Sanity Check ~ The Risk Averse Alert

Wednesday, July 02, 2008

Sanity Check

I will be honest with you. The stock market's slow roll over continues to bother me. Given all conclusive evidence revealing underlying weakness, it is disconcerting not to see a capitulation develop more rapidly.

Let me get right to the point...

It is not the case that current circumstance provides less analytical rationale to suppose stocks have much further to fall. Rather, it simply is that the door remains open for a sizable bounce.


I'm a little at loss for words right now. I will just leave you with this...

Consider how from the perspective of RSI and MACD the current period appears similar to August - September 2005. It's the slow degradation of the S&P 100's daily RSI reading, taking it to an oversold level that is bugging me right now.

I am 100% certain bottom to the current move down is not yet in. So, even if my concern over the possibility of a sharp, counter-trend rally is justified, there is time to appropriately react.

No doubt, we should see some indication of technical divergences develop before any bounce occurs. Right now, I can only defer to recent observations toward the NYSE McClellan Oscillator and its non-confirmation of the NYSE Composite's move lower. However, the same cannot be said for the NASDAQ McClellan Oscillator.

The one thing I can say with utter conviction is the stock market is not about to launch on its projected melt-up. Yet, it might strongly bounce sometime over the next few weeks and delay its much-anticipated capitulation.

My eyes are wide open to possibilities. I really do not like having money at risk when uncertainty reigns.

Yes, it's true. Nothing is set in stone. Sometimes, though, analytical certainty is quite elevated. And sometimes it is not.

Right now, I am not terribly comfortable being so aggressively positioned expecting the stock market's decline to accelerate. Like I said, if uncertainty continues, there still is time to react. Bottom to the current move down most certainly is not yet in...

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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.

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OldBrokenRecord said...

You're not the only one being puzzled at the weird frozen pattern of the past 3 sessions. It should get unglued one way or another within the next 2 or 3 days. Odds are still very much in favor of a big drop by mid-week.

adan said...

had been meaning to stop by and say i think your posting-in-the-mornings of the market day before seems to be working

but feel free to write the same day if so compelled :-)

thanks tom, enjoying your posts

ps - been following your twitter too