On Mindless Bull Market Banter to Come ~ The Risk Averse Alert

Tuesday, June 09, 2009

On Mindless Bull Market Banter to Come

There's hope for my June OEX 400 Put position. This is despite failure of a prospective strong bout of selling to develop yet as a consequence of [still] deteriorating underlying technical conditions.

You see, "live and learn" is a double-edged sword in this game. On one side mistakes are bound to be made. Indeed, this is likely to occur more often than successes can be claimed...

OEX 5-min

Risk averse options play really requires a trigger finger (and that's what I hate about it). Everything must go as anticipated. If it doesn't, then either you react accordingly or suffer the consequences.

When I initiated my June OEX 400 Put on Tuesday, May 26th, anticipating a "like from like" spiral down to the 360-370 range ... all was well until late-Friday, May 29th. This was when the first of several [known] recent S&P 500 futures jam jobs occurred.

Truth is I probably should have bailed out of my position that very moment. Yet with much time remaining until expiration and favorable technical conditions I chose to hang on. Had I been more aggressive and closed at a loss, surely I would have initiated another Put position last Friday when, according to CNBC, our nation's economic recovery began with 345,000 jobs lost.

Well, now you know why I limit the size of any [speculative] options position I take. This helps compensate for moments like this, when "close" still might win a cigar...


Here is the better side of "live and learn." Adjusting the Elliott Wave view to fit developments since initiating my June OEX 400 Put position, you see there really is cause for hope.

Time, indeed, is running short, yet so too is momentum, relative strength, and upside volume ... among other things...


All I know is nothing crazy has to happen to precipitate a decline to the vicinity of the S&P 100's 50-day moving average. In fact, this could happen tomorrow. The sooner the better will be fine with me, because time value is about all I can rightly hope to fetch upon selling my position.

Now, recall recent musings on the prospect of a buoyant market extending into late-summer. The Elliott Wave view of the S&P 100 presented above fits the bill quite well.

Imagine wave 5 of c — more strained in its advance than anything seen thus far since March bottom — unfolding over several slow summer weeks ahead. Think of the ceaseless media banter about "recovery" covered thick with imagery of an unfolding "super bull market."

How ever will I maintain focus here on a very bearish big picture?

You can be sure I'll do my best to remain objective. Please let me know if I bore you to tears...

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.

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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