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.

Contest Winners – Week Two (by Biffermas)

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Stock_monkey  It was another impressive performance by the Slope traders.  Thanks again for everybody who participated and shared their trading ideas!

This
week's contest received more short entries than long, and favored large-caps
over smalls.  Longs were systematically
hammered, and a great percentage (75%) of short positions ended the week with
positive gains.  On the long side,
merely one of nine managed a positive return, not surprising considering the
broad market declines. 

I won't
be holding a contest this coming week, since I'll be traveling to Mexico
Wednesday through Sunday.


Large Cap
Winner –  AngryWetCat, with his CMC
short.  This ended the week with an 8.7% gain.  Congratulations!

Angrywetcat 


Cmc
  

AngryWetCat: First, let me say to win when thrown in the bears den with the Slopers is an honor.  The people there are really good and are on top of their game.  That's why Tim's blog is the best out there.  So many smart people willing to share what they know.

Second, I suck at picking individual stocks.  So I needed a little help. I went back to my roots:  PnF charting.  I started with the bottom two sectors in the market, Platinum and Precious Metals and Metals, Non Ferrous.  Thinking about the potential for volatility in the PM's, I focused on the Non Ferrous Metals.  I was looking for companies that had negative relative strength when compared to the S&P Equal Weighted Index, negative weekly and daily momentum, were below both the 50 and 200 day MA, were on sell signals when compared to their peers and were forming bearish triangles.  Putting all of this in Dorsey-Wright's screener, it was a fairly short list.  It didn't take long to find CMC.  It had fallen apart in September, and showed no signs of gaining back momentum anytime soon.

So that was my pick.  The ideal entry would have been between 17 and 17.25, but that's life.  Take what the markets give you.


Small Cap
Winner – Fayssoux for an 9.0% gain shorting SNF.  I was unable to contact Fayssoux so I'll post his original entry
as explanation for his position.  He's
been absent (fighting crime?) over the last several days.  Well done, Underdog!

Fayssoux 

  Fayssoux chart 

 

Other
notable performers this week:

Shorts

TreasureHunter

NVDA

8.0%

Bernhard1867

MCF

5.8%

Justin

JEC

5.2%

PussyGalore

DOW

3.9%

MoneyFarm

SRX

3.9%


Longs

No notable long performances occurred.  Bulltard
of the week is me (Biff) for a 1.5% gain in FLXS. 

Move Your Money!

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Today, I put my money where my mouth is. Literally. No, no, wait – figuratively. Well, my point is that I took action based on a principle. Specifically, that big banks are evil and should be avoided.

Some of you may have heard of MoveYourMoney – – I was told about it a few weeks ago. The basic premise is that, between the bailout and the risk they entail, big banks are bad news for citizens of Earth, like us Slopers here, and it's time to move your money out of your big bank and into your local community bank.

Now, I've been with Bank of America for decades, and although I liked the idea of MoveYourMoney, my initial reaction was that it sounded like a bit of a pain. I mean…….new checks, new ATM card, changing auto-pays, and all the rest of it. But it kept gnawing at me, because I felt it was the right thing to do, and today I took the plunge………..

0126-borel

Now, the fine chap on your left is your humble narrator, and the fellow on your right is Tom Fehrenbach of Borel Bank. So for my fellow Bay Area citizens, Borel Bank – which received really high ratings from the research I did – has branches in Burlingame, Palo Alto, Los Altos, and San Francisco. Please call Tom at 650-463-8717 or email him at [email protected] if you're interested (and, no, I'm not getting anything for referring folks his way; come on!)

For those not in the Bay Area, MoveYourMoney has a handy Find a Bank link. This will help you find a bank in your own community.

The bottom line is this – there's no shortage of huffing and puffing on Slope about the banks. If you're serious, then do something about it! My account isn't going to mean that much to Bank of America, but it's six-figures large, and that means there's a seven-figure amount that they can no longer lend out (ahem, not that they're lending much anyway these days). Take action! Leave your big bank! Take a stand! Move Your Money!

Stock-Picking Contest Winners (by Biffermas)

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What a week to start a stock-picking contest!  A holiday-shortened week turned nasty for the general markets, with the largest weekly drop since last March.  Amazing!  The entries that performed well seemed to have a common theme: they were short positions built around irrational euphoric rises last week.  Sell the news paid the bills.

The contest rules were structured to be fair above all else, so hopefully I achieved this.  Forcing everybody to buy the open Tuesday and close positions Friday was rather cruel, I admit.  Since many penny stocks were selected along with the big cap names I broke the contest into two components: stocks that trade above $5, and stocks that trade below $5. 

If people are interested in playing again, please submit an entry by Sunday evening to this post.  I'm tweaking the category values to above $10, and below $10.  For the sake of collaboration / education, I've asked each to provide a chart and short description of their rationale for the trade.  I'll pass out the 50 "likes" today to each winner.  Maybe that cruddy old LikeMobile will join in the fun if Gil didn't drive him off permanently!

Large cap category: winner is Katzo with his FSLR short, which dropped 8.7%.  Way to go, Katz!

FSLR
FSLR is one that can really move. It hit its high of 145 on 12/16 (60 min.), then went into a series of two EW ABC moves. This is an indecisive circumstance and one does not want to be trapped in, it basically goes nowhere and ties up your capital. The last EW C ended on 1/07 at a high of 142.46. Notice that this is not much of a decline from the 12/16 high. The unfolding of a perfect EW 1-3 pattern to the downside subsequent to that caught my eye. As I have said, it is all about trusting perfect form over noise. That was the one thing Ralph Elliott left with us. A stock's move can be equated roughly 50% to the underlying market moves, that definitely helped. An EW5 move down in alignment with the market's impulsive move down, what can go wrong. But note the flat preceding the major move (12/16 to 1/07), a cause for concern on my part.

Penny stock category: winner is Cnairn with his NWCI short, which dropped 27.8%.  Smoking job, Chris!

NWCI
 
I am pleased that this stock declined by just under 28% in four trading days. It was just as possible for it to go up by as much. Not because it would have been justified but because markets do stupid things quite often. This stock has clearly caught the attention of medical device investors, (alleged..by me) illegal inside traders and gamblers alike. The company issued some news that seemed to be very positive. They announced that they were awarded a patent for one of their inventions. The stock moved up tremendously on this news but seemed overblown to me. The reason being, it was just that, an invention, an idea. They have three ideas(inventions) total and they seem to be good ones. They have a handful of smart people, presumably very smart people. These smart people are not selling there good ideas as of yet so cash is only going out and not coming in. $47 million was the market cap at the end of last week. They do have about $2.6 million in cash and no debt so this brings the total purchase price to $44.4 million. That seemed fairly pricey for a handful of smart people with three ideas in these poor economic times to me.

Looking at the chart, I realized that we were quickly approaching the 38.2% retracement level from the all time high to the all time low.  Incidentally, that was were it topped on Tuesday. Although the volume was confirming the tremendous rise, it was very overbought. Suspecting that speculative stocks and especially high-flying speculative stocks wouldn't fair well this week I felt this was a good short candidate for entry into Biff's contest. 

Penny stock category: Toad with his PFSW short, which dropped 27.1%.  Given that Toad finished so close to Cnairn, and that his short dropped 27.1% in four days(!), I want them both included on the victory stand.  Nice work Toad!

PFSW
 

When I saw that Biff was holding this contest, the first thing I did was to go to Finviz.com and look for the stocks that had the biggest gains that day (being a bear, I obviously had to find a good short). PFSW was up a whopping 116% that day! So, I pulled up a chart and put my newbee chart skills (inspired by Joey8888) to work.  I quickly drew in the nice trend line that started at the pivot high in mid 2005 (#1 on the chart.) Then I looked for decent nearby horizontal resistance (once acted as nice support) and found it (#2). Last but not least there was that beautiful pierce of the 200dma that often acts as resistance or support if it hasn't been touched in a while (#3). All 3 of these things met right at that Friday's closing price! Monday's pop past this resistance level was just for the pros to take the amateurs money. They all piled in thinking it was a legitimate break out. Fib levels (not shown) gave me an idea of where a nice pull back target would be. If I had shorted this (I didn't, dumb, I know), I would have given all of the proceeds to Nathaniel Goodwin's Fiero Savings Fund. 

Thanks to Biff for putting this on! Please give the "points" I won to Joe8888 for inspiring me to be the best chartist I possible can be!

Here are some other great picks that should be mentioned, since each could easily have won:

Shorts:

Giledain

BIDU

-7.4%

StealthAdvisor

FXI

-7.3%

Boldventure

WOR

-7.1%

Greg

NYT

-6.7%

DrNo

JWN

-5.24

Longs:

Biffermas (weekly bulltard)

BLC

+11.0%

Weasel Whisperer

NEOP

+6.5%

C-P3-O (by nummy)

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Preamble by Tim that has nothing to do with the post: Several folks have written to me saying that they cannot post comments anymore, or that their avatar has disappeared. Some have even asked if I've banned this (which is peculiar, since the people writing are as nice as can be). First off, my frequency of banning is Virtually Never; perhaps two or three people a year. Second, I think Disqus is having some database issues going on that are affecting some users. Please know that I'm as eager for you to comment as ever, and that I haven't done anything on this end to squish your avatar or its wonder-twin powers.  If you're having trouble, please write them at [email protected]

Many of us are excited about the ever-elusive P3 wave down that would confirm this rally as a bear market rally.  Is this it?  If this is the start of P3, things can get nasty pretty fast and bulls are toast.  It may very well be, but the contrarian to my contrarian is molesting me.  What if this isn't it?  What if in the bigger picture, we are at the foot of another bull run?  I investigate what could happen (and has happened) if we really are in a new bull market (which I highly doubt).

Katzo  

First of all, I want to thank katzo for mentioning before that topping processes can be tough to swing trade and several times he pointed to the 2004 example where SPX put in a nice triple top and then corrected in a negative channel.  He has also been making some sweet calls this week, so thanks katzo!

When we look back at a chart from 2003-2004 and compare it to 2009-2010, the similarities are pretty surprising.

+ The first major move up from the March 2003 lows (almost to the freaking day) was topped in early 2004.

+ The wave structures look fairly similar.

+ The ranges are fairly similar.  In 2004, we topped around 1150 (like now).  However, March 2003 lows were 800ish.

+ After that "local top", we had two sequential days with moves more than 2sigma (1sigma = a standard deviation) to the downside.  To give you an idea, a 2sigma event occurs approximately once every 44 (trading) days (~2 months).  The chances of getting 2 sequential 2sigma events are one in 1,936 (trading) days (~7.7 years).  If you'd like my standard-deviation TOS script, Download MyStdDevSTUDY.

-We arrive at a similar trendline in both cases.  In 2004 we broke it and wiggled around it before leaving its vicinity.  Today, we are very close to breaking the analogous trendline from 2003-2004.

0304comparison

So if P3 is bogus, we could see similar action to 2003-2004.  We have seen so much similarity so far, so why shouldn't it continue?

But when we face the situation of fundamentals, aka reality, I laugh at the ridiculousness of the contrarian to my contrarian because the economic situation today is nowhere near what it was in 2003-2004.  A correction is starting and a sideways-ish mildly negative-sloping channel correction is all the bulls can hope for if this isn't P3.