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.

2012 Roadmap (by TnRevolution)

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Happy Memorial Day Slopers!  Before I dive into the Revolution roadmap, I would like to offer my sincere appreciation to the men and women of the U.S. military.  Bravery and sacrifice are to be honored, and I thank you for that.  With that said, bring our troops home, where they belong.

Now, let's get to the charts.  I continue to use GDOW as the best overall view of what is truly going on in the markets.  From a fundamental standpoint, I would argue that U.S. markets have been skewed higher as money has fleed other global markets, fearful of currency/sovereign crisises.

GDOW52812

GDOW is currently resting on trendline support coming up off the March '09 bottom through the October '11 bottom.  A break of this trendline, should lead to a quick impulsive move down.  Also, notice the structure of the overall decline since the 2011 top.  From February '11 through July '11, the index formed a downward sloping head & shoulders top.  It then formed a similar structure from February '12 through April '12, as the move higher off the October bottom topped out.  Ideally, what I would like to see is another similar structure develop.  Let's take a look how 2012 might play out.

GDOWforecast

What I'm looking for over the next two weeks is a break of the trendline support, and then a quick move down beneath the October '11 low.  This would then be followed by building a right shoulder through June/July '12, backtesting the trendline break as well.  A break lower out of this downward sloping head & shoulders structure would have the potential to yield a powerful bearish move, a la 2008.  Is this possible?  Let's take a look at GDX and the VIX to see what they are saying as well.

GDX52812

As has been well documented on the Slope by our gracious host, the GDX head & shoulders top continues its breakdown.  After making an initial impulsive move beneath it's neckline, GDX has enjoyed a bit of a bounce, moving back into overbought territory on the daily stochastic.  It is ready to resume it's fall.  Looking back at the 2008 GDX analog, I would put us around the beginning of September 2008.  From September 2nd through September 11th, GDX fell from 37.19 to 27.86.  The move was swift.  I believe GDX is signaling the same thing it did in 2008, a deflationary crisis event.

On an aside, for my view on where gold is heading once this flush is finished, I encourage you to read a post TK (and Serge) made last August.  Goldy von Moldy.

VIXforecast

Lastly, let's take a look at the VIX.  After breaking out of its inverse head & shoulders setup, the VIX impulsed higher, and then has since moved back to ease off its overbought levels, backtesting its breakout as well.  Ideally, I'm looking for a quick move higher into the low 40's, before running into trendline resistance coming off the August/October '11 highs in the VIX.  Notice that the VIX has continued to honor it's uptrendline on the daily MACD.  A break beneath this trendline would be a red flag. 

Free-Floating Anxiety

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I am, by nature, a worrywart. Sometimes this is good, and sometimes it is bad. When I was father to very young children, my ability to walk into a room and instantly assess any potential dangers was very valuable. As a trader, though, my worrisome nature can sometimes be costly.

A good example over the past few months has been with miners (symbol GDX), which I have mentioned 0514-worried something like fifty-thousand times this year. I was very vocal about my bearishness on the miners last year. I got a lot of nasty emails about how loony I was to think such a think. Precious metals kooks can be a passionate bunch, and they were firmly convinced not only of gold's imminent lift to $5,000 per ounce but, naturally, the value of miners following right along.

Well, my bearishness on miners was bold, visionary……….and poorly executed. I have worried myself out of that position countless times. In retrospect, simply shorting the holy hell out of miners and then just updating stops from time to time woudl have been a very profitable approach. Instead, I've tried to capture nickels and dimes along the way, sometimes winning, sometimes losing, and – in the end – making dramatically less than I ever would have just staying put.

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Following up on the Miners Spreadsheet

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On April 27th, I did a video speculating on how high the miners (GDX) would bounce before presenting another good shorting opportunity. In it, I concluded we would bounce to 49.17 before beginning the much larger fall.

Well, we just kept fallling. Indeed, I bought GDX yesterday, only to close it at a loss this morning. A new short position today repaired the damage, and I ended the day buying GDX again (and, with much larger size, GLD).

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The Poop On Groupon

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Only half a year ago, Groupon was the talk of the town. It was the biggest, hottest IPO on the horizon,and it was the darling of the social media industry. Imitators were everywhere, but there was one giant that was far ahead of everyone else: Groupon.

Well, one glance at a stock chart will show you just how much the biggest, hottest IPO has been embraced since it went public. I offer you the following:

0421-grpnchart

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The Silicon Valley Top

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Late last year, I paid a visit to Josh Brown ("The Reformed Broker") and had a pleasant chat. I went to his blog a week later and put up a comment, shown below, stating my belief that Facebook's IPO day would mark an important turning point in the market.

I forgot all about this, but totally by chance, a few days ago, I re-visited that comment and I saw that someone had put in a snide reply.

0409-valleybubble

Errr, actually, Facebook only goes public one time, so I'm not sure how I could make such a declaration "a lot". It's a specific day, and I do believe that Facebook's IPO will be a seminal event. There's only one Facebook, and it has only one IPO. It's not like there are twenty other Facebook-equivalents waiting behind it, and because of the public's fascination with this offering, I do believe it'll mark a tipping point.

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