I am not so sure the S&P 100 "needs" to retest its Monday, 3/17 intra-day low. This is contrary to what I thus far have been suggesting with reference to intermediate-term RSI (more on this below).
The "form" the S&P 100 has taken since last Wednesday's (3/19) high suggests the stock market may be about to explode higher. Other stock indexes support this view as well.
Although I have been suggesting intermediate-term RSI would rise above its December high before the S&P 100 turned lower and challenged last week's low (set on Monday, 3/17), there is no denying the kind of RSI divergence one might expect at a bottom has already formed.
Now, the possibility I mentioned above, suggesting the stock market might explode higher (say, tomorrow and Friday), could turn out to be something like a "false positive" medical test. We'll probably know for sure sometime tomorrow. If the S&P 100 does not launch higher, then it probably will break down to the 590-600 range. Yet, even were this to happen I suspect the stock market might sooner rocket higher than I have been suggesting prior to today.
The more I look at the big picture — the nearness to which all major indexes are to points at which, were they to fall below, the stock market might likely thereafter collapse spectacularly — the more I am persuaded last week's low represents something of a strong floor.
Bottom line, the stock market's multi-month decline since last October might have ended with the Bear Stearns take-down. However, this decline has been but part of a larger corrective pattern that began last June. So, even if the stock market rises over the weeks ahead — to the point of challenging last October's high or possibly even exceeding it — the anticipated stock market melt-up part and parcel with the Risk Averse Alert's "long-term" forecast might still face a late spring or early summer speed bump. In fact, following any significant advance over the weeks ahead there could be another steep decline taking major stock indexes (the S&P 100 included) right back down to present levels, or even a bit lower.
That's a bit of forward thinking stated for the record.
* * * * *
© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.
Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.
Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.
There's an easy way to boost your investment discipline...Get Real-Time Trade Notification!
