Turning Large Caps Into Penny Stocks While Killing the Real Deal ~ The Risk Averse Alert

Friday, August 13, 2010

Turning Large Caps Into Penny Stocks While Killing the Real Deal

Consider the current states of major indexes seen relative to key moving averages (50-day and 200-day). Seeing where strength and weakness are being revealed the view forward is substantiated by the configuration resulting from this week's steep pullback.


Yesterday's OEX gap below its 50-day moving average went unfilled today. Thus, kings and generals are experiencing a marked increase in weakness among their number.


Yet the gods of Olympus have not so much fallen from grace. Weakened, yes, but spared so far from any hint of duress. Relative safety thought available in these most widely held issues apparently still remains something valued.


Were there thought no further opportunity to push up by the penny NYSE-listed issues, then this week's broad sell-off might have been broader still. Yet apparently capital raised among gods, kings and generals stands ready in part to pick up pennies over the broad field of NYSE-listed issues still being watered by a prominent ETF trade.

Such is the nature of today's technically driven market.


And of those animal spirits necessary for sustaining a prolonged advance ... these were taken out and shot this week. Wednesday reads, "Bye bye suckers" over the wide gap between NASDAQ's 200-day and 50-day moving average.

Certainly all was not lost this week, though. There's still hope for recovery over the near-term. The current lay of major indexes, indeed, is thought supporting this prospect.

Likewise, though, did we receive confirmation that, an outlook projecting a terrible gassing as election day draws near is founded on such demonstrations of underlying weakness over the broad spectrum of U.S.-traded stocks as this week's bloodletting amply delivered.

Fast Money
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