Blessings on My Forecast ~ The Risk Averse Alert

Friday, January 29, 2010

Blessings on My Forecast

Believe it or not, much like last Friday the question right now is how fast could the market crater?

Inasmuch as last Friday's negative crescendo to a poor, holiday-shortened week — finishing more or less on the lows — did not prove as foreboding as, indeed, appeared possible ... today's similarly negative close — finishing out the week, as well as January 2010, more or less on the lows — no doubt doubles, one might reasonably think, next week's negative potential.

In hindsight, then, last week's "foreboding" might simply have been the setup for this week's decidedly negative culmination to the first month of 2010.

One thing I will add to this year's "January Barometer" is the fact that, many major indexes also registered an "outside" month, trading both higher and lower than respective ranges established during December 2009 and, furthermore, settling below respective December lows. In all the years over which it is my contention stocks have been distributed from strong hands to weak — namely, the years 2000-present — an outside month settling below the prior December low never before has happened. I don't necessarily wish to elevate the negative portent of either this year's "January Barometer" or the fact that January 2010 was an outside month whose close was terrible. Yet adding these things to my technically well-developed, extraordinarily bearish outlook, how does one not begin thinking...
I got blessings on my forecast (so to paraphrase). $SPX Look at that. It is all bad. Dive, dive, dive! Unknown is whether a first wave down from January's top and a second wave up, correcting this, have formed, and whether, now, a third wave down has commenced. This is entirely possible. Certainty about this should likely come first thing Monday morning, too. Bear in mind it is possible the European Union won't collapse this weekend. Although by the sound of things this could happen any day now, according to EU Monetary Affairs Commissioner Joaquin Almunia, there's no need to fear the worst...
Is it just me, or does this performance evoke shades of Alan Schwartz a couple days before Bear Stearns was taken out? Fast Money
* * * * *
© 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. There's an easy way to boost your investment discipline... Get Real-Time Trade Notification!