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.

AAII Sentiment Survey (by MacroStory.com)

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This week's AAII sentiment survey is relatively unchanged.  Those with a bullish outlook over the next six months rose to 36.8% from 36.6% the prior week versus an historic reading of 39%. Those with a bearish outlook over the next six months dropped to 33.1% from 36.1% the prior week versus an historic reading of 30%.  The divergence between these readings and the SPX continues to stay very wide and signals pending SPX weakness.

 

 

 

 

Submitted by Macro Story.  If interested in reading more, please visit - MacroStory

The Obvious Cover

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Back on February 11, there was a widely-circulated story that the hedge fund manager Whitney Tilson – who had very publicly and loudly broadcast a huge short position months earlier in Netflix (NFLX) – had finally thrown in the towel and decided to accept the massive losses he had suffered from this short.

Naturally, the world of contrarians (such as here, and on ZeroHedge) declared that there was no better signal to short the stock, but anyone sensible knew that shorting NFLX was still kind of insane, so I doubt anyone really did anything about it.

The funny thing is this: when was the lifetime high of the stock? The very next day. And in just the tiny amount of time since then – – less than a month – – the stock is down about 20%. A little too obvious, wasn't it? But it sure worked out the way people thought.

0302-nflx

AAII Sentiment Survey – Week Ending 2/22 (by Ultra Trading)

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WOW!  Check out the reversals in market sentiment over the past week.  The AAII report is through Tuesday so Libya would be "priced" in here.  Still, the moves are massive.  Bullish sentiment dropped to 36.6% from 46.6%.  Bearish sentiment rose to 36.1% from 25.6%.   Buying the dip may be out of favor for a period of time as fear has really crept back into the market.   

The SPX has correlated very well with the AAII data as shown below.  The divergence between the two is pretty large right now.  Time will tell if the red line or blue line is wrong.  

 

 

 

 

Submitted by Ultra Trading.  If you would like to read more, please visit - Ultra Trading

Perhaps There’s Hope Now

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Well, I never thought I'd see this day……….I offer the following from today's New York Times:

0219-prechter

The last time they featured Prechter, back in July, he was calling for an incredible collapse. It turns out – – agonizingly, painfully, and horribly from my point of view – – last July was in fact a fantastic time to buy every stinking stock in sight.

Perhaps the fact that he's saying he was wrong……..which, seriously, I don't think I've ever heard from Gainesville………is a good sign. As for being prudent: prudent don't pay the bills. EWI's warnings over a year ago that silver was about to plunge compelled me to sell my 1000 oz. brick at $9/ounce. I'd rather have been imprudent and own it today at $31.

Market Neutral Trade for 2.10.2011: Long EMN, Short MBLX

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For today's market neutral trade, I shorted MBLX at $9.12 and bought an equal dollar amount of EMN at $91.37. As I’ve done with the last few market neutral trades, I shared the trade idea with subscribers of the Market Neutral Notification List the night before I placed the trade.

One quick note about my plan here: in a previous post, I mentioned I planned to build up to a portfolio with 26 pairs. I've decided that would be a little unwieldy. Instead, I plan to build up to 13 pairs over the next six months or so, using wide trailing stops, and then start closing out open positions and replacing them with new ones. On to today's trade.

Metabolix, Inc. (Nasdaq: MBLX), a bio-plastics company, caught my eye recently when I saw its chart.

The gap down in that chart in November occured when the company filed a disappointing 3rd quarter 10-Q, in which it reported a loss of 37 cents per share, versus a gain of 41 cents per share in the previous year's 3rd quarter.

Short Screen shows an Altman Z-Score of -0.95 for MBLX. Recall that Z-Scores below 1.81 indicate risk of bankruptcy within two years. Although MBLX has a high current ratio and no long-term debt its negative trailing four quarters EBIT (Earnings Before Interest And Taxes) and its negative retained earnings contribute to its negative Z-score.

Out of curiosity, I also pulled up a stock report on MBLX from MarketGrader Research. MarketGrader's quantitative tool gives a sentiment rating for stocks, that takes into account technical factors as well as earnings guidance and short interest, and a fundamental rating that takes into account cash flow, profitability, and other factors. On a scale of 0-to-10, with 0 being the worst, MarketGrader gives MBLX a sentiment rating of 1.4. On a scale from 0-to-100, with 0 being the worst, MarketGrader gives MBLX an overall grade of 15.3 and a "sell" rating.

For Eastman Chemical Co. (NYSE: EMN), Short Screen shows an Altman Z-Score of 3.2 (scores of 3 and above indicate an absence of financial distress).

MarketGrader Research's tool gives EMN a sentiment rating of 8.6 on its 0-to-10 scale, an overall grade of 66 on its 0-to-100 scale, taking into account the stock's fundamentals, and a "buy" rating .