A demonstration of "Strong Hands in Action" for your consideration...
Pay attention to the "higher lows" marked above...
As you can see, each new "higher low" was matched with wisdom — right fear — to increase Put option hedging of long positions. Likewise, given hindsight, demonstration of such "right fear" indicated a vested interest was buying time allowing prices to drift higher.
It is, of course, my contention this "vested interest" is intermediate-term bearish. These are strong hands squeezing weaker shorts, as well as skillfully trimming long inventory and raising capital to pay for hedges in the process.
But this is neither here nor there at the moment, for you see this "vested interest" is behaving differently at the present "higher low." Long position hedging is seen contracting. Hmmm.
This begs the question, then: have strong hands sufficiently trimmed their long positions?
Judging by reduced Put option buying at this "higher low" it appears so.
Add to this the evaporation of yesterday's relative strength divergence (on the daily) and there's further evidence supporting the possibility top is in. Marked acceleration of downside momentum (MACD) in the course of establishing the present "higher low" is but icing on the cake.
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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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