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.

Long-Term Analog Update

By -

I haven't taken a good look at the 1937-1942 analog lately, so I thought I would do something a little different this time and back it up – way up – to a larger timeframe.

First, here is the chart from 1928-1943. I have numbered the major turning points. For those not acquainted with my work, let me drive home the point that this has absolutely nothing to do with anything resembling Elliott Waves, which in my experience have proved to have zero predictive value. These are just plain old numbers. Nothing more.

1122-analogpast

(As usual, if you click on either of these images, you will get a larger version of it.)

My belief is that we are at approximately point #25. There has been a huge amount of noise the past several months in the markets, making the identification of our "location" quite difficult, but based on this interpretation, I think the "grind it out" slow descent has begun, and there won't be any big drop until sometime in the middle half of next year – – – let's call it April, give or take a month.

1122-analogpresent

The notion that the market isn't going to make any big moves in either direction for a while sort of makes sense, given:

+ QE2 is obviously kind of a pile of wet kindle right now; a $700 billion joke that's already been fully taken into account;

+ Earnings clearly aren't falling to pieces; they might not get hit with Reality until Q1 2011 reports come in, which would coincide with a "shock event";

+ What's the best or worst news that could happen in the short term? The market has been buffeted by a lot of news lately which, in normal markets, would be cataclysmic, but with the Permanent Fed Backstop, all moves are muted.

Now any time I mention this analog I hear the same tired old excuses: "It's different this time. We are in a totally different world than the 1930s. Everything has changed." If you seriously believe a historical chart cannot inform your present-day decisions, I don't know what your interest in technical analysis is in the first place. To my way of thinking, historical analogs are an important premise for the entire realm.

The good news for bulls and bears alike, I think, is that a steady market is a chartist's market. I have plenty of beautiful long and short positions that I really like, and I'll be happy to acquire more. This kind of "smooth sailing" really reduces my bias, and I'd prefer to have a mix of bullish and bearish charts that I really like instead of having to tilt hard in one direction or another.

A Fascinating Parallel

By -

My friend Serge sent me this amazing parallel between the market in the 1930s (which capture the 1937-1942 timeframe I've watched so closely) and the NASDAQ today. Click on the image for a larger version. It seems more and more bearish technicians seem to believe that any Big Kahuna of a drop has been postposted until Spring or so, which also agrees with Serge's illustration. Anyhoo, have a good Sunday.

1121-analog

The Timmay Wave

By -

The last time I discussed my analog, I believed a drop from "h" to "i" was going to take place. It hasn't; the market has just chugged higher. I still believe this one last drop for the bears in 2010 is in the cards, and I've updated my charts accordingly.

Below is the chart from the late 1930s; the aforementioned drop would be from "12" to "13" (which is the equivalent of "h" to "i" mentioned last time). After this drop, a hearty rally challenging the April 2010 highs should take place, and I plan to have a ton of precious metals and stocks at that time.

1017-past

Looking at the present chart, you can see that the range for (13) is massive, because – – – even though the form for the analog has been holding up exceedingly well, the terminus points have been either muted or exacerbated, distorting the form. So (13) could fall from anywhere down to about (10) to much farther, down below (11). As manipulated as this market is, I'm leaning toward a more modest fall.

1017-present

Once this fall is complete, I plan to load up and be out of shorts almost entirely, if not completely. There is some kind of "shock event" for next spring (or thereabouts) that will change everything, but I want to ride things up until then. I imagine Bernanke's shenanigans will finally come home to roost, and the U.S. is going to be up the creek without a paddle.

I have finally set aside the Elliott Wave entirely as a predictive tool. Indeed, I would say that nothing has been more destructive to my own financial prosperity over my lifetime than the attention I have paid to this method. I know there are other prognosticators besides EWI, but I find them all collectively to be just noise.

I have taken readers' advice and am going to be following my own analysis. Because you know what? There is no wave 3. Or wave X. Or anything else like that.

It's a fun parlor game to put labels on "waves" after the fact, but for predictive value?……..I'm done with it. It doesn't work.

The Serge Surge

By -

I have a large long position in UUP (although my long position in LDK is the only reason I'm in the green today!), and I was intrigued by this chart I got from friend-of-Slope Serge this morning:

1011-eurbig

 

Looking more closely at the left side of the chart:

1011-eurpast

…..and then the right, which is the present time……

1011-eurpresent

It certainly calls for a drop in the EUR, which would smash the equity rally to pieces.