This "Power Hitter" Looks Downward Through the Fog ~ The Risk Averse Alert

Thursday, April 10, 2008

This "Power Hitter" Looks Downward Through the Fog

Yesterday I admitted "I could be wrong" to "predict pain" possibly resulting in the stock market imminently breaking to new multi-month lows. It's true. I could be wrong.

However, I could be right, too.

OEX 5-min

No doubt, I was incorrect to suppose Wednesday's like-RSI performance to Tuesday's (4/8) and late day Monday's (4/7) probably would have the same negative consequence today. Apparently Wednesday's RSI divergences put buying strength beneath a market characterized by both "diminishing demand and underlying complacency" enough to move prices higher.

Yet, Tuesday's gap open lower is showing itself to be something of a brick wall. So, I would contend selling beginning mid-day Monday still looks more portending than buying early today.


The picture of "diminishing demand and underlying complacency" continues. Relatively weak volume demonstrates this.

Of course, this does not mean Monday's peak could not possibly be exceeded. Indeed, it could. However, if volume remains weak, then look out below. See last Friday's "Thank You, Sir, May I Have Another" for a broader discussion on the volume picture.

Just so you know ... nothing sentiment-wise has changed. Go back to Tuesday's "A Five Minute Spanking Can Sting All Day" and review the CBOE Put-Call Ratio. The picture essentially has remained the same these past two days. Taken in the context of this measure's performance over the past year, it too is saying look out below.

And finally, remember: in their first fight Clubber Lang didn't knock out Rocky until the second round...

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