Christmas in April ~ The Risk Averse Alert

Thursday, April 02, 2009

Christmas in April

Yesterday, I indicated that, "Technically, it's looking a bit like mid-December here." This view largely was precipitated via index MACD and RSI performance. Both measures, bullishly positioned, raised no cause for concern the market might unexpectedly turn over. Considered, then, from the perspective of finite, [very] near-term, Elliott Wave-related possibilities ... a strong push higher in the market seemed likely.

One profitable April OEX 390 Call later (sold right at the top ... lucky! ... at a tripled premium) ... now, much like mid-December, could come a fairly decided (yet relatively tame) pullback...


The [bearish] S&P 500 price-RSI divergence noted above similarly is confirmed by NYSE and NASDAQ McClellan Oscillators (which are indicating some measure of underlying weakness is building).


The CBOE Put/Call Ratio's MACD is positioned similarly to recent instances when the market was poised to sell off.

Keep in mind, too, the market bounced sharply subsequent to selling during those recent instances noted above. As you can see via markup on the previous chart of the S&P 500, I am anticipating much the same near-term ... projecting a solid, further advance off March bottom following any sell-off unfolding over the next couple days.

NYSE 5-min
NASDAQ 5-min

Lately, 5-minute RSI extremes have reliably signaled a pending turn in the market. So, there's another reason to suspect the market might imminently come under some selling pressure.

Per the speed of the market's pending decline, I am only guessing. Since RSI on daily index charts can be expected to remain on the buy-side (above 50) selling might unfold rapidly ... reaching bottom intra-day ... only to see losses largely erased going into close (Monday?). Something like Wednesday, March 25, 2008.

Fast Money
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