Capital Impaired Pigs Tip Their Hand ~ The Risk Averse Alert

Tuesday, September 21, 2010

Capital Impaired Pigs Tip Their Hand

It's hard to say whether the market topped today. Chance are it did not. Likewise, one cannot help but suppose every last second possible will be spent milking the vast sea of suckers who neither appreciate nor care to fathom the stock market's precarious state — a condition supported by a wealth of technical evidence.

Much more easily discerned, though, is desperation for capital among those weened for decades on a credit-creating machine equipped with an infinite multiplier that, unfortunately, hit its operability ceiling about three years ago ... and then suddenly seized.

OEX 5-min

Judging by the trade going into today's close (following FOMC confirmation that, the U.S. financial system remains dysfunctional), winning the day were those who recognize the Fed is a lilliputian, technically insolvent institution in comparison to the public-private partnership that built a mountain of financial claims by such means as affected the most reckless allocation of capital the world has ever seen. The magnitude of mispriced risk — even now widely ignored — absolutely dwarfs the Fed's capacity to maintain appearances of that risk's viability.

Much more capital than the Fed reasonably can provide via "quantitative easing" is needed for that task. Much more capital, too, than a paralyzed, overhead-heavy economy can generate will be forthcoming for as long as such productivity-enhancing investment as has been neglected for decades is left to hope in a public-private partnership whose public side is so weak as to appear pathetically animated by hopelessly bankrupt interests with too much experience in playing a consuming game of make believe using such empirical formulations as have become the work of the "best and brightest" minds of America's premier, higher education institutions.


Friday's volume slipped past my radar. You might recall the tendency since March '09 bottom for volume to peak upon completion of third waves. Whether Friday's volume demonstrates this same tendency is not certain, but it deserves notice nevertheless.

How ever unclear is the Elliott wave count off late-August bottom, last week's outlook for continued levitation remains intact. Five waves up are seen forming and these are thought nearing their end. This is likely to occur over the next few days (if it has not already).

Fast Money
* * * * *

© 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!


Penny Stocks said...

Thanks for your information. Most of the posts in the blog is really valuable. Regards

Penny Stocks

TC said...

You have an interesting website, too. Thanks for sharing.