the post, the first comment was:
Well, it’s been almost eight months, so let’s check in on the Devil May Care portfolios!
Since late 2008, the semiconductor fund SMH has gone up about twenty-fold with hardly a downtick on the way. This morning, the sector is brought into particularly light, since INTC had an enormous burst higher. Looking at more recent history, I think we can agree that even if semis do not look at threat of failure, they are certainly on the high side of the range.
As a side note, I’m awfully curious what the long-term effects on commercial real estate will be. The landlords in this area seem to believe that once this blows over, things will flop back to normal and it’ll be 2019 all over again. My view is that owning commercial property will be disastrous for a long time to come. Some of the effects of C-19 are permanent alterations of the capital landscape.