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 Rain in Spain……Evil Plan 47.0 (by BDI)

By -

3263390

Are the embolden bulls going to continue their torrid rampage through the narrow streets of Pamplona, skewering every petrified bear that stands in their path?   Is the energizer bunny going to simply hop, skip, and jump directly to Dow 15,000 by Easter Sunday?  Will the mad mad mad market mavens, falling all over themselves, calling for the traditional, pitiful, end of quarter window-dressing ramp, be proven correct once again?  Is our future so bright, that we will always have to wear shades from now on?  

(more…)

Looking Back At Last Week’s Mini ‘Flash Crash’ In Gold

By -

Looking Back At Last Week's Gold 'Flash Crash'

Hello fellow Slopers,

Reviewing last week's Slope posts, I noticed Gary Tanashian's bullish guest take on gold last Wednesday ("Why Gold & Why Now?"). Gary reiterated the long-term bullish case for gold in the wake of Tuesday's sell-off. In this weekend's FT, John Dizard's column on the sell off ("Gold flash crash rouses suspicions of witchraft") offered some support for the bullish case, to the extent that it suggested last Tuesday's shock likely wasn't a harbinger of another significant correction.

Dizard's columns are usually worth reading in full, and this one is no exception, but this was his argument in a nutshell: Dizard cited research by fixed income strategist David Goldman. who noted that gold and TIPS are both highly correlated, since “they are both deep out of the money options on catastrophic changes in the price level”; since TIPS didn't react nearly as strongly as gold on Tuesday, Goldman argued that indicated the sell-off in gold wasn't that significant.

Neverthless, for gold longs who want to hedge their bets, at the bottom of this post I've included a screen capture of the optimal puts to hedge the gold-tracking ETF GLD against a greater-than-20% drop over the next several months. Before that, though, a quick reminder about optimal puts, and a look at how the cost of hedging GLD fluctuated last Tuesday, before and after Bernanke moved the markets.

About Optimal Puts

Optimal puts are the ones that will give you the level of protection you want at the lowest possible cost. Portfolio Armor (available on the web and as an Apple iOS app) uses an algorithm developed by a finance Ph.D. to sort through and analyze all of the available puts for your position, scanning for the optimal ones.

Hedging GLD With Optimal Puts Last Tuesday — Before And After Bernanke

By coincidence, I happened to look at the cost of hedging GLD Tuesday morning, prior to the Bernanke excitement. I tweeted this from the Portfolio Armor account at the time:

Less than two hours later I noted that the cost of hedging GLD against a greater than 20% drop (from its then-lower price) had jumped more than 50%:

Chart Analysis of SLW & GLD (by Mike Paulenoff)

By -

The pattern in Silver Wheaton (SLW that emerges off of last April's peak at 47.60 argues strongly that a complex intermediate-term correction ended at the Oct 4 low of 25.84, a decline of 46%. That was followed by a powerful new up-leg that within the past week has hurdled key resistance at 37.35/40.

From a pattern perspective, we can make the case that the current up-leg off of the Dec 29 low at 26.85 represents the "right side" of a big "W" — or Double Bottom formation that was putting intense upward pressure on 37.35/40 on the way to my next optimal target zone of 42.30/60 and then to 44.00/30.

At this juncture, only a decline that breaks back beneath the Apr-Feb resistance line at 38.16 will compromise the current upside breakout and thrust towards 42.50.

Looking at gold, the SPDR Gold Shares (GLD) is heading for a confrontation with its prior significant rally peak at 175.46 (from Nov 8), which if hurdled and sustained should trigger upside follow-through to 182.75-183 relatively quickly.

Only a decline that breaks 171.50 will compromise the current upside acceleration phase.

Full-a6Dt4Z5PITaHtQkUsC63-1
Originally published on MPTrader.com.

Lower Lows Overnight (by Springheel Jack)

By -

The bounce yesterday was at an obvious level for the short term bull case, but lower lows on ES and EURUSD overnight are less encouraging. There's not much to work with on ES at the moment in terms of trendlines but I did come up with a short term rising channel that has just broken as I've been writing. There is some support at 1260.5 that is holding so far but if that breaks then a move down to 1244 is on the cards:

(more…)