Fat Pigs Ready for Slaughter ~ The Risk Averse Alert

Monday, December 21, 2009

Fat Pigs Ready for Slaughter

You don't need me to tell you what is going on. It is as plain as day...

SPX 5-min

Ask yourself one question: where is the follow-through? Jam pre-market futures higher, then distribute. Pretty simple. It has been this way for months now. Today's experience is nothing new.

But what of this contrived, CME-led bid absent any follow-through? What does it prove?

Zero real buying power possessing capacity to sustain a ruse!

So, when might this become a problem?

When some presently bankrupt enterprise, public or private, finally rolls over and dies.

Picture it...

A crisis of confidence. Day after day, pre-market futures obscenely sold down. Circuit breakers rapidly triggered once stock exchanges open for trading. The impact of some dead enterprise's seizure. A chain reaction collapse that simply cannot be averted. No bids to be found. Millions stuck with positions being driven only further into the ground.

Such likelihood is the price of complacency among those who today insist upon holding their position in expectation of recovering a few more pennies following last year's pounding.

Market makers crippled last year are well-aware of profound risk still nowhere near abating. Ditto the exchanges where these firms do business. These insiders are not dumb! Yet because they have no other choice they're playing millions who are. Don't you be one.

$COMPQ$NAAD cumulative

If trend-leading NASDAQ's cumulative advance-decline line has returned to its death spiral ... then $COMPQ 300 ... here we come.


No, no, no! When new index highs are reached, more stocks should be setting new 52-week highs, not fewer. Simple stuff! Apparently, however, too much rigor for some.


Look. These past couple months present every appearance that, fattened pigs are ready for slaughter. Not once have market makers let things slip, and likely for a reason. Namely, they can't afford to. That is why once circumstance moves beyond their capacity to control, this thing probably is going to spiral into oblivion so quickly there simply will be no time to react.

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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