On the Highest Confidence Reading Since Lehman ~ The Risk Averse Alert

Tuesday, May 26, 2009

On the Highest Confidence Reading Since Lehman

Can you believe CNBC's Closing Bell failed to broadcast the following credit...
"Today's trade scripted by TC at the Risk Averse Alert."

OEX 5-min

Did you hear today's Consumer Confidence upside surprise brought the best read since Lehman Brothers went bankrupt last September? What contrarian is not doing his best Ace Ventura "Rahehealy?" Given today's low volume accompaniment, might mending confidence absent a willing bid set up for a real-life demonstration of how money talks and b.s. walks in times of tanking 200-day moving averages?

Of course, a brief trip around the technical horn yields nothing but signs reading, "Beware!" So, there is no trouble here being a bear.

Real quickly, then, have a look at how NASDAQ might be taking up its typical leadership role, and providing advanced indication a decided turn lower is imminent...


Having recently noted how buy-side relative strength has been harmoniously persisting across the broad market, providing "support" (and possibly lessening the depth of any pending decline) ... we see in the above view a noteworthy RSI contrast, NYSE versus NASDAQ.

There has been a breakdown in NASDAQ's relative strength trend. Thus, the broad market's prospective turn lower is not only being telegraphed, but the very message of trouble ahead appears to have been largely delivered.

Need more proof? Check out NYSE and NASDAQ McClellan Oscillators.

A 15-20% haircut might be served promptly.

Fast Money
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© 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.

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