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 Rest of 2022 (by Honduki)

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For those with bearish proclivities, it has been a rough stint since October 13.  If nothing else has been gleaned from the past 11 months, I think we can all agree that forecasting market moves based purely off what we believe the overlying macro environment is has not been consistently working.  The goal here is to provide some context around these moves – especially the latest – and frame it with forward looking data that may help guide us to short term market potential. 

First, let’s identify the things that we do know.  Top of mind:  1) We are still in a Quantitative Tightening regime, 2) This Friday is a Monthly OpEx, 3) Since the all time high, we have tagged the downwards trendline (orange dotted line on Figure 1) acting as resistance two times – in March and August. 

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To Step Down or Not?

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(from Tim: this was kindly shared by Sloper Craig Shapiro; this is unedited, except for some boldface I’ve added and some modifications for relative time reference.)

Let’s cut right to the chase. We have another Fed meeting tomorrow and there has been a growing belief in markets, exacerbated by comments from the WSJ’s “Fed Whisperer,” that a step-down in the Fed’s rate hiking agenda is imminent come the next Fed meeting in December. The equity market has run hard on this idea that a step down in hiking is akin to bringing forward the end of the tightening cycle. Stocks have bounced hard off the lows from last month’s once again hot CPI print on back of this belief, which has come along with discussions of stepping down rate hiking cycles in Europe, Canada, Australia and more dovishness from the BOJ and BOE. There is a dovish smell in the air and the equity market has picked up the scent. When you add in stronger seasonality, the prospect of a Republican sweep next week which will bring about gridlock in DC (something equity investors tend to love) and the potential for yet another Santa Claus rally, many believe the bottom is in. Shorts have been covered, puts are gone, skew is back to the lows and the FOMO chase is starting to resume. But what justification would the Fed really have to tell investors tomorrow that a step down in tightening is coming at the next meeting? Have we seen any momentum that has gotten them closer to their goal of stomping out inflation? In the words of ESPN’s Lee Corso, I think the Chairman Powell is ready to deliver a “Not So Fast My Friends” moment to equity markets. Proceed with caution.

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Doing The Splits

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At the risk of pulling a Jim Cramer and simply saying the market could either go up or go down, I wanted to make an attempt at being open-minded and showing the most bullish (and, of course, bearish) charts as we head into the big FOMC day on Wednesday. I’ll be glad when the whole charade is over, but face it, we must. Below, even split, are six bullish charts and six bearish ones.

Bullish

This, and other charts in this section, aren’t bullish per se, but they have been beaten so severely that there’s an argument to be made for a hearty, sustained bounce. There’s actually nothing bullish about it in the least, but it’s got a very long way to go on the upside before it encounters substantial resistance.

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