Near-Term Resistance Amidst Distribution ~ The Risk Averse Alert

Friday, March 19, 2010

Near-Term Resistance Amidst Distribution

Also presently trading in the vicinity of near-term resistance is the broad-based NYSE Composite Index...


And still — yet as ever since March '09 bottom — the underlying substance of buying supporting the Composite Index's advance presents a mystery...

$NYAD cumulative

If the majority of NYSE-listed issues on balance are rising in a fashion suggesting a great deal of long interest, then why is the Composite Index lagging so badly?

ANSWER: the majority of NYSE-listed issues are being distributed to suckers ... and gains thus far registered are the best these weak hands can deliver. Same as it ever was since March '09 bottom.

Yet over the past six months in particular, long side interest, no less pervasive by any means, appears to have all the financial power (and likely mindset, too) of a six-year-old in a candy store. Their purchases just are not moving the register. All the more they appear only to be eating dead equity ... willingly, of course, as suckers would.

So, all the more, still, is so-called "near-term resistance" appearing formidable, pure and simple.

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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