Holding On For Dear Death ~ The Risk Averse Alert

Monday, September 14, 2009

Holding On For Dear Death

Evidence demonstrating how pigs in the stock market willfully choose to be slaughtered was put on display today. With overwhelming reason to consider locking in gains off March '09 bottom ... today's hard smack at the open instead inspired money manager "talent" to bid on the trickle of supply that followed, rather than offer up supply of their own. What a pack of stupid lemmings.

Actually, though, it is good to see this. Forecasting collapse would be foolhardy were fear born of sensitivity to historical precedent instead widely evident. That "talent" persistently holds ever-tighter its equity position as indexes march higher off bottom reveals one of two things about its present operating psychology (and neither is good): fearlessness or desperation. My sneaking suspicion is the latter is rather more widespread after last year's slaughter. Still, a pig is a pig, whether it be squealing (like now) or not (like last year).


You can dig into my past and discover analysis suggesting that, if past is prologue, then what might come of it is exactly what you see above.

So now the question is, if past is prologue, then how soon might $COMPQ trade down to the green line in a repeat of last year's June-July period? Looks to me that, if this move down were to begin pronto, then March bottom could be challenged by the end of the year. Indeed, if past is prologue, current divergences in both RSI and MACD suggest a sustained move down could begin at any moment. Furthermore, much as June-July '08 demonstrated, the market generally falls faster than it rises ... and it neither needs a "reason" for doing so (there wasn't one last June-July), nor must Shemp be ahead of the curve (he was bullish last summer, too).

Fast Money
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