Bearish is Fading Advancing Participation ~ The Risk Averse Alert

Tuesday, November 02, 2010

Bearish is Fading Advancing Participation

The likelihood that, today began the fifth wave (i.e. wave v) of a rising wedge (forming wave 5 of c) is bolstered by the fact that, following yet another CME-driven, pre-market futures goose, the stock market's opening gains were not given back over the remainder of the trading day.

OEX 5-min

Unlike what occurred during formation of corrective waves within this rising wedge (i.e. waves ii and iv) when CME-driven jam jobs consistently failed to excite any follow-through buying and, instead, brought selling entirely wiping out the market's opening gains, today's trading succeeded in holding pre-market futures gains. Thus, the final wave (i.e. wave v) of a "rising wedge" forming since early October is thought to have begun unfolding.

Also supporting the view that, today brings the market but closer to its peak in forming a corrective wave off late-June bottom is contracting participation of advancing, NYSE-listed issues registering as indexes move higher off that bottom...


Healthy advances bring an expansion of listed-issues participating, not a contraction. What we are seeing here is the same thing as occurred during the market's counter-trend rally from March - May 2008. This presaged disaster then, as it likely does now, too.

Fast Money
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