A big move up yesterday and then some retracement overnight followed by a push to a new high on ES. SPX hit the 61.8% fib retracement at the high yesterday and is now in a very key resistance area:
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.
Gosh, What a Collapse!
Well, in spite of repeated warnings from ol' Big Nose and Blubber Butt, the mere fact that the entire European continent seems headed toward a complete shipwreck isn't mattering a tinker's cuss. The Big Resolution this weekend, which G-20 demanded be finished by TODAY, amounted to little more than a bunch of dirty goblets and dishes that the catering had to deal with.
So at this point the promise is that by Wednesday – Honest! – – Honest Injun!! – – everything will be, like, totally figured out.
It's really pissing me off, beause until the Grand Plan is announced, I'm tying my hands. There is no way I want to get aggressively short with this Stupid Looming News on the horizon, which probably will be the shortable event of the year.
But until then, we can all gasp in awe at the absolute devastation being wrought as I'm typing this. There is not just one pip but multiple pips being shredded from the Euro! Hang on to your hats, everyone!
Promises, Promises, but Where are the Flowers? (by Mark StCyr)
It seems like the never-ending story of the summer has been either Greece defaulting, or some other European full-scale emergency. Over and over again the so-called "smart crowd" has slathered onto every available camera lens how they understand the issues. How they are fully aware on how these issues are to be resolved. And how the outcome is more likely than not to unfold.
What I would like to have others remember is that these are the same gatherings of intelligentsia that spewed their thoughts over the preceding 3 years that the Euro was going to replace the US Dollar, and if you wanted to feel safe, you needed to buy into the concept of the EU experiment, and on, and on. All of it has been rubbish in my opinion, but now my conjecture is moving more towards facts.
When the Euro was skyrocketing as the US Dollar was falling I wrote many articles calling attention that it had nothing to do with the strength of the Euro, but had everything to do with Federal Reserve policies crushing the intrinsic value of the dollar, making stocks appear more valuable. (appear is the operative word) I also wrote, and spoke on the subject concerning the Euro. I believed then as I believe now that the unprecedented rise was not due to anything more than a temporary correlated move.
Waiting Out the Insanity
Well, if the market wanted to make me lose interest in trading it, then: mission accomplished. Yesterday's Rally-From-Hell and the subsequent Sorry-Just-Kidding is exactly the kind of thing that makes participating in a market like this little different than strolling through an unmarked mine field.
This is not to say I've gone flat. I still have multiple short positions, but I doubt I'm going to get anywhere past 50% committed (that is, at least half the portfolio in cash) until this stupid, idiotic, frustrating, agonizing, moronic, infuriating European Salvation Plan From God is announced. I don't feel like getting my hand blown off with the surprise announcement of a $25 trillion Euro plan served with a case of red wine and a bag full of baguettes for every citizen in the Eurozone.
I hope it's announced, I hope it falls on its face, and I hope the leaders of Europe are hung in effigy shortly thereafter. Until that happens, I'm keeping my body parts intact.
Hedging Update — ETFs
Hedging costs of Leading ETFs — in late June and now
Hey fellow Slopers,
In looking back at the hedging costs of the most widely-traded ETFs toward the end of June versus the same basket of ETFs on Tuesday, I figured they'd all be more expensive to hedge now. That turned out to be true of 9 out of 10 of them: the only one of those ETFs that is cheaper to hedge now is the iShares MSCI Japan Index (EWJ).
The two tables below show the costs of hedging EWJ and the other 9 ETFs against greater-than-20% declines over the next several months, using optimal puts, as of June 23rd (when the VIX S&P 500 volatility index was at 19.29), and as of October 18th (with the VIX at 31.56). First, a reminder about what optimal puts are, and why I've used 20% as a decline threshold; then, a screen capture showing the current optimal puts to hedge the one ETF with lower hedging costs now than in late June (EWJ).
