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.

Mr. Wizard’s Epic Post (3 of 3)

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You can click here for Part 1 and here for Part 2.

Can Caped Crusaders rescue us?

Another valuation method is the Shiller CAPE 10, which stands for Cyclically Adjusted PE Ratio, with a period of 10 years. This metric is cited quite often when claims are made the market is overvalued.

Resources:

http://www.econ.yale.edu/~shiller/data.htm

https://www.multpl.com/shiller-pe

Shiller’s thesis (literally) was that averaging earnings over a period of several years created a valuation measure that could be used to predict future returns, since the longer period tended to smooth out the ups and downs of the economy and give a more accurate picture of corporate fundamentals. The same data we used in the trendline construction can be used to plot the Shiller CAPE.

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Mr. Wizard’s Epic Post (1 of 3)

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Preface from Tim: Our beloved Mr. Wizard composed an enormous post, long enough to be seen from space. I have broken it up into three roughly equal parts, to be published over the course of the weekend. Hearty thanks to Wiz!

Predicting the S&P

Can We Do Better Than Highly Paid Analysts?

At the end of every year, fund analysts and stock pundits fall all over themselves predicting ever higher and higher prices at where the S&P will close for the coming year. These predictions usually go something as follows: “Our analysts estimate S&P earnings for 2023 will be $240. Coupled with a conservative PE of 17.4, we believe the S&P will close 2023 at 4176.”

So we have an “estimate” for the first number, earnings, and a guess for the second number, the PE multiple. How well do these analysts do?

To be blunt: not very well.

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Turning As Expected So Far

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I’m finding it difficult to get back into doing more than one post a week. I shall try hard to get two out next week. (Editor’s note: cough cough cough!)

On SPX a week ago I was looking for a reversal under declining resistance from the all time high, and ideally a decline and high retest to set up a possible daily RSI 5 sell signal. I got the first of those but not the second.

The decline from the high was too large to set up the RSI 5 sell signal and as time goes by, unless we are going to see a break of declining resistance from the all time high, a high retest is looking less likely as soon it might need to break that resistance to retest the current high.

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Market Thesis 2023 (by Xerxes)

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I’ll get this out of the way and say this year has not started out as I’d hoped. I was hoping for this month to begin the next large downturn, on the cusp of which seems to be never-ending. I have been bearish since early last year, which served me well earlier on in 2022 in the broad market and helped me to get into my TSLA short last year. But something is definitely off about this market now.

We can’t seem to get a consistent rally to break upwards nor a consistent downtrend again to get to capitulation and end this bear market. I have had this thesis early last year regarding the mentality of the overall market, how everyone was truly addicted to the free money we have had for the past 13 years. I have also made the comparison of Jerome Powell to an all-powerful drug dealer providing this drug so willingly for so long. But despite his unwavering commentary that they are going to continue raising rates, the market seems to refuse to believe it. In fact, the market seems to be totally obsessive about it.

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Fed Spread Red

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A few days ago, I read a premium article over on ZeroHedge which went into great detail as to why the three components of what I call the Fed Spread – – most in particularly, the balance sheet – – which render all the Q.T. the Fed is doing moot. In other words, by their arguments, the market was going to roar higher this year anyway. I confess, I felt pretty empty-headed reading the article, because it didn’t really sink in, although it was enough to strike fear into this bear’s heart.

I was reminded of this just now, since it looks like our predictor of near-term S&P prices enjoyed a rise. It’s still beneath present price levels, but the gap is definitely getting smaller. Here are the three individual elements:

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