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.

Wayback Machine

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Although this is bound to cause delight amongst a few folks, the past three weeks have been utter torture for me. There have been many reasons for this, but one of them, of course, has been the brutal counter-trend rally which seems to have strength drawn from another dimension.

Of course, what’s maddening is that it wasn’t a secret that things were badly oversold on February 11th. Indeed, I took the time yesterday to read every post from 2/11 to see what people were saying. I figured everyone would be screaming at me to get out. Nope. Everyone – – both authors of posts (Springheel Jack, for instance) as well as the commenters were all jumping up and down about the next leg down, be it 1750 (conservatively) or the 1500s. So the atmosphere was definitely “bearish now and bearish to stay.” Of course, the oversold state of the market is plain as the nose on my face now:

0303-oversold

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Thing One Violated

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In yesterday afternoon’s post, I described the day as “taking the wind out of my sails.” Well, today went ahead and just took the sails themselves. Excuse my bluntness, but God damn it, what happened to our breakdown? The Powers That Be seem to be intolerant of anything more than a few percentage points to the downside before they crank up the buy programs again. It’s revolting.

With all this strength, the ES has cut above the “Thing One” level I mentioned yesterday, and now we’re into the DMZ. There’s very little holding the market back from marching up to somewhere south of 2000. If the bulls were waiting for an opportunity, it has arrived.

ESDMZ

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Change of Plans

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Well, this sucks. Mr. Permabear is looking at numbers that would normally have him dancing on his desk. However, in a perverse twist of date, he has no positions at all, either long or short, and this is one of those days that will be permanently seared into his memory. FOMO has a basis after all. I’m missing out.

It would be foolish, I think, for me to clamor into shorts at this point, no matter how elegant the charts. Instead I think I will focus on those sectors which, until today, have been beaten to pieces (energy and precious metals) on the long side, but on a fairly small scale.

Suffice it to say that I hardly slept at all last night, and starting the first trading day of the year with my stomach tied up like a knot is hardly a propitious beginning. Below you can see where the ridiculous and logic-free Santa Clara rally died:

0104-es

Two Ways Of Hedging ATVI

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Our Current Number One Stock: Activision Blizzard

Activision Blizzard (ATVI), which just announced its purchase of King Digital (KING), the Dublin-based maker of the Candy Crush mobile game, currently has the highest potential return of any security in Portfolio Armor‘s universe, at 20.8%. Potential return, in our terminology, is a bullish estimate of how a security will perform over the next 6 months. Below, we’ll explain how we calculate potential return, and then we’ll show a couple of ways of hedging ATVI.

How We Calculate Potential Return (more…)