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.

HUI-Gold Ratio; 3 Views, 1 Conclusion

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Here is a little snippet from NFTRH 213 that showed the important
indicator of gold sector health, the HUI-Gold Ratio (HGR) from three
different views; daily, weekly and monthly.  As you can see, daily must
hold to keep the weekly intact, which in turn must hold to keep the
monthly big picture of the secular bull (for the HUI, not this sad looking ratio) intact.

This is a difficult sector to own and indeed these charts say it is
best to trade the stocks regardless of what one does or does not do with
the bullion.  But the conclusion is that until the HGR breaks down to a
lower low, the current situation is viewed as a buying opportunity.  On
the other hand, HGR will serve as a handy risk management indicator if
it should unexpectedly collapse.  From #213:

hgr daily

Daily HUI-Gold Ratio (HGR) needs to hold a higher low to both the May and July lows here or else the story is bearish…

That is because a new low here would threaten the higher low from
Armageddon ’08, highlighted in yellow, per the chart directly below…

Which would in turn threaten 2008’s higher low to the one from the beginning of the bull market in 2000.

hgr weekly

hgr monthly

So you can see that it is kind of important that the daily HGR hold its parameter.

It is a simple conclusion; HGR must hold a higher low on the daily to
avoid a threat to the July and May lows so that the weekly view can
remain intact and not threaten the 2008 low and eventually, the secular
low of 2000.  Meanwhile, higher low status across all time frames means
the indicator is not broken, despite the formerly “normal” correction
that become somewhat intense last week.

http://www.biiwii.com, Twitter, Free eLetter

The Ending of Twist

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From MarketWatch…

“The Federal Open Market Committee Fed’s bond-purchase
programs, known as Operation Twist, expires next month. Under the
program, the Fed has been buying long-term Treasurys and selling its
holdings of shorter-dated Treasurys, effectively “twisting” the yield
curve that charts the gap in yields between different maturities.

Investors expect the Fed to continue its buying of long-term
Treasurys while letting the short-term sales expire, in effect expanding
its program known as quantitative easing, or QE, beyond large-scale
purchases of mortgage-backed securities — something to which the Fed’s
committed to doing as long as necessary.”

Below is a look at what the Twist manipulation has done as various
items – and notably, gold – have been held in a corrective grip by the
“sanitized” aspect of Twist, which does not increase the money supply. 
It is of course bald faced (in that it is very official and not just in
the realm of Tin Foil Hatters) manipulation of something that has
traditionally been a ‘free market’ indicator of systemic stress or lack
thereof.

yield spread

Here’s a compelling view by a log scale chart of gold dutifully following the yield spread.

yield curve and gold

Both charts have been used in NFTRH, where we a deal in what is, not what should be.  What is
is a barbarous relic that also acts as monetary insurance and barometer
of systemic problems towing the line with a yield curve whose structure
has been manufactured.

What happens if they terminate (or are forced to terminate by lack of
short-term bond supply) this operation in December as the currently
announced Twist phase ends?  Well then, inflation may become just a
little bit more honest.

http://www.biiwii.com

Post-Election Thoughts

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The opening segment of NFTRH 212 did what an unbiased financial
writer probably should not do and discussed politics.  Then 24 pages of
straight analysis followed.

Financial writers far and wide are weighing in on the US Presidential
election result and its implications.  So jumping into the ring, here
are mine.

For the third cycle in a row I cast a protest vote. After voting for George Bush in 2000 (actually it was more a vote against
Al Gore) I wrote in Ron Paul in 2004 and 2008.  This year I voted for
Gary Johnson, although I do not consider myself a Libertarian.  I
consider myself an independent who has long since been alienated from a
two party system that looks a lot like dangerously competitive cartoons
from opposite ends of a narrowly constructed ideological spectrum.

(more…)

Updating the HUI-SPX Ratio

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There were reasons for the mind numbing gold stock correction out of
the hysterical events of the 2011 Euro-led meltdown and its aftermath. 
Take your pick…

  • + Too many lousy gold mining operations not keeping on top of costs and/or execution projections.
  • + Too many scammy smaller operations doing little more than issuing stock and telling stories needed to be weeded out.
  • + Over bullish sentiment was that this time the gold bug true
    believers really were going to take Hamburger Hill as Europe’s implosion
    would be taking down the rest of the civilized world.
  • + Highly strategic yet indirect manipulation of the gold miners’
    product – a barbarous relic not welcome in an economic discussion by
    today’s monetary policy setting intellectuals – by a very overt
    (publicized) manipulation of the Treasury yield curve in Operation
    Twist.  I will spare you another chart of gold’s correlation to the
    curve.

(more…)

SPX Weekly & Equity Put/Call Ratio

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The S&P 500 lost 1425 and this chart from NFTRH 210 shows why
this former support level is important.  Get above it and SPX is off to
the bull races; stay below and be subject to the next level of support
at 1375, which is the current target based purely on technicals.

spx

The US presidential election is a big wild card in the middle of the
analysis right now, but the raw technicals say that any negative
reaction to the election had better be contained at 1375 or else the
near term bullish phase – that remains intact with a series of higher
highs and higher lows out of 2011 – would be under threat.

The lower panel shows the Equity Put/Call Ratio’s 1 week moving
average.  The green dotted lines show that it tends to make a higher low
into significant tops, which have come three times within the bull
market out of 2009.  This is a warning sign on the SPX that while the
bull trend is technically not over until it makes a lower low beneath
1275, a lot of damage could happen if the correction gains momentum.

So it is critical to the bull case that SPX get above 1425 and failing that, hold 1375.

http://www.biiwii.com