June in September? ~ The Risk Averse Alert

Tuesday, September 01, 2009

June in September?


The similarity to mid-June market behavior and the consequent effect on technical conditions proceeded today...


$SPX

If correct is the view that the market could remain in a state of suspended animation — not reaching ultimate top for some weeks forward at levels not much higher than now — then it's likely that technical conditions just prior to the final move to top will be weaker than was the case early-July. Thus, both RSI and MACD, for example, (as well as other technical measures) have considerable room yet to pull back. This could easily happen, though, while indexes trade sideways over coming days and weeks.

Still, let's not forget that both RSI and MACD (as well other technical measures) already have signaled increasing weakness in the market's advance off March '09 bottom. So, it's possible top is in (i.e. five waves up from March bottom are complete). Today's bump in volume seems a red flag indicating the greater likelihood of this possibility.


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!