The Risk Averse Alert

Continuing with the view that, (a) the market currently is tracing a counter-trend rally off March '09 bottom (rather than embarking on a "new bull market") ... and (b), this advance is nearing its end ... let's take a closer look at what prospectively lies ahead.

For whatever reason the NASDAQ Composite is providing a greater measure of clarity allowing more certain analytical discernment of finite Elliott Wave possibilities...




As usual, nothing is set in stone. I won't go into the various Elliott Wave-related considerations making this prospective wave count attractive. Suffice it here that everything about the market's underlying technical condition supports the possibility presented above.

In keeping with what conditions continue indicating ... this wave count leaves room for further extension of the market's current counter-trend rally. It's possible, too, the ultimate top might not be reached until sometime well after the May 4th "stress test" fireworks. Judging by what was leaked today a cruel joke is about to be played on the more responsible lenders in the banking community, all for the benefit of the creative geniuses whose structured finance built El Swindle Grande.

Most interesting is what all this might be leading to...




Consider how the five waves forming the yet completed wave (1) might unfold similarly to the five waves forming wave 1. As you can see, March '09 bottom might be retested sooner than most presently imagine.

Do you remember what happened during the formation of wave v of 1 last March (2008)?

Why yes! It was the Bear Stearns take down.

So, the question naturally becomes whose goose is about to be cooked?

There's no such thing as a sure thing, but come May 4th odds are high some institution with a long and storied history might be sacrificed to the gods of reckless, wildcat, securities-based finance.

Being that El Swindle Grande [obviously] is built on an active volcano, the hope remains that, by throwing good money after bad, a catastrophic eruption might be delayed.

But entirely avoided? Not while President Obama continues regaling us with his best Herbert Hoover imitation.

Add the pending dismantling of the auto industry and one wonders why anyone with his head on straight would anticipate anything other than a pending tectonic shift in the financial/economic geology supporting the stock market.

All technical reasons for heightened concern recently raised here appear to be meeting rude fundamental facts exposing a truly unstable investment landscape. Again, I do not anticipate imminent collapse. Nevertheless, favorable near-term trade opportunities appear to be in store. Foremost, better days for exiting long ETF positions are clearly on the radar...






© 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.

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