I was scratching my head over certain technical aspects surrounding today's rally ... until the not-so-subtle truth behind it hit me...
Banks +3.40% and Financials +2.59% ... essentially leading the way higher? These fraud-rife, fantasy-filled bastions of irresponsibility taking charge on a most surprising day delivering appearances of a breakout following endless weeks and months demonstrating nothing but broad, underlying technical weakness?
This begs the question: is someone being set up? Could it be Mr. "Banker of the Year 2009" whose business only shows signs of loan delinquencies subsiding? One wonders how durable is JPM's [supposedly] improved position with home foreclosures in Q1 2010 up 35% (a record) from Q4 '09.
One also wonders given the relentless continuation of the physical economy's collapse just how long the carry trade can last. Maybe a net exporter of physical goods like Japan can get away with such monetarist debasement as has persisted there for twenty odd years, but here in the U.S. we haven't the luxury of export-oriented industry whose products find commanding global demand, particularly now that the securitization market has gone the way of Elvis. Thus, cash flows to leverage in an effort to postpone inevitable systemic insolvency simply escape the capacity of the United States of America ... the Fed and Treasury's momentary game of make-believe notwithstanding.
So, despite a few, unexpected technical surprises, sufficient is today's demonstration of "all things are not what they seem" coming at a moment when five waves up from March '09 bottom appear very near complete.
* * * * *
© 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!
