Buying Time ~ The Risk Averse Alert

Monday, March 01, 2010

Buying Time

No change in Friday's view. Today's trade fits the bill of another day but spent buying time...


And time is about all they were buying on the big board. Volume continues its fade ... while momentum remains negative. $NYA still appears poised to fall to its 200-day moving average.


But wait! Is tech now leading the way higher?

Well, one contrary item of note today is $COMPQ has risen to a well-defined line of resistance. Although volume today did pick up, it once again fell well-shy of volume exchanged during NASDAQ's mid-January - early-February decline. Thus, more effort buying time appears here, as well. Such could be the best one might expect when there are far more stakes holding for dear life than are in fact increasing.

If NASDAQ is to lead the market to higher highs, post-March '09 bottom, the time is now. Yet if five waves down and three waves up from mid-January top have unfolded, then the line of resistance to which NASDAQ has risen might bring $COMPQ likewise to dive to its 200-day moving average, and stat.

Supporting this likelihood is the state of NASDAQ's leadership. Here finds a foreboding weakness ... but extending:

$NAAD cumulative

NASDAQ's cumulative advance-decline line — a measure of listed-issue participation — in '09 having barely arrested its multi-year death spiral, now appears poised to resume the blood letting of the majority of NASDAQ-listed issues.

On a side note, the behavior of NASDAQ's cumulative advance-decline line around its 200-day moving average thus far over the course of 2010 is the picture of what might lie ahead for major stock indexes. (I mentioned this Friday.)

NASDAQ McClellan

NASDAQ's McClellan Oscillator today presents the sort of negative divergence one should not ignore here. This follows its behaving as might be expected during an Elliott 2nd wave's unfolding, as has been occurring since late-January. Taken together, NASDAQ is seen at a threshold.

If something other than much more selling is dead ahead, then the time is now to postpone this seemingly inevitable end. However, the technical configuration around NASDAQ suggests this end might not be forestalled.


In the new world, post-securitization market fail, incidence of capital fleeing the United Kingdom of OTC derivatives casinos does not mysteriously coincide with equity market stress. The two go hand-in-hand: the yin of capital drain and the yang of capital desperately filling the hole.

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.

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