Slope Of Hope with Tim Knight

Garmin Long Shines

It's kind of a perverse irony that Slope - a permabear's blog - has some of its greatest successes with long ideas.

I offer you my January 10th suggestion of Garmin:

Hyperdynamics Follow-Up

Last month, on January 6th, I did a post suggesting symbol HDY as a speculative short play. I've marked with a red arrow when I made the post.

The chart pushed a little higher from where I suggested it, but as you can see, it worked out pretty well as a short, down about two-thirds from where I mentioned it. Unfortunately, this was one of those very rare instances that my broker couldn't find a single share of stock, so I didn't partake. But maybe one or two of you did...........in any case, in spite of being a little early, this was a good one.

Anyone's Guess

Well, I really thought the long-term trendline on Apple would mark a turning point. Nope. Apple rolled its eyes, kicked the trendline out of the way, and has gone stratospheric.

When it's going to top out? At this point, your guess is as good as mine. I can tell you this, though - - I'm not touching this thing.

Ready for More Skanky Punishment

Big Cap Tech versus Internet Bubble 2.0 (by Dave Pinsen)

Big Cap Tech Versus Internet Bubble 2.0

Hey fellow Slopers,

Mike Paulenoff's post Wednesday afternoon ("Big-Cap Tech Stocks to Watch") and the release of Groupon's earnings later in the day, prompted me to take another look the hedging costs of some big cap tech stocks along with the cost hedging Groupon and a few other Internet companies that went public in 2011.

Groupon dropped 15.6% after hours Wednesday after it announced a Q4 loss, but at least one observer was bullish on it on Twitter. You might recognize his name from the late '90s:

 

Groupon now generating operating profit and strong free cash flow read.bi/ypRGEU Meanwhile, idiots still saying "Can't make money"

— Henry Blodget (@hblodget) February 8, 2012

 

Skanky Trade Continues

I've mentioned purveyor-of-skanky-wear retailer Abercrombie & Fitch many times in the past, and my post of October 11 highlighted it when it was above $70. It continues to tumble (much like it did during those charmed years of 2007-2008). It's down a double-digit percentage today.

Revenge on Federated Investors

You may recall that on Wednesday I got stopped out of FII at a really lousy price based on a completely bizarre intraday spike in the stock (I've pointed out where I got stopped out with the red arrow below).

Well, after taking a look at the chart, I decided it still was a good short, so - - in spite of the recent pain - - I re-entered the position. I'm glad I did, because today I covered (where the green arrow is), turning my frown about FII upside-down.

It just goes to show that even when something rattles you, it makes sense to step back, take a breath, and re-assess with as much objectivity as you can muster.

Hedging a High Yield Long Idea

Hedging a High Yield Long Idea

Hey Fellow Slopers,

In a post Wednesday morning ("High-Yield Long Idea Idea Continues Strong"), Tim noted the strong performance of his long position in the SPDR Barclays High Yield Bond ETF JNK. Back in August, I looked at the cost of hedging JNK, but I thought it might be worth taking another look after seeing Tim's post. It turns out JNK is pretty inexpensive to hedge right now. The table below shows the cost, as of Wednesday's close, of hedging it against a greater-than-20% drop over the next several months.

A Comparison

For comparison purposes, I've added six of the most actively traded ETFs to the table. First, a reminder about what optimal puts are, and a note about decline thresholds; then, a screen capture showing the optimal puts to hedge JNK.

High-Yield Long Idea Continues Strong

Miners - The Gift That Keeps On Giving

I'm starting to think I should just stop bothering with anything else but GDX. This is like the new UNG - - it faithfully pushes lower, irrespective of the manipulations of TPTB. Thank you, GDX.

Below the (completely manipulated) SPY is in blue while GDX is in black. It looks like they decoupled a couple of weeks ago.