We are just about there: the launching point for one nasty surprise it appears...
This week's levitation — rather expected here — is seen possibly the fourth wave of five waves up from late-August bottom.
Now, this leg up might better be thought part of a corrective wave forming since late-May, when five waves down from late-April top were completed. Many signs of technical weakness continue, suggesting the present advance could be the end of this corrective wave, as well.
Elevated put option buying remains conspicuous ... as in what here is being hedged? Long equity positions set to become selling detonators with the approach of September options expiration? Might some, too, be low-cost positioning should the detonators succeed in creating a chain reaction?
This sort of thing was done using call options all the way up from March '09 bottom. So, elevated put option buying we see here might be intending to profit (via exercise into short equity positions) during the pending drive right back down to March '09 lows.
It occurs to me the growing clamor to extend the Bush tax cuts is like all the other many apparent revelations of a desperate need for capital. This matter certainly could be a prime candidate for a legislatively coaxed "aye" vote. The President's focus of late on jobs, economy and taxes might be seen greasing the skids for some emergency "affirmative action," free market style. Oddly enough, there's very little leadership on this coming from the soon-to-be-retired, limp noodles at the top of the heap in Congress. The stage appears set, then, for securing this sorely needed capital. Time for some vote getting. (...one could imagine this failing badly, too, this election year in particular)
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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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