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.

The Turn

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The two important headlines I saw today both came from Our Dear Leader Powell.  In his testimony today, Chairman Powell declared that “It is time to retire the word transitory regarding inflation”, and “the threat of persistently higher inflation has grown.”  Finally, he added that the Fed “can consider wrapping up the taper a few months sooner.”

The fact that inflation is here is no shock to the average American, but to hear it come out of the Fed Chairman’s mouth was a bit shocking today.  Also, the idea of speeding up the taper has not been priced into markets.  I believe soon we’ll be hearing Chairman Powell begin to broach the topic of raising interest rates sooner than expected as well.

So, what does this mean for markets going forward, and are we at a key turning point?  If the Fed is now moving to a stance of acknowledging a persistent inflation problem, logic would dictate that a policy response would follow.

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Ch-Ch-Ch Changes

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Writing for me is kind of like a dam bursting.  The lake fills up, fills up, and then all at once there is an earthquake in me that causes the dam to break and all the water comes rushing out.  Of late, I have been getting requests to write more from all sides of my life.  I will say that due to some positive life changes coming down the pike, I will be having much more free time beginning next year.  I have many thoughts at the moment on how to use that time, but would be interested in your feedback.  At the moment I am considering either a weekly Youtube broadcast to discuss my trading and methodology, or a weekly hour long meeting for traders to gather together live on a platform such as Discord.  If you have any interest in either of those, I would be interested to hear your comments below.

Alright, on to the main course.  Today I am going to be examining my three areas of specialty:  SPX, oil, and gold.  I believe each have the potential to be at key turning points.  Let’s take a look as to why, and what we can expect going forward from each.

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Mid-Year Update

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Greetings from Revolution HQ in sunny Tennessee.  I must say the first half of this year has flown by.  It seems like just a moment ago I wrote “A Revolutionary 2021” to give my thoughts on the upcoming year.  As we prepare to head into what should be an exciting second half of the year, I wanted to take a moment to examine what I’ll be on the lookout for.

Let’s begin with the broader market, and then I’ll work my way into some of the other sectors that I am involved in.  Looking at the past year on /ES we can see that after a bit of consolidation last fall, we have been on a simple, steady ascent higher since.  Thus far 2021 has been a series of higher highs, and higher lows.  Do I believe that is going to change at any point this year?  Yes, but not yet.

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A Revolutionary 2021

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As I look forward into 2021, I want to paint a broad picture of what to look for directionally, as well as key turning points to be aware of.  I will focus on the two main trades I am most excited about, SPX and crude oil.  As we examine the below charts and analogs, consider them as a rough guide, using crayon not pencil.

SPX Forecast
Let’s begin by taking a look at the broader market via SPX.  To gain a big picture forecast view of SPX I prefer to utilize the 10 year crude oil to SPX analog.  This analog was discovered by Tom McClellan, and looks back to see what crude oil was doing ten years ago to give us a glimpse of what to expect with the broader market now.  A note on this analog, and the other analogs I will discuss in this post; they will look to show you direction and key turning points to be on the lookout for.  They do not reflect the magnitude of the move to expect.

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Striking Oil

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I believe we are at the start of a new bull market in oil.  In the famous words of Dave Chappelle, “Oil?  Oil?  Who said anything about oil?”  Isn’t the world swimming in oil right now?  Isn’t every possible tanker and storage facility filled to the brim?  Why on earth do I believe that oil is starting a new bull market?  I’m glad you asked.  Let’s take a look.

Since this is the one and only Slope of Hope, let’s begin by taking a look at some charts.  After that we’ll examine the geopolitical and monetary fundamentals that I believe will also play a role.

Earlier this month Jesse Felder penned the article, “A Generational Opportunity in Commodities?”  He discussed the idea that rising U.S. fiscal deficits is bearish for the U.S. dollar, with one of the consequences being a return to a commodities bull market.  The chart that caught my attention the most in his article is the chart shown below.  This chart compares the Commodity Stock Index vs. the Dow.  As you can see, the last commodity bull market ended in 2008, and commodities have been in a bear market ever since.  This data goes back to 1937, and commodities are now the most undervalued relative to the Dow in that time span.

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