Treasury Secretary Warren Buffett Anyone? ~ The Risk Averse Alert

Wednesday, November 04, 2009

Treasury Secretary Warren Buffett Anyone?

Any ideas on what Mr. Buffett might haul with those trains of his that could make BRKA's 50x multiple look cheap?

How about right-of-way for the next leap forward — maglev. I want to give his faith in America credit. Billions of dollars do not buy the spirit of consensus making America unique among all nations the world has ever known. Rather we all play a part in this. We are all part of the shape of things to come. This, indeed, is power of a free people.

So, maglev needs nuclear power and a lot of it if it's to go coast to coast. It is assumed all railroads would benefit with this sort of national upgrade built on a crash basis. A full build-out of a nuclear-powered maglev system ensures the gap between Buffett's eternal fair value accruing to BRKA long after he is gone and our nation's gained productive power is so huge as to make a state-of-the-art infrastructure upgrade such as this beneficial to all — indeed, a classic "no brainer."

I mention this because Mr. Buffett's assumed fundamental intent buying BNI is to protect the core value of his BRKA shares for posterity, particularly given present risks. He did in fact once say derivatives were weapons of mass destruction ... and now he is walking the walk ... grabbing core value long likely to serve up cash consistently while the already dead wildcat finance inexorably leads what remains to further fall victim to the global economic plague simultaneously begun with last year's collapse in the exchange of goods and services.

Yet Mr. Buffett also expressed faith in America. And you know, he is not a stupid man. Surely, he realizes this faith, though representing the will of many (if not all humankind), has had its standard-bearers who were instrumental in making this nation's ultimate potential a tangible reality at critical moments throughout its history.

And so imagine Mr. Buffett's legacy were he to become Treasury Secretary, reconstituting the Bank of the United States charged by Congress to cheaply finance projects (loans at 1-2%) necessary for the build-out of standardized, fourth generation nuclear power plants and a national magnetic levitated train grid, serving the good of not only BRKA shareholders and their business interests, but also the greater good of all Americans and their posterity.

This my modest, business-minded proposal, uniquely sensitive to American history, is given in thanks to Mr. Buffett for yesterday roaring load and clear, "This is a serious, serious bear market you stupid box of rocks!"

(Like I said you could see this understanding yesterday in the faces of those closer to the Street. They heard of it the same way I thought of it, and they didn't need to say a word to speak of what they sensed. Their tense commentary said it all.)

On to the stock market's technical condition...

SPX 5-min

Just a few days ago I thought it likely 5-minute RSI would push up near a buy-side extreme and this would set the stage for a thud...

Wha la!

You gotta like those lower $SPX highs and higher coincident RSI highs. This, again, reads the lower she sinks the more positively the buy-side believes it's time for turnaround. Such fearlessness is prerequisite to building a bull trap ... and this one here is but a tiny sampling of an enormously bigger bull trap built since March '09 bottom. The technical case made over recent months supporting this view has been and still is rock solid.

The extent of this week's comeback advises the Elliott wave count you see above. You see quite typical RSI behavior accompanying each wave in this initial move down from top, right along lines I was originally anticipating (before suspecting a "running correction" was forming in wave ii position). And now ... RSI exceeding its best reading at top — classic 2nd wave behavior — was all the more reason to press my UltraShort ETF position and jump on a couple dirt cheap November OEX 460 Puts, as many of you already know.


From top to bottom ... loving daily $SPX RSI trapped on the sell-side of its balance (i.e. below 50) ... $SPX languishing below its 50-day moving average ... volume's increase as $SPX fell from its recent top and volume's contraction during this week's bounce ... and momentum (measured by MACD) falling to the sell-side of its balance with plenty of potential momentum loss remaining to account for the gassing I believe is coming right up.

(Engaging Word on the Street today ...
that is beyond the first 5 minutes)

Fast Money
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