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 Joy of Text

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This blog tends to be about charts, but this post is going to be an exception. I'm just going to type what I'm thinking, and this will be my last post of the day.

Today stunk for me, just like the prior five trading sessions stunk. In fact the only reason the stink is diminishing is because I am backing farther and farther away from the market. Two of my four accounts are all cash. That, for me, is extraordinary. I only wish I could wave a magic wand and turn all four into "all cash" as of last weekend!

I haven't been in the comments section in any meaningful way for quite a few days now, but I did catch a glance at one comment which stated that no real downtrend would resume until the bulls became net sellers. I hadn't thought of it that way before, but the Sloper is absolutely right. No matter how much we stare agape at the gullibility of the investing public, the fact is that they are buying stocks, and their demand is driving up prices. So no matter how many bears there are………..and there are rarely many……….their selling is going to be completely puny compared to the buying of the bulls. As long as the bulls are drinking the Kool-Aid, we bears are going to have to keep buying the drinks.

If I look at the total value of all four personal portfolios that I manage, I haven't made any net profits since February. Across the four, obviously a couple are higher and a couple of lower, but the net result is that the five past months have yielded me $0 for the countless hours I've spent on the markets. That is demoralizing.

But demoralization isn't going to do anyone any good. It isn't instructive, and it isn't edifying. When I reflect on 2008, which was an amazing year for me as a trader, I am actually more proud of my ability to pick myself up and recover than I am proud of my ability to make money during the "good times." March-May 2008 were horrible for me, and when I discovered e-mini futures in the autumn of 2008 and wiped out almost an entire portfolio in a week's time, that was horrible too. But I bounced back hugely from those mistakes, and there are times I really wonder to myself how I managed to do so.

Sometimes I get tired of being strong, though. And, believe me, watching hard-earned profits evaporate in a very public way takes a lot of fortitude. When I'm making money and offering suggestions which are scoring money for my readers, all kinds of good things happen at once. My accounts grow in value. I look good to my family. I look good to my readers. My self-esteem and confidence are strong. I am a charting wizard.

When things go badly, everything happens in the opposite direction. What is heartwarming to me is that I actually get more nice emails and thank-yous during the bad times than during the good times. I am really moved at how much people appreciate the community here.

I had an absolutely blast trading late last year, but markets go up more than they go down, and I need to be able to thrive as well in an up market as a down market. I proved this to myself, in a limited way, with my 401-k this year. But as I survey the charts, I cannot bring myself to buy. The risk/reward isn't good enough to my eyes. I have set aside a handful of charts that might look like good longs, but the ratio of interesting short opportunities to interesting long opportunities is about 15 to 1 for me, so it's hardly worth bothering.

I still think the run-up in asset classes – – – be it gold, oil, silver, or equities – – – is running out of steam, although as we threaten to bust above June's highs on the S&P, I wonder how much more upside the bulls might be able to muster. It's entirely possible that "steam" could last much longer than I anticipate. But, for better or worse, I still remain 100% short (setting aside the fact that I have a very large amount in cash, since I've been stopped out of so many things and since I haven't had much interest in loading up on a lot of new positions).

What's most important for me is to make sure I keep my confidence and wits about me. Getting some consistent profits flowing again would do me a world of good. Until then, I'm taking it one day at a time, and I am keeping both my eyes and my mind open.

So What Happened?

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I first want to apologize to my readers for my dour nature today. I'm kind of a depressive chap to begin with, and three days of the bulls pushing their horns into my eyeballs doesn't help my already flimsy spirit. So that's probably seeped through quite a bit, particularly today. Take note of the new logo.

But I hope you can understand. This week has been the worst three days of my trading life so far. I've slipped down 8% of my overall portfolio, and it's more demoralizing than I can say to have multiple weeks' worth of extremely hard work destroyed in short a short amount of time. Climbing my way up Profit Mountain doesn't mean anything if I'm kicked down into the valley so quickly.

The only trade I'm really upset at myself about, of course, is TBT. That was a really good long play, and I blew it. I really hope others made good money on that idea, because it was solid. But otherwise, the simple fact of the matter is that I was on the wrong side of the market in a very big way. I loaded up on shorts and puts all over the place, and the 500 point rise in the Dow so far this week has been agonizing.

I don't think I'll feel like uttering the words "head" and "shoulders" any time in the near future. That was a massive fakeout, and it really hurt a lot of bears. I'll do a little post later, but you can understand how it's a little hard to get excited about discussing charts at the moment.

Melt-Up

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As is often the case during the bounces: (a) I was right about its coming (b) I didn't profit from it. Seeing the bounce come was relatively a piece of cake. I've repeatedly shown over the past few days how the indexes have gotten beaten down to very clean support levels. It was high time for a rally.

My failure to profit from it comes from two places. One is a distaste for trading against the primary trend. And two is losses on both Friday and Monday to "play the bounce" (these losses were small, but losses nonetheless). Indeed, moments before the close on Monday, I placed a trade for a substantial position in Russell 2000 April calls, but I set a limit price that wasn't met, and it was never filled. So it goes.

The key difference between, say, a year ago and now is this – – – I love rallies! I love 'em to pieces! Because, just as bulls like to "buy on the dips" during a bull market, bears love to sell into strength in a bear market. I'd much rather be being puts after a day like today (with the Dow up an incredible 416.66 points) than the day prior.

Observe the tinted area below. This is what I call, to coin a phrase, the Rectangle of Resistance. It is our ally.

A similar situation is found in broader indexes.

I held on to virtually all my positions today (and I got smacked around good, to be sure, but it only meant my obscene profits got less so). I intend to reload in the land of gold and oil.

 The only really "green spot" among my portfolios today was in my IRA account, whose contents you'll see here on the blog under Long Positions. With the latest Fed attempt to rev things up, battered stocks had a fine day.

I'm pooped from my business trip, so I'll close here. I'm sure the comments section is probably stark raving mad (particularly since Beanie finally had the opportunity to spout off about how bullish things were), but I haven't had time to meander in there. In a day or two, blocking should be in place, and we can get rid of some of the other riff-raff polluting our corner of the world here.