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.
Mrs. Bear is throwing a huge baby shower (38 guests…………God help me), so I'm busy wit that (but you really didn't believe me when I said I wouldn't post until Monday, did you?) Scurrying around and tidying up is therapeutic for us O.C.D. types, and I'm spending my idle brain cycles thinking about the big picture of the markets.
I've got a lot to say. I'll put it together tomorrow. Expect a change of attitude, and a change of direction.
When I was in the 5th grade, there was a kid in my class by the name of Kevin Healey who was (as federal law requires) the designated "cute kid" in the class (I was the smart one). All the girls liked him. He was really popular.
Now that we were in the 5th grade, we could run for student council. Typically the 6th graders ran for President, and the 5th graders ran for Vice President. I signed up for the campaign, and I tried my best to explain to the kids why they should vote for me. "Vote Right, Vote Tim Knight" was my catchy slogan.
Once the votes were tallied, the cute kid won, and the smart kid lost. I was in tears when I told my Mom the news. I felt it was really wrong for the popular kid to get to be on the student council, especially when he could barely write his name in the ground with a stick. But that was the result.
The next year, I tried again, but this time, I ran for President. Against Kevin Healey. And even though my prior experience told me that I would get trounced, I did the best I could. And I won. In the end, the smart kid finally won.
When I was 16 years old, I was audacious enough to want to write my own book. I put a proposal together and submitted it. It was about how communications between computers would change the world (the book was called The World Connection, and I wrote it ten years before even the first primitive browser was introduced).
The rejection letter came in the mail. I slunked off to my bedroom and thought about it for a while (the future Mrs. Bear sat in the living room with my mom, since they wanted to leave me alone). I picked up the phone – called a different publisher – got their acquisitions editor – and got myself a book deal.
And I went on to write twenty published books before I was even out of college.
In 1992, I started Prophet, and a year later, we were a prosperous little business. A competitor of ours (we surmised) decided to cut us off at the knees, so they burglarized the office. They smashed all the windows, took all the computers, and took all the tape backups. We were effectively out of business. All our customer records were gone. Our data was gone. Our code was gone. Everything.
I rebuilt the business (alone – – my partner got out after that) and sold it for $8 million.
And, as a trader, in the spring of last year, I was getting devastated. The typical suspects (Goldman, CNBC, other bankers) were cramming their crap down everyone's throat and pushing the market higher. I was getting mauled. My accounts were plunging in value, and I was a laughingstock to friends and family. Hateful voicemails arrived. I got mocked on other blogs. I doubted I had any talent at all.
I closed the year with my two biggest accounts having gains of over 180% and 350%.
So to to all the cutey pies saying things like……….
…….my response is this: people have been trying to beat me down all my life, and they usually crawl out to do so when I'm at a low point. Like now. But I find it within myself to come back, and in the end, I win. It never seems like I will, but I do. And I will.
Your crooked friends in Washington and in the Goldman Sachs building are the only reasons for this rally. Maybe the market won't collapse until Q3 earnings start coming out, and until then you will keep snickering. But my faith that:
To the 99% of the folks who have written me supportive emails and comments, I thank you, and I'm sorry for all of us this is so hard. Slopers are, by definition, smart, disciplined, and mutually supportive. To the 1% who have recovered a portion of their losses and are getting their jollies spitting in our faces: go to hell. And if you're lonely, stick around and wait for Blankfein to drop dead, since he'll give you some company there later on.
This blog tends to be about charts, but this post is going to be an exception. I'm just going to type what I'm thinking, and this will be my last post of the day.
Today stunk for me, just like the prior five trading sessions stunk. In fact the only reason the stink is diminishing is because I am backing farther and farther away from the market. Two of my four accounts are all cash. That, for me, is extraordinary. I only wish I could wave a magic wand and turn all four into "all cash" as of last weekend!
I haven't been in the comments section in any meaningful way for quite a few days now, but I did catch a glance at one comment which stated that no real downtrend would resume until the bulls became net sellers. I hadn't thought of it that way before, but the Sloper is absolutely right. No matter how much we stare agape at the gullibility of the investing public, the fact is that they are buying stocks, and their demand is driving up prices. So no matter how many bears there are………..and there are rarely many……….their selling is going to be completely puny compared to the buying of the bulls. As long as the bulls are drinking the Kool-Aid, we bears are going to have to keep buying the drinks.
If I look at the total value of all four personal portfolios that I manage, I haven't made any net profits since February. Across the four, obviously a couple are higher and a couple of lower, but the net result is that the five past months have yielded me $0 for the countless hours I've spent on the markets. That is demoralizing.
But demoralization isn't going to do anyone any good. It isn't instructive, and it isn't edifying. When I reflect on 2008, which was an amazing year for me as a trader, I am actually more proud of my ability to pick myself up and recover than I am proud of my ability to make money during the "good times." March-May 2008 were horrible for me, and when I discovered e-mini futures in the autumn of 2008 and wiped out almost an entire portfolio in a week's time, that was horrible too. But I bounced back hugely from those mistakes, and there are times I really wonder to myself how I managed to do so.
Sometimes I get tired of being strong, though. And, believe me, watching hard-earned profits evaporate in a very public way takes a lot of fortitude. When I'm making money and offering suggestions which are scoring money for my readers, all kinds of good things happen at once. My accounts grow in value. I look good to my family. I look good to my readers. My self-esteem and confidence are strong. I am a charting wizard.
When things go badly, everything happens in the opposite direction. What is heartwarming to me is that I actually get more nice emails and thank-yous during the bad times than during the good times. I am really moved at how much people appreciate the community here.
I had an absolutely blast trading late last year, but markets go up more than they go down, and I need to be able to thrive as well in an up market as a down market. I proved this to myself, in a limited way, with my 401-k this year. But as I survey the charts, I cannot bring myself to buy. The risk/reward isn't good enough to my eyes. I have set aside a handful of charts that might look like good longs, but the ratio of interesting short opportunities to interesting long opportunities is about 15 to 1 for me, so it's hardly worth bothering.
I still think the run-up in asset classes – – – be it gold, oil, silver, or equities – – – is running out of steam, although as we threaten to bust above June's highs on the S&P, I wonder how much more upside the bulls might be able to muster. It's entirely possible that "steam" could last much longer than I anticipate. But, for better or worse, I still remain 100% short (setting aside the fact that I have a very large amount in cash, since I've been stopped out of so many things and since I haven't had much interest in loading up on a lot of new positions).
What's most important for me is to make sure I keep my confidence and wits about me. Getting some consistent profits flowing again would do me a world of good. Until then, I'm taking it one day at a time, and I am keeping both my eyes and my mind open.
I'll start off with a minuscule bit of good news – I figured out how to make it so that clicking the logo sends you back to the Slope home page. A technological breakthrough! Anyway, some people have asked, so there you go.
I quite obviously have been getting out of sorts this week, so I dusted off my copy of Trading in the Zone and am re-reading it. I'm only halfway through at this point, but the main takeaways so far have been:
Good luck today.
Referring to my Trading Rules page:
Well, the second part was a few days ago, and the first part is, uh, about right now.
Keep in mind we've been in the same trading range of about 860-950 since April. Bears and bulls have been bouncing between these levels for what seems like an interminable amount of time. I truly thought we were ready to sink beneath it, and I was positioned as such, and the past three days have been very painful.
