Tuesday, November 30, 2010

Complacent Pigs Await Slaughter


The cost of insuring equity risk is on the rise, and this on the back of an increase in the cost of insuring sovereign debt of European states still trapped by a real estate bubble whose present, further bursting is more deeply sowing seeds of chaos across the globe...




Seeing the VIX challenging its 200-day moving average, one might look to the late-April period for some sense of possibilities over coming days.

Specifically, a bounce completing the market's correction of its initial move down from early-November top could develop here. It's either that, or the market breaks down, promptly sending the VIX above its 200-day moving average.


OEX 5-min

Today's breakdown at the open puts to rest the Elliott Wave count for wave ii (of five waves down from early-November top) put forward Friday. Some other corrective wave count applies.

Have no doubt, wave ii could be complete and wave iii could be in its initial stage of formation. Yet today's comeback and the present relative strength similarity to that at the same time last week (seen in conjunction with the position in which the VIX finds itself) suggests a bounce could be in store. Whether this completes wave ii, or serves to correct the first wave of wave iii remains to be seen.

No matter. The risk of a sharp decline going into year end appears elevated.


$BPNYA

Lots of NYSE-listed issues remain in line to be slaughtered. Indeed, they've hardly been touched (demonstrating yet again the manner in which complacency has the majority holding long positions at a time when new money increasing its exposure simply is not forthcoming: a condition verily defining the market's entire advance off March '09 bottom).


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.


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Monday, November 29, 2010

Weakness Persists


Despite today's predictable comeback, weakness persists...


$OEX

Increasing volume accompanying the market's decline from early-November, and its decrease while the market trades sideways confirm underlying weakness, with the present absence of a bid capable of reversing the market's course being most glaring.

Building weakness also is the RSI (top panel) and MACD (bottom panel) message. Both are in fine position prior to an anticipated third wave down.

Today's comeback goes a considerable distance toward completing wave (c) of ii per Friday's projection. Risk of a severe throttling draws near.


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.


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Friday, November 26, 2010

A Euro Detonator of Global Chaos


Lo, there's a terrifying bear loudly growling at a wounded Europe...




Increasing disharmony with the globalization fraud, and this at a time when 72% of the CDS market insuring a collapsing (hat tip E.U.) global banking system's debt is in the hands of five American banks — JP Morgan, Bank of America, Goldman Sachs, Morgan Stanley and Citigroup — is not just risking a 2008 capital crisis repeat. Rather chaos ending all illusion of the global financial system's solvency clearly is at stake. Mr. Farage seems a courageous voice of a growing Mass Strike movement threatening social complacency. Extraordinary measures thus far pursued to prop up a dysfunctional arrangement are at risk of unraveling should voices like these resonate on our contemporary arrangement's bottom line — confidence (with the E.U. being but a political front to the wildcat finance enterprise presently imploding upon Europe's periphery).

Being suspicious that, a point of no return risks being crossed here ... and with history as a guide ... these days we find many necessary, volatile ingredients typical in periods marked by chaos. Thus, such unusual underlying circumstance, indeed, raises the likelihood of a calamitous setback ahead, wherein lowly equity is most immediately at risk of being cast to the wind.


OEX 5-min

This week continued formation of what is thought a second wave of five waves down from top earlier this month. These five waves are projected to throttle major indexes back to levels last seen in July 2009.

The Elliott wave count labeled above means to suggest the second wave of five waves down presently unfolding could further evolve over some days more. The holiday-shortened week clearly ended on a weak note (RSI remaining on the sell-side of its range all day). So, a challenge of recent lows appears in store. Yet any subsequent bounce might find an accommodating crowd wrongly judging present weakness a buying opportunity (right on cue).

The horizontal red line drawn at OEX 538 marks the lower end of the area to which wave ii might be expected to reach its highest. So far, though, resistance even here is proving formidable. Thus, weakness rightly preceding a wave iii down is being demonstrated by the market's lackluster recovery over the past seven days.

The entire week having evolved as anticipated sets up for a challenging year end period, wherein waves iii and iv of five waves down promptly could unfold (leaving wave v to January 2011).

(No CNBC Fast Money today, so this from RT...)




* * * * *

© 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.


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Wednesday, November 24, 2010

An Increasing Bearish Bets on the Cheap Sighting


Oddly enough today's strong advance was accompanied by what appeared an elevated measure of long equity position hedging via put options...


$CPC

Or was elevated put option volume reflecting a bias intending to establish short equity positions over the upcoming period, much like occurred late-April?


OEX 5-min

Lower OEX highs over the past two weeks are coinciding with higher relative strength peaks. So, price weakness persisting despite increasingly stronger lifts off a momentary bottom reasonably is seen typical behavior of a corrective wave forming in the midst of a larger decline whose gravity Mr. Market is increasingly challenged to defy — a decline developing since earlier this month, and nearing a point where its continuation lower can no longer be delayed.

Thus, today's unusual pickup in put option interest.


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...

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Tuesday, November 23, 2010

Spinning Wheel


What goes up must come down.
Spinning wheel got to go round...


OEX 5-min

So, should you find a directing sign
on RSI's straight and narrow highway
Just let it shine within your mind
Still showing the colors that are real.

Spinnin' wheel's spinnin' true
About its troubles: nothing new
Most fail fearing it's a cryin' sin
So, ride a painted panic
and let the spinnin' wheel spin.


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...

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Monday, November 22, 2010

Bad News for Lowly Equity


Pity the European Union has not even a shadow of the U.S. Treasury. Then, attempts to fake the solvency of the banking system within its borders might fly for a day. With no unified military force possessing a fearsome arsenal of weaponry acting as backstop of last resort, capital injected into the European banking system rather appears a naked case of throwing good money after bad.

That the fascist swarm has no choice but broaden its attack on the continent's weak periphery, the discrediting of all things E.U. (including its scrip, the Euro) can only accelerate sovereign demands that, bond holders in distressed enterprises start taking haircuts. That's bad news for lowly equity...


$OEX

The marked turn down in both relative strength and momentum raised prospect that, a significant top is in. That both measures remain weak bolsters this possibility.

Now, note that momentum (bottom panel) remains positive and continues holding to its uptrend since late-May. So, that the market presently should find strength to correct its fall from top finds technical substantiation.

Relative strength's performance (top panel) — hovering at mid-range, revealing buy- and sell-side balance — supports this view that, but a corrective wave is forming following the market's initial decline from top earlier this month.


OEX 5-min

Also supporting this view is today's trip to nowhere. This more or less confirms my outlook over the holiday-shortened week.


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.


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Friday, November 19, 2010

Moral Hazard Fail


What becomes of Ireland is theirs to say. What matters right now is what's done. The bankruptcy of the European Central Bank along with our own Federal Reserve once again is made plain by a terribly vulnerable, private banking system, this a result of failures to properly regulate those failing institutions within their purview — a policy even continuing to this day by schemes whose durability competes with a snowball in hell. These failed agencies are being overwhelmed by insolvency of their own creation. How easily this could be wiped away, leaving but whispers of memories lingering, much like occurred following the Holland Tulip Bubble's bursting.

With harmony of political interests in Europe a great purging in the battle for obeisance between sovereign nation states and borderless slime mold no doubt is assured. This is assuming zombie banks eventually will pop up in, say, Spain sometime as soon as early next year.


$NYHL

The NYSE new 52-week high-low differential is another underlying technical measure confirming five waves up from March 2009. Deterioration we see during formation of waves 4 and 5, again, is typical as an Elliott five-wave advance completes.

Most stunning has been the retreat among NYSE-listed leaders since early-November, right after the Fed served up another batch of Benito Juice (formerly called QE2).


$NYA

Momentum's divergence at early-November's NYSE Composite peak stands in contrast to what occurred in April. So, the present projection for a steeper fall than that following April top finds technical substantiation. This pending decline targets levels last seen in July '09, and very well could mark but the first wave of a larger, five wave decline to levels last seen in the 1987-1994 period.

Over the coming, holiday-shortened week it appears further consolidation of losses since top probably are in order. Although a recovery challenging peak is not out of the question, I rather suspect the challenge will be to last Tuesday's low, followed by a drift back up completing the market's consolidation and paving the way for a much larger fall.


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.


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Thursday, November 18, 2010

Substantiating an Irregular Flat & Anticipating Collapse


The prospect that, top is in — a major top at that — and a throttling for the ages has commenced — albeit but in its embryonic state — finds more compelling evidence supporting the probability...


$NYA

First, though, an apology for not labeling the Elliott wave count on the same chart above presented yesterday. There it is. As I said, there's considerable technical support raising this probability. More on this in a second, after a disclaimer...

Even if a collapse taking major indexes to levels last seen in the 1987-1994 period eludes reality over months ahead, the market's present technical condition strongly supports the likelihood of a pullback to the area where various lines of support drawn above converge. This is in the vicinity of July '09 bottom.

So, if wave (1) of C down is not presently in its early stages of development, then a [smaller] "c" wave down continuing what otherwise might be seen a topping process evolving since Q4 '09 has a high probability of unfolding in its stead. Which will be, I imagine, might not be clear either, following this upcoming pullback.

Indeed, there was not a great deal of clarity toward what lied ahead at July '08 bottom. Then, capitulation I had been anticipating seemed stretched at the conclusion of the market's decline from May '08 peak. There was evidence of it, but not overwhelming. Of course, capitulation came soon after, but its probability was difficult to project at July'08 bottom, as well as during the bounce thereafter.

In some manner we might likewise expect a measure of uncertainty following this projected, upcoming decline to levels last seen in July '09. Yet being further along in the market's corrective wave down since October 2007 top has its advantages. With more accumulated evidence we have greater capacity to isolate possibilities.

And have we evidence that five waves up from March '09 bottom completed just days ago! This is important, because with this, we can say a 3-3-5 "irregular flat" from November '08 bottom has ended, and a nasty, five-wave collapse has a high probability of developing over months ahead...


NYSE McClellan

Focus on the McClellan Oscillator's performance during the market's advance off late-August bottom. Is this better thought coincident with a 3rd wave or a 5th wave? The answer, of course, is the latter. So, rather than coinciding with some "c" wave (a corrective wave's 3rd wave) that is part of some larger corrective wave seen unfolding over the past many months, the market's advance from late-August is justifiably seen the fifth wave of five waves up from March '09 bottom.

Consider, too, the oscillator's behavior prior to this advance. Its deterioration at the start of the year challenged its reading at March '09 low, and then in May even exceeded it. Such technical deterioration during formation of 4th waves, indeed, is typical.

Per the oscillator's spike up from May bottom ... look what it took to produce a steady trickle of suckers thereafter!

And now it is falling apart...


$CPC

Extreme swings in the CBOE Put/Call Ratio noted above are a curiosity. Of course, what has evolved in the current instance differs from 2008. Yet the position in which the market is seen (given the new and improved Elliott wave count isolating a 3-3-5 corrective wave off November '08 bottom) finds nothing but fright in the Put/Call Ratio's behavior, here at the precipice of an anticipated, historic decline to levels last seen in the 1987-1994 period.

Returning to previously mentioned uncertainty at July '08 bottom, we have enough evidence to anticipate conditions during formation of wave (1) of C. My guess is a greater measure of what appears capitulation will develop. This will differ from what was the case in July '08.

So, upcoming weakness might appear extreme, resulting in technical measures "oversold" to a degree only comparable to 2008's worst. Given that a "buy on dips" mentality cultivated over many decades is very much still alive — all the more enforced with the March '09 save, and its "new normal" finding undying support from the lender of last resort — and given "the game" ... well, we have seen what can be manufactured in a second wave's position (take wave B from November '08 to November 2010, for example).

Likely well-masked will be the coming wave (3) of C, just as occurred in the summer of '08.


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...

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Wednesday, November 17, 2010

Simply Top


Venturing out on a sturdy limb is tonight's Elliott Wave view suggesting top is in...


NYA 5-min

"TOP" labeled above is meant to suggest something proving more problematic to Team Fraud could be knocking at the door. After all, the company whose IPO is creating buzz is heading into a buzz saw running across the Pacific ... where QE2 attacks Benito's "excess supply" in a Chinese market for American cars at risk of being sacrificed in trade war Fed policy ventures to precipitate.

Let's not forget, too, those capital starved pigs whose partners in Europe are being crushed. Their floundering cause lies behind a mysterious "flash crash" and its raid on "stop loss" positions (made easy marks in the electronic age). A new target arrives via a recently bankrupt company facing formidable competition — let alone an unraveling, global, commercial climate — with anticipation for such great things as only Joseph Goebbels could muster with little dissension heard from well-conditioned players who seem not to notice the calendar reads 2010 and not 1980.


$NYA

So, what if five waves up from March '09 bottom were considered completed a little over a week ago? Granted, this might not produce the prettiest picture, but technical conditions helping substantiate this view are no less convincing. Both RSI and MACD reveal the same deterioration as is typical when a five wave advance nears its completion.

Channeling is seen to wave 1 peak (June '09), rather than wave 3 (as late as January, 2010). Indeed, peak momentum was registered during formation of wave 1 off March '09 bottom, so some rational case for this alternative can be made.

With this view, then, a 3-3-5 "irregular flat" up from November 2008 bottom remains a credible possibility. This — following (and alternating from) a 5-3-5 "zig-zag" down from October 2007 top — is seen forming wave B of an A-B-C corrective wave down. Next, then, comes a five wave decline forming wave C ... and index levels not seen since the 1987-1994 period.

This possibility, no doubt, simplifies the view forward. Likewise, May's desperate drive for capital (revealed with elevated volume rivaling that in 2008) remains foreboding circumstance in much the same manner as was revealed in July 2008.

So, much like occurred during the market's initial decline from May '08 peak, look for momentum (MACD) to deteriorate in a similar manner. As you can see, the range to be reached lies lower and is wider than that in '08. Most fitting the "c" wave upcoming, indeed.

Lo and behold, RSI has collapsed from its recent peak in a similar manner as occurred following its May '08 peak, too. Yet in the present instance relative strength's fall appears more precipitous. Again, this is entirely fitting the "c" wave set to unfold — one degree larger than the "c" wave unfolding from May - November, 2008.

This possibility is put forward with the lesson of 2008 well-ingrained: a market facing much risk has every capacity to rapidly fall apart to a degree most find difficult to imagine.

It was a failed Austrian bank in 1930 triggering a mad, global scramble whose end brought down the U.S. banking system in 1932. Oddly enough, continental Europe — Great Britain's playground — finds itself entirely vulnerable once again. Go figure.


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...

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Tuesday, November 16, 2010

The Irish Eyes of Senator Blutarsky


Goosestepping in unison with Benito at the Fed, Senator Bob Corker and Representative Mike Pence today began their drive to once and for all bury the Republican party, and do this even faster than Obama and Pelosi have disgraced the so-called "opposition." Their unified drive to make "price and dollar exchange rate stability" the Federal Reserve's mandate can be seen an effort to shackle a Congress lacking courage to deal with systemic bankruptcy — most emphatically that of the Federal Reserve System itself — deferring instead to continue the game of make believe characterizing present circumstance as being emblematic of a "liquidity crisis," rather than the solvency crisis it is.

With this subtle change in mandate, then, Benito is to be made free to collapse "excess supply" without needing to worry about how many unemployed, desperate souls will be transformed into virtual slaves scrambling for a shrinking pittance of crumbs made available in the fraudulent drive for "fiscal responsibility" presently being led by representatives of the soon-to-be-destroyed Republican wing of the American Fascist party in Congress, as well as our Fascist-in-Chief backed by his "Deficit Commission" — a bi-partisan collection of misfits whose most useful purpose so far has been to reveal at last the national tragedy of having shut down state-run, mental health institutions some decades ago.

How hard fantasy dies in this age of sophistry elevating debt above the human condition!

Too bad the Irish are opting out. Imagine, a nation with a long history of being pillaged by outside interests finding courage to stand up and say, it's not the sovereign that is insolvent, but rather it is the banks whose wildcat finance addiction blinded their employment of that crucial, operational aspect tending to assure their businesses remain going concerns, whose practice is commonly known by the term "due diligence." You know, the same thing Goldman Sachs says investors should have exercised when the firm sold them that "shitty deal."

Forgive this stereotype, but the Irish have inspired the following video advice directed to the U.S. Congress, that some among them might find like-courage as the Irish to stand up and assert sovereign control over a thoroughly bankrupt arrangement...




The future Senator Blutarsky has shared with his "Flounder" a bit of unusual advice that might well-serve a badly floundering Congress. Lord knows how the act he advises raises courage, and we are by no means suffering from an "excess supply" of that in Congress!

So, the accelerated drive to deny sovereign nation states the right of self-determination suddenly is hitting a brick wall on the Emerald Isle. Once again, then, breakup of the eurozone is back on the table...


$OEX

Apparently, a market built atop an extraordinarily vulnerable, fraud-rife Ponzi scheme has no place for rebellious slaves.

Still, one good fraud deserves another, and word has it there are no shortage of suckers waiting on a piece of the GM IPO (as if the company has a prayer of levering up its balance sheet once again). So, it seems likely that, the market will not collapse tomorrow, as some momentary success Treasury might claim its TARP yet again delivered offers to mask that much larger failure made glaring today by the Irish government's resistance to further bankrupting their nation.

Yet the day after tomorrow now has considerable possibility of bringing collapse following today's unexpected breakdown. There's enough reason to suppose five waves up from late-August are completed, thus ending an a-b-c corrective wave up from late-June. So, a devastating "c" wave down — prospectively putting March '09 lows in the cross hairs — could be imminent. It is curious (to say the least) that, coincidentally, we are seeing yet another eruption of vulnerabilities exploding onto the scene.


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...

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Monday, November 15, 2010

Benito 1 - Suckers 0


This is a good time to tie a red ribbon on a package holding a game played by grossly leveraged, weak hands whose supposed backing (QE) is attacking "excess supply" of their own, combined, reckless making via a mountain of mispriced risk...


$NYA
$BPNYA

The upside divergences between the NYSE Composite and its Bullish Percent Index since September '09, as well as those downside confirmations since October '09 are clear indications coming from where the rubber meets the road, that such confidence as broadens participation when the market moves higher and does not flee when the market falls has left the building. What's left is "the game."

You remember how it's played? Three times this year we were shown.

First, early-February, then early-July, and finally late-August: each time the same. A fire is lit under a tiny handful of issues (revealed by an astonishingly small bump in the Bullish Percent Index as the market rocketed off each respective bottom), then the dogs are made to follow in a relatively slower extension whose defining feature is not that interest in stock ownership is widening. Rather, that shell-shocked suckers continue holding their shares, expecting recovery, instead of bailing out. Volume tells all.

With yesteryear's fee-based orgy gone Elvis, the game is what's left of a seemingly more harmless realm of Western finance.

Meanwhile, the wheels of breakdown continue-a-turning toward a borderless, global fascism, and so far everything is going just as Benito planned...


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...

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Friday, November 12, 2010

Levitating Folly


Yesterday's case extending levitation finds another Elliott wave view supporting this possibility...


$OEX

Here we see more typical, coincident RSI as five waves up from late-August (forming wave c) have unfolded. This is particularly so on two counts: first, that peak RSI readings occur during formation of wave 3, and now during formation of wave 4 RSI is falling below that registered during formation of wave 2.

Curiously, too, every fifth wave has coincided with an RSI peak. We see this in formation of wave v of 1, wave 5 of iii of 3, and wave v of 3. We probably had better expect this again during formation of wave 5 of c ahead (that is once wave 4 is completed).

Supporting this wave count is the fact that, RSI as well as MACD remain on the positive side of their respective ranges. Indeed, momentum-wise, last Thursday's rocket higher was a huge save, and so bolsters this Elliott wave view.


$CPC

Today's pickup in put option volume indicates long equity interest is stepping up to protect its exposure. This sets up, then, for wave 5 of c.

Yet before this prospective, final move higher commences, some days (and possibly weeks) might pass before wave 4 of c is completed. This conclusion is arrived at on account of the fact that, wave 3 of c unfolded notably more slowly than did wave 1 of c. Thus, the process of completing waves 4 and 5 of c might involve a slower development of any further gains remaining in a one-year-and-running levitation that has utterly failed to cultivate a broader and expanding long interest.

This latter, indisputable fact inevitably will make for a panic dwarfing May 6th's "flash crash." One might question why this is being delayed were not truth of persistently diminishing upside volume since March '09 bottom indicating that, hope waxes eternal among those majority long interests holding their positions rather than increasingly offering these up for sale. This is occurring amidst a physical and financial economy condemned to contract on account of a hyperinflationary deluge whose impact is collapsing margins. This on top of a dizzying spiral of vulnerabilities ranging from municipal finance to sovereign debt to MBS absent the critical "M" (leaving truth — BS — in its wake) exposes a measure of folly one would be hard-pressed to find precedent.


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...

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Thursday, November 11, 2010

A Case Extending Levitation


What a wonder has been the market's [forecast] levitation. Similarities among various technical measures to conditions at April peak abound. And still, there is reason to believe levitation might persist, as nothing signaling technical breakdown challenging this can be found.


$OEX

Of course, the situation could change in an instant. A decisive break could come as soon as tomorrow. Yet everywhere is indication top possibly has not been reached.

Lurking, too, is the fact that, at April top relative strength maintained a position of extreme buy-side strength for an extended duration lasting several weeks. Last Thursday's surge brought but the first extreme RSI peak registered during the market's advance off late-August bottom. So, levitation might continue for some days longer.


OEX 5-min

If at first you don't succeed, try, try again. My eyes once again are open to the possibility that, a "rising wedge" might be unfolding and forming wave 5 of c.

Contrarily, waves i, ii and iii of 5 already might be formed, with wave iv of 5 unfolding presently and wave v of 5 ahead.

Or, wave 4 of c ended last Wednesday (11/3), and wave 5 of c Friday morning, suggesting a breakdown confirming this possibility is imminent.

Given how the market's levitation has persisted thus far, prudence awaits a clear signal bolstering the possibility its end has come, however.


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.


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Wednesday, November 10, 2010

Blow-Off Top Fail


Last week I indicated that, the "rising wedge" thought forming prior to last Thursday's breakout instead appeared to have formed an Elliott corrective triangle — a wave form appearing just prior to the final move in the direction of the main trend (i.e. in the fourth wave or "b" wave position).

Also mentioned was the fact that, according to the Elliott Wave Principle the wave following a corrective triangle typically is sharp and brief.

Last Thursday's sharp lift higher now finds case supporting the move's brevity...


NYSE McClellan

First, seen from the perspective of the McClellan Summation Index, a pair of divergences belie the market's seeming strength.

Then, the McClellan Oscillator's declining trend and subdued absolute readings registered during the market's advance since late-August starkly reveal underlying weakness.

To now the Oscillator's subdued performance was thought opening the door to a blow-off top — something resulting in a challenge to the Oscillator's best during formation of wave a from late-June to late-July.

Yet that pair of Summation Index divergences loom large. Should these remain intact as wave c (from late-August) completes over the next few days, then the Oscillator's subdued behavior can be thought warning of a bad period ahead (supporting my continued outlook for an imminent throttling putting March '09 lows in the cross hairs).


OEX 5-min

Five waves (labeled i-v) set to form wave 5 of c are nearing completion.

Whether today's low brought end to wave iv of 5 of c remains to be seen. Today's worst RSI surpassing that during formation of wave ii is a yes vote. However, RSI's only slight divergence at today's low, as well as its subsequent, fearless dash to the positive side of its balance vote no.

Considering all things presented here today, a blow-off top does not appear to be in the cards. Looming is a strong turn lower whose technical substantiation projecting weakness only grows.


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!