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.

Cypriot Butterfly, European Hurricane (by Bob Kudla)

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Is the Cyprus bank deposit confiscation move the "butterfly flapping her wings which ultimately causes a worldwide  hurricane"?

The Euro elite and the IMF sought to punish the horrendous bank lending practices of Cypriot Banks by taxing their depositors, and not make the owners of the banks take a haircut, in order for the government to get a bailout.  Now if you are a depositor in Spain or Italy and you know a bailout is required, would you keep your money in a bank account?


Riddle Me This? (by Bob Kudla)

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A couple of weeks ago I posted that the Fed ran out of suckers and conduits to keep the equity markets rising higher.  Last week we saw our first pullback, as oil, gasoline, Natural gas, the Yen, volatility, bonds and the precious metals were all squeezed or rotated out of to try and creating, the all is good, wealth creating, perpetual motion machine, capital gain generating, equity market.

The boyz ran out of runway, and had to throttle back for another try. 


The Markets Tax (by Bob Kudla)

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The Federal Reserve would have you believe that their policies are helping the U.S. economy and at worst, they are benign.  The political elite would have you believe that all is well and getting better every month.  The financial elites are telling you time to rotate out of those bond and money market accounts because the Fed saved us, and the Administrations policies are working.  Get ready for the next boom.


The Armstrong Line is Breached

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While watching the incredible exploits of Felix Baumgartner as he successfully broke the record for the highest free fall jump, I learned something, and that was there is a line of altitude once breached requires a human to where a pressure suit, and obviously oxygen, in order to stay alive. That is the Armstrong line.

This week the market powered metaphorically through that line, and like the human body, it will require extraordinary measures to maintain, and or rise from these levels.
My momentum based buy signal is overbought, showing a pretty large divergence on the daily, from the September peak, to this new high. There is not the same intensity. On the hourly, which I trade, I am getting chopped now on my signal line. This is a red flag for me.

My signal chops on consolidation and reversals. This looks like the latter. Eighty percent of the components of the S & P 500 are buys on my signals, and twenty percent of those are considered blowing off on my indicator. I am not screaming bear market here though, as I am convinced sometime this spring we will reach the Von Karmen line (Google it), and reach for those new highs.

I think the volatility play is over for now, the February to March expiry is not nearly as steep as January to February curve, and the last time we had a fall so steep in volatility, it rose 55% over the next two weeks (hat tip to Zero Hedge). I have been riding XIV, and now long VXX. Retracing some of the Vol calmness will pressure the broad markets.

I think gold, silver and the miners are ready. The cycle guys are saying we are swinging to participate in a multi month move, and I have/had buys on both metals. Miner ETF's are still chopping, but some individual stocks are buys. I am in NAK, AG, and NAK. Miners have totally decoupled from stocks, and am looking for some regression to the mean.

As an aside, I am doing a paid webinar on day trading XIV, a trade that I do a lot, and have had some very good success. If interested email me to get the details. The class will probably pay for itself on your first trading day.
Enjoy the rest of the long weekend. Bob (e-mail)

To The Top of Mt. Everest (by Bob Kudla)

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The market has been climbing relentlessly higher since the March 2009 bottom.  Last week I discussed the drivers of this movement, and this week, I will discuss the four remaining tools/events left to push the market onto new highs.

The price of oil, oil is the lifeblood of our economy, and acts as a tax when it rises, and a regressive tax at that.  Lowering oil prices will provide a growth story to the markets.  It is clear, at least to me, that the price of oil is being elevated in the paper markets, while the fundamentals are supporting lower prices.  If I were a Central Banker that can control the paper markets, and need a cheap boost to growth without using up my spare monetization dollars, I can flood the market with naked short contracts and drive down the price of oil. 

The Saudis today are reducing production, they are doing this because they see a glut coming, and are trying to get ahead of it.  The U.S., Canada, and Iraq all increased production last year, and are on tap to increase it again in 2013.