Slope of Hope Blog Posts
This is the heart and soul of the web site. Here we have literally tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. You can also click on any category icon to see posts tagged with that particular category.
In light of earnings reactions in the Semiconductor Equipment sector, it’s time for an update of a theme we have had in play since November, 2017
The canary is no longer chirping in a healthy manner and the economy’s coal mine has a toxic gas leak. While the recent Lam Research (LRCX) earnings report was pretty good and there were positive aspects to that of Applied Materials (AMAT), these highly cyclical companies that have been at the front end of the entire economic cycle that had its beginnings in 2013 are showing signs of wear.
Business is still good but when you are talking about cyclical leaders, it is growth rate that matters. I have read article after article touting strong current business and future drivers that will change the typical Semiconductor cycle as next generation Fabs are needed for ever more dynamic specialty chips for higher-end devices.
Applied Materials Slides After Softer Q3 Forecasts on Weaker Smartphone Demand
“Smartphone sales have been below expectations, particularly for high-end models, and in response, both semiconductor and display suppliers have made adjustments to their capacity planning,” CEO Gary Dickerson told investors on a conference call. “With inventory rebalance that we’re seeing from smartphones, we’re going to see a sequential dip in the Q3. But from our guidance into Q4, you can see that it recovers nicely into Q4.”
Below is NFTRH 499‘s opening segment and the first part of the US Stock Market segment. As for the entire report, here’s what subscriber JF had to say before giving me some of his views on the market. Interactions with NFTRH subscribers, an astute bunch, is a hidden benefit I receive from this service.
“Will write more later when in front of PC, but this is a great report. Fucking absurdly solidly enjoyable thorough and easy to read and ponder. Well done.”
It Is What It Is
We will update charts of US stock indexes and sectors, along with global markets in the report below, as usual. But for this week’s intro segment I want to think about the origin of Biiwii.com’s URL (but it is what it is) because there are echoes of inputs from 2004 in play, which were part of the reason for the name of the website.
Specifically, back in 2003-2004 most people were still bearish in expectation of an ongoing secular bear market to follow the secular bull that had concluded in 2000. Personally, I had been leaning toward a resumption of the bear after the 2003 double (‘W’) bottom and bounce. But at some point in 2004 I realized that it wasn’t happening and that inflation was lifting stocks while it lifted gold, silver and commodities even more. But it was what it was, Alan Greenspan had cooked up new bubbles. (more…)
It’s the happy-go-lucky 3 Amigos (in play since we began this goofy metaphor last fall), which would signal macro changes to come. When you are talking about the macro however, things move slowly and to date, only one of our riders has made it to his destination.
To review, they are Amigos 1-3, Chevy, Steve, and Martin.
- Stocks vs. Gold
- 10yr & 30yr Yields
- The 10yr-2yr Yield Curve
Below we’ll review a daily (short-term) and monthly (long-term) chart of each to check the status.
Amigo #1: Stocks vs. Gold
We noted Amigo #1’s eyes closed as stocks vs. gold took a big plunge in early February and again in March. This has actually set a lower highs, lower lows downtrend in 2018, and the swings have been very dynamic. Right now we are on an up swing and if you are a gold bug and this ratio rises above the March high please prepare to take caution, as the macro would be moving against you, at least relative to risk ‘on’ assets. But for now the lower highs and lower lows daily trend is intact. (more…)
PREFACE FROM TIM: The spiffy new site is absolutely crushing our server pool, so slowness (and occasional downtime) have been happening this morning. After the close today, we are going to VASTLY expand our server pool, so please don’t be shocked to see Slope completely down. I promise that no harm will come to your computer, including spontaneously bursting into flames. Just keep being patient, Slopers!
The following is part of the Market Sentiment segment of this week’s edition of Notes From the Rabbit Hole, NFTRH 498. I’ve given it a funny name that would be less funny for a lot of people if the scenario actually plays out.
Slow Boiling Bull Frogs
Last week we reviewed Commercial Hedgers data that was bullish for the stock market and other sentiment data points that were not. The picture was mixed and our view was that a bounce (to short into, if you are bearish) was likely.
Refining that a bit, we reintroduce the ‘M’ retest possibility. It’s not a call or even a favored outcome since the stock market is still generally below markers like the SMA 50 and a series of declining highs. But as Apple showed us last week, this pig can scream higher at any time that animal spirits get unleashed. (more…)
Since early 2016 we have been carrying forward a theme illustrating that until the macro trends in place since 2011 change, the situation would be as is, stocks trending up and the precious metals in consolidation/correction. The current trends were kicked off symbolically, and functionally to a degree, by the Fed’s concoction of Operation Twist, a plan with the expressed goal of manipulating the macro (or in the Fed’s word, “sanitizing” inflation signals). Until this year it has been the gift that keeps on giving to unquestioningly bullish stock market participants.
We have also carried a theme forward that in order for a bull view to be widely recognized in gold, a bear view or at least a relative bear view will need to come about on the stock market, whether that means stocks rise nominally or not (ref. 2003-2007 when stocks rose nominally, but declined in terms of gold). (more…)
With gold testing its 200 day moving average this morning I thought I’d reproduce the first part of the precious metals segment from week’s Notes From the Rabbit Hole (NFTRH 497), including a daily chart of gold at the end showing the anticipated SMA 200 test.
 Steve Saville updates gold’s ‘true fundamentals’ here. Notice at the end what is not considered fundamentally material.
We have done a lot of work delineating what the best investment environment would be for gold and especially the gold mining sector. The gold miners leverage (for better or worse) gold’s performance vs. cyclical items like stocks, commodities and materials. Gold vs. stocks is a macro fundamental indicator on investor confidence, or lack thereof. Gold vs. Energy and Materials are gold sector fundamentals directly informing a gold mining company’s bottom line performance (their product vs. mining cost inputs). (more…)
Yesterday we took a look at the bullish SYK breakout and the bullish chart of the Medical Device iShares (IHI). So here is the thing; bullish stocks are one thing and sound business is another. Many of these device/equipment companies have long-standing and sound businesses.
But yet another thing is valuation. In combing through IHI’s holdings today, looking at charts, business specifics and P/E & P/S I am struck by how over valued and over played the sector is by the suits, who evidently have read my many assertions that the sector is stable during economic soft patches. Just kidding, but… Wall Street loves themselves some medical device companies these days. IHI’s holdings… (more…)