The Fits We Must Endure ~ The Risk Averse Alert

Thursday, December 18, 2008

The Fits We Must Endure

Well, yesterday's marked weakening of 5-minute RSI became today's incredible sell-side RSI extreme. This coincided with a decline that was hardly notable on every count. So, conviction I have toward the market's pending melt-up extends to reluctantly accept the fits we must endure in the interim.

OEX 5-min

The urge to rant really is subdued by today's mini-capitulation. Looks a lot like last Friday (12.12.08), doesn't it? Yet the surge in sell-side RSI strength was even more pronounced.

Surely, this imbalance will be exploited, much as has been the case all week. Whatever weakness carries forward into Friday's open will rather likely be bought. There's little doubt about this.

Question: what are the odds ratings agencies, like Standard & Poors, suddenly are in front of the curve? Any chance their downgrade of GE had something to do with Herr Brit for Brains threatening auto industry bankruptcy?
"I thought about what it would be like for me to become president during this period. I believe that good policy is not to dump him a major catastrophe on his first day in office," Bush said.

(What the guy lacks in credibility he more than makes up for with an uncanny ability to tell a good joke...)


Hardly a wide-reaching panic hitting the Big Board today.


Ditto "the House Madoff Built."

Obviously, then, both the NYSE and NASDAQ McClellan Oscillators held up remarkably well, too.

(Question: how do you go for decades showing consistently positive performance, and find your firm ... in times like these no less(!) ... suddenly facing withdrawals amounting to 40% of capital under management? Wouldn't you think money would be rushing in, and not out? In a fund with a reputation for turning away investors? In a world chalk full of losing hedge fund strategies? At a time when governments are shoveling money out the door so fast, the abundant excess is bidding 30-year Treasuries through the roof ... thereby demonstrating "safety" is not the issue? The FBI hasn't gotten around to explaining this one yet. And David the vanilla ice cream man Faber shed about as much light on the matter of "European redemptions" as reaches the dark side of the moon.)

As if this were not odd enough, here's something strange, too...


That has "Nelly Capitulates!" written all over it. Why even Vince Farrell is nervous. Who says they don't ring a bell on Wall Street when it's time to buy?

Of course, in all fairness I'm no raging bull. There's certainly no compelling case to claim a buying opportunity of a lifetime is staring us in the face. Yet there's also no reason to feel panicked here, either.

So, take it from the Chip Diller of Stock Market Analysts ... remain calm, all is well.

Fast Money
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