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.
Having experienced multiple quadruple-point days, including moves along the lines of 2,000 points, we’ve all become accustomed to unchecked mayhem. I was feeling that today was a complete bore, and I noticed the Dow was up about 500 points. This is yet another “new normal”, I guess.
The chart below is not of the Dow, but of the Russell 2000. It makes the same point in a different way. Notice how the dynamism of the small caps has sputtered into the apex of the triangle, and how the range of the bars has changed from enormous to puny.
Not a week goes by that the Federal Reserve doesn’t introduce some new multi-trillion dollar “emergency” package and shove it down the helpless throats of the public. Ever since 2008, I would wonder “how come this doesn’t seem to bother anyone?” It seem incongruous to me that the citizens of a nation would care so little about money-printing in such astronomical quantities.
Then, duh, I finally realized the answer this morning: it isn’t because John Q. Public doesn’t understand what’s going on (and he doesn’t). Instead, it’s because he doesn’t feel any pain from it. At least not directly. And at least not yet.
People are so predictable sometimes. That is, after all, the very foundation of technical analysis. But the predictability of people is something I see in running Slope as well. For instance, Slope’s popularity has been gathering steam all year, with a particular inflection point early in February.
We are in the midst of daily events that would have been unimaginable only weeks ago. There is a particular aspect of the current environment I’d like to write about, and I’d like to approach it by way of a personal anecdote from many years ago.
Early in 1999, I had managed to get my little company, Prophet Financial Systems, on its feet again from a near-death experience from a few years before. The company had always been very thinly funded – – its initial starting capital was all of $3,000! – – and I had slowly and carefully nursed it from something I ran out of a spare room in my house into a real company with a real office and about a dozen employees.
There’s a narrative being pushed in the mainstream media right now that people should buy stocks because they are “on sale.” Here are some examples of stocks which people gobbled up late last week. As of Monday’s close, they have already have lost almost half their value from the purchase price. I would point out that these losses were in the face of a nearly 700 point gain in the Dow on Monday!
We all keep hearing about we just have to tough it out through Easter, and everything’s going to be totally back to normal. Spoiler Alert: it’s not. Indeed, the end of this endlessly-cited “15 Days” is on Tuesday! So there seems to be this cultural meme being bandied about that we’re just a few days away from ending this thing. We ain’t.
Of course, at some point, things will start to drift back to normal. In sharp contrast to the opinion of our ostensible leadership, however, I don’t think an enormous “pent-up demand” is suddenly going to explode into the former capitalist society of ours. I think it’ll vary tremendously. Off the top of my head:
It seems goofy to spend so much time focusing on this $0 revenue, $0 profit, zero customer outfit, but it’s a powerful proxy for the animal spirits of the inexperienced traders out there. Looks like another U-turn has been complete.