40 But He answered and said to them, “I tell you that if these should keep silent, the stones would immediately cry out.”
—Luke 19:40
As I was saying...
"Prices can fall of their own weight, but it takes buying to put them up."
Yet the patient bear — whose position is entirely confirmed by a dying, trend-leading NASDAQ — also appreciates how, in the ongoing culling of weak-handed shorts ... he or she might need further endure the stock market's contrived levitation ... whose truth over many weeks has been consistently laid bare.
Once again, however, any upside remaining should be rather limited. And just precisely how any further gains might be achieved would be no mystery at all...
Kudos Jon Najarian for insights into short squeeze mechanics that, over a year ago in these parts were thought a likely driver to carry the stock market higher following last year's beating. This suspicion, indeed, proved spot on. For the record, both Jon and Pete Najarian are players whose options analysis I respect because there's usually something valuable to be gleaned from their observations, whether I agree with their conclusions or not. Their collective command over the options world and ability to convey intelligence and strategy with relative simplicity is admirable. That's one reason why links to their tradeMONSTER online brokerage now are being featured here. These two men have put together a gem, so check out the state-of-the-art tradeMONSTER platform. There's another reason tradeMONSTER is a friend ... and you can read about it here. Did you happen to see Bill Gross' November 2009 Investment Outlook titled, "Midnight Candles?" It is a bombshell worthy of Francis Scott Key! You will discover a big picture view harmonious with perspective presented in my Summary Statement of Fundamental Reality. One thing of note is his conclusion that, financial assets at the periphery present a risk too great to justify low yields presently being offered. Pondering this conclusion one realizes that, without increasing willingness to take risk at the periphery, the entire edifice put in place over the past year — the attempt to mimic the Japanese response — in all probability is for naught. This is because prospects for financial assets that, in normal times are considered relatively risk-free (for example, U.S. Treasuries) are in fact made grim by this unattractiveness of risk at the periphery. Think of it this way... What reward is to be gained investing in securities that, in normal times are considered relatively risk-free (U.S. Treasuries and investment grade bonds), when an unending issuance of these securities must be expected as a stopgap to mitigate inevitable collapse at the periphery? Although Bill Gross did not directly say so much, his article's curious introduction and the hour at which his candles are burning really says it all...
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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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