Giddy Fail ~ The Risk Averse Alert

Thursday, April 01, 2010

Giddy Fail

So, here's the deal...

Since absolutely nothing transpiring over this week's four days of trading changed the bearish view put forward here last week ... as well as many months before that ... I took the week off ... sort of.

You might have noticed that, sometimes (often times?), my posts have a time stamp seemingly belying the hour they appear. Up to (and including) this week, the template for a given day's post first is saved (producing the time stamp you see), after which I dive into the charts and develop my commentary.

Of late I have found better success after a good night's sleep putting to pen, so to speak, perspective that came to mind before retiring for the day. Sometimes my writing is not completed until the next day's trading is well underway.

In the grand scheme this delay really is of no consequence. Perspective I develop is entirely unaffected by the following day's trading.

Ditto this week's commentary. It's just that one thing led to another ... and, like I said at the start, given that nothing this week — absolutely nothing — altered my well-developed basis for maintaining a very bearish posture, well, I just let each day's new thought sit on the burner.

And now that the week is over ... finding traders on the Fast Money desk going into the long weekend in a downright giddy mood ... let's talk bear smack because that capital-starved beast appears oh so close to pouncing.

So, for your edification here is the week that was...

Monday's trading inspired Pictures of a Giant Sucking Sound, and detailed how over recent months fluctuations in the number of listed issues hitting new 52-week highs on both the NYSE and NASDAQ present convincing evidence that, stocks in the aggregate are being distributed rather than accumulated.

Tuesday, the view turned toward the probability that, commencement of El Swindle Grande, Act II might coincide with approaching national elections (November 2010), much as Act I played out just prior to, and immediately following, election day '08.

Wednesday began with a look back at what some [wrongly] have thought an inverse head-and-shoulders bottom preceding the market's further lift higher last July ... then subsequently put forward evidence suggesting that, any upside remaining is quite limited. In fact, top to the market's counter-trend rally off March '09 bottom probably is but days away and the evidence never has been more compelling.

Have you noticed recently that, the greater bulk of observers are struggling to develop their sense about what lies ahead? You might even say most everyone appears to be overrun with complacency. You know, though, this very same condition was prevalent in May 2008. Now, however, the spirit seems twice as thick.

You might even lump me among those who are complacent. Yet I have no way of knowing just whether strong hands largely have distributed their shares, or whether the market's levitation will be prolonged so that this task might move nearer completion.

My point is this: a strong case is made claiming the majority of stocks have been victims of distribution over the past decade (and in some cases longer). So, who's to say some unpredictable event — say, an act of war, financial or materiel — might serve to pull the rug out from under those presently complacent? If strong hands have been exiting stocks for years now, would the likes provide a supportive bid following such an event? This hardly seems likely.

It is well enough, really, that a bear case is made with rather conclusive evidence demonstrating so-called "animal spirits" are AWOL, and that one simply be positioned accordingly, come what may. Clear are proofs bullish belief, even now, remains shaken, making stocks still vulnerable to further, historic setbacks unfolding at any moment.

Fast Money
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