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.

A Prediction Fulfilling (by BKudla)

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Last March I wrote my first post for Tim and discussed what can stop the Fed.  At the time we were going through our second bout of uninterrupteded ramping in the market, and I speculated on what will kill the economy.  Please read here for the post

http://slopeofhope.com/2010/03/index.html

At the time the price of oil was $81, the price of gold $1130, and the interest rates were 3.7%.  In one short year, all of the levers that will kill the Fed's ability to strengthen the economy through more debt are now pushing hard against them, and are at breaking points for the economy. 

 

In addition, our inconvenience in these areas of price increases are turning into calamities overseas.  China and India are experiencing food inflation that, in my view cause world changing social unrest. South Korea is releasing emergency food stockpiles to ease pricing pressures, North Africa is experiencing regime change, and the other two BRIC countries, Brazil and Russia are suffering from these same hot money flows.  Oh, and don't forget Europe.  We are one bad harvest away from a worldwide upheaval (a post for another day)

All of this calamity because the TPTB are protecting the bank and other fixed income bondholders.  All of the extra money created worldwide is being used to buy hard assets (and being hoarded) with the fake money, and the money is being politically directed.  So in the end, the imbalances continue until the masses here in the U.S. can't absorb the costs anymore.  That time has come; as I always contend, the price of energy is the silver nail into the Fed.  Food and transport companies are getting crushed via margin pressure, and they will release that pressure onto us.  As that happens (already begun) the political heat ends the games and the long awaited debt destruction spiral can and will begin.

My bias is that we profit correct out of this quarter, the politicians panic regarding the Muni crisis, and we move into our last bout of the bubble, then it gets ugly.

Enjoy your weekend  :-), and go Steelers.

SPY- A Historical Perspective (by BKudla)

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SPY is entering into its quarterly correction zone, and as we enter into the zone, what can we expect?

The first chart I created looks back 11 years to give us some perspective.  The findings are actionable; The market actually goes down during each of the first quarters examined. On average the moves are large enough and long enough to make a trade worthwhile (36 days, 13 SPY points, 14% move). 

My view is this correction will be longer and deeper than normal, as the price to 200 day is extremely stretched, and the run up has been particularly persistent, and calm.

Looking at the third chart informs me when I should make my move.  Initial position when either MACD crosses or Stochs break the 70 line, and full position when both are triggered.  Looking at the second chart, we find obvious support and a rising 200 day in the same area of past historical correction percentages.

So my trade is a 14 point March debit Put spread.  I will use an initial stop loss, then look for a hammer or swing low to adjust or exit my trade.

Spy_2011-01-15_0503 
SPY_2011-01-15_0510 
Spy2_2011-01-15_0515 

www.arum-geld-gold.blogspot.com

Moly Crunch (by BKudla)

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In five business days, the insiders for MolyCorp are allowed to sell their shares to the public, and having a company with no near term earnings prospects, a pricing model controlled by your competitors, selling for over 6 times book value, and a stock that is 300% of the IPO price, if you were an insider hedge fund, or executive, would you sell?

Now that the fever has broken on this stock, I am expecting at least a move back to the bottom of the channel.  I am short via Feb 55 puts, and I am also short REE Feb 16 puts.  I acquired and completed my purchases last week.  Why REE?  Well when folks start bailing out of MolyCorp, they are going to bail out of the ETF for Rare Earths, and REE will fall in simpatico.

Enjoy, and join me on the wild side  🙂

Moly_2011-01-11_1928 

www.arum-geld-gold.blogspot.com

Are We at Deflations Gate? (by BKudlaQA)

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In December my indicators told me to move into a short position regarding the miners, especially gold, and I did so.  Then during the Christmas break, the strength of the move forced me to dehedge and go longer, which I did.  So far so good on that, made some nice money and was feeling good going into the new year.

This week I spent the better part of it very sick and scrambling to sell things and rehedge, as I think I was hoodwinked by greed, and not paying enough attention to the low volume week, and its implications.

As part of my reflection, I started to look at charts from December 09 to see how the miners, and commodities in general have done in this so called stimulated environment.  Some interesting finds.

The large cap miners have done nothing, while gold is up 11%, this can't be good news for them if they break this horizontal support.

Oil has, really, done nothing, and looking at USO, it was forming IHS, and has turned back on the neckline.  I am watching this closely.

The dollar has gone nowhere, as well. Based on all that we are hearing about stimulus, you'd think the dollar is in the tank, nope.

The Euro, is down, and looks ready for the next leg down right now.  This cannot be good for the stock market.

What is up is food and copper. Food I can understand, poor harvests, small commodity markets that can be overwhelmed with hot mney, etc.  Copper though is interesting, best I can guess, it is all about China, or is it.  I also hear that JP Morgan is controlling 80% of the metal in Comex, and has it warehoused, maybe a hedge against their silver exposure short.  If silver relents lower here, watch copper, also the China growth story is long in the tooth.  I am shorting FCX below its 20EMA.

We may be in a position for our next whiff of deflation, what say you?