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.

From TBSP to WSB

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Back in the late 1980s, when I first developed a strong interest in trading, I subscribed to a newspaper that’s still around today: Investor’s Business Daily. In that paper, without fail, would appear a full-page ad from a company that I don’t think is around anymore called The Better Software People (or, as they called themselves, T.B.S.P.).

The message TBSP wanted to convey was simplicity itself: buy our software, and you will get options trade signals that will make you rich. About 95% of the ad was just row after row of trades, starting with something like $10,000, which steadily grew to literally hundreds of millions of dollars. These people, with a straight face, retroactively picked all the perfect trades and convinced some poor saps that a small account could, in a few years, grow to hundreds of millions of dollars. Self-evidently, they must have sold enough software to pay for these expensive ads year after year.

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Three Metallic Amigos

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Metals Ratios Continue to Indicate Inflation

And that is welcome for monetary and fiscal policymakers of course, since inflation is the only trick they have up their sleeve to bail this mess out once again. And this is no comment on COVID-19. The economy was slowly decelerating last year well before this guy showed up (I like the picture, okay?)…

tyx

The yield curve bottomed and turned up in August of 2019 as manufacturing was slipping, long-term yields were tanking and other economic signals were fraying in the wake of the trade war. So please, no convenient COVID excuses.

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Ironically Long (Part One)

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At the outset, I want to make plain I respect the rights of others to their work, and I offer this post (and its second part, for premium readers) based on Fair Use principles. This post I am composing is an overall critique of the financial prediction industry, and I am including excerpts from various works, most than a decade old in most cases, to make a point.

I would also make very clear my familiarity with “Those who live in glass houses……….’ The purpose of these two posts isn’t to laugh at predictions that never transpired. But I definitely want to make plain that respected, well-funded, and widely-read pundits can create some breathtakingly bad prognostications, and we can only realize that in hindsight.

Let us begin with this page, which was part of a very, very lengthy report from Longwave Group. (As with all these images, click it for better readability; those of you with big screens will have no trouble being able to read the copy). The thrust of this report was that the Dow was heading to 1,000. The chart offers a conjectural path, which was basically similar to a lead sphere being dropped from a skyscraper.

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The Influence of Fed Balance Sheet Growth

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First off, thanks to The Lone Ranger for inspiring this post in the first place.

Lone Ranger Fed Question

And now let’s begin…

Starting with the bird’s eye view, the chart below shows all available data on the FOMC’s operations going back to 2007 (for a more detailed explanation with chart of all the FOMC operations current to Apr 2020, check out this excellent post I found here).

Except for the period between 2015 and the end of 2019, virtually all of the market gains were concurrent with FOMC operations. I will focus in this post on the periods of high complacency as identified by extremely high levels of the 100SMA (20wk SMA) of the Equity Put/Call ratio. If you want to read those posts, the first is here and the second is here.

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