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.

Our Own Worst Enemy?

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A Sloper wrote me this evening with a thought-provoking email; he kindly gave me permission to reprint it here anonymously:

I just want to share a thought/observation that I have had: there has been a mentality shift in your website, most crucially in the cumulative psyche of your Slopers. For the first time, instead of shorting a rally, almost everyone is waiting  for a higher push to 1100-1120 to short. I believe that is significant sentiment event, one to be approached  in the contrarian fashion.

To me, it's like the longs who waited for 600 on SPX to go long after getting hurt trying to bottom pick. 

It's demeaning to be considered part of a psyche that should be faded, which is why I am writing to you in private via email. I am by no means commenting on the skill or integrity of your site or of Slopers and do not want to offend any one. I just want to point out that I belieive that this fear of shorting now is one of many other signs that a vicious sell off is imminient. Personally, I think it is this week and we don't push past 1085-1090 on ES.

I know I am one of many many faceless names/email addresses/avatars, but I hope these thoughts help. I could always be wrong, like anyone else, but what I am pointing out is something at least worth being congnizant of. 

Discernment and Denouement

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If there's anything I learned from the (miserable) experience of largely missing the March-Present run-up, it is this: trying to "out-think" the charts is stupid. If you look at a chart, and technically it make sense, and if you're a practicing technician………..well, you should take action! What I did was looked at the charts and talked myself out of it.

I face the same quandry with DIG. It's a great inverted head and shoulders pattern. Period. Therefore I'm buying it. A huge asterisk next to it is the disintegrating volume, but that's just the first of the "talk myself out of it" actions happening. I could also think about how it doesn't make sense for energy to be hot in a slumping world economy, or how the dollar is bound to push higher any day now. The list could go on and on; there are always to talk yourself out of a trade.

But I've got the chart. I've got the stop. I'm in the position. And I'm going to leave it alone unless it's stopped out. Because I need to let the chart do the talking, and not my brain.

1012-dig

Don’t Get Cute

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Now that the market has turned down, I imagine most bears – who have been dying for this moment – are telling themselves that they'll get in when the prices are better.

I'm among them. The difference is that I've got 85 open positions, all bearish, and I intend to keep them. I'm pretty sure the market will move against them, and that's OK. I'm so deeply in profits on them already that it doesn't matter. I'm willing to wait it out.

If we do push higher – and I pray God that we do – I've got a veritable truckload of new shorts I'm waiting to get into.

But here's the thing – – back in March, as the market was undergoing another sea change, people kept saying I'll Wait For A Better Price. They knew the market was moving higher, but they didn't want to pay "top dollar" after a big surge. Let's call this thinking IWFABP. I was affected by it. And here we have it:

1002-cute

The problem is that a better price never showed up. Not even once. So……..

1002-upupup

I cheated myself out of the vast majority of the rally this year by waiting for the "right price." I'll be damned if I'm going to repeat that mistake in the other direction.

Your friend Tim remains firmly entrenched and shall add to his short positions on any pushes higher. Come and get me!

The S.A.D. Indicator

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They say that no one rings a bell at the top of a market. That isn't necessarily true.

In the basement of Slope Labs, I have discovered a vitally important new market metric called the S.A.D. indicator, which stands for Snark And Despair. The mathematical operators and relationships between the components are proprietary, but it is based upon:

  • The quantity of nasty comments and put-downs on the blog (or on other blogs about this one);
  • The sudden re-appearance of JakeGint, who was mysteriously and utterly absent when I was raking in cash but sees fit to burst back onto Slope to chortle when times are tough;
  • A barrage of emails from anguished traders who are getting killed by the fraudulent and deceitful mayhem of the U.S. government's printing presses;
  • The barrage of emails that this "proptrader" clown has been sending me packed with hateful images and text, delighted at the mayhem in the markets.

I have been doing this long enough to not only take it in stride but to consider it a helpful revelation as to where things stand in the market.

So on a scale of 1 to 10, the S.A.D. hit a 9 recently, and today's turnaround confirms its efficacy. I only hope it never reaches a 10; I don't think I could stomach that much bile.

Now, today's action was very, very, very significant from a psychological standpoint. Let's assume for a minute those bullish bastards got their way and the market closed at, say, 10,010 and there were smiles all around. It would simply affirm:

  • No matter what hare-brained insanity the government engages in, the investing masses will continue to bid equities up;
  • There is always a bid under the market;
  • It would assure the idiots in the U.S. Government that they can always just keep puking trillions of dollars of money that will never be repaid at the world with absolute impunity.

Instead, we got the best of both worlds. The FOMC whored itself, as everyone expected, and the bulls got into a lather and bid things up and gorged themselves on /ES at 1075+. Then, right out of the blue, the floor disappeared, and suddenly a plethora of bulls found themselves with something they had forgotten existed: Losses.

Good.

So now we've got a bunch of bulltards underwater on their positions. Isn't very comfortable, is it, ladies? And you've got a huge mass of activity between 1065 and 1070, which means that if we bid up to that level again, the bulls will be squealing and tittering and getting the hell of those positions as fast as they can in order to ameliorate their losses.

Does this mean the top is absolutely in? No. But to my way of thinking, it increases the odds of a top being in from about 5% to about 25%. The disappointment that the bulls must be feeling today has got to sting, since they got accustomed to free money over the past seven months. That is going to introduce a skosh of worry which was absolutely absent before today.

The Emperor Has No Clothes, and we're about the only ones who recognize it. Today's action isn't a game changer, but it's a very positive sign. At this point, additional good signs would be the @ESZ9 breaking:

  • 1051.50
  • 1035
  • 986.50

If we get some serious selling, I think we will slow down and turn around somewhere in the high 900s – I can't see us getting below my "bold prediction" of 950 any time soon – but if indeed we do slosh our way down there in the coming few weeks, I am highly confident the bears will have regained control, and we can play off a series of lower highs and lower lows.

Thank God.

So that's it from me. I spent the first half of my day worrying about and dealing with FOMC madness (which turned out great) and the second half of my day making my network into a Robust Network With Wonder-Twin Powers. I'm off to read my kids their bedtime stories. Good night.