A Tired, Tired Levitation ~ The Risk Averse Alert

Wednesday, December 22, 2010

A Tired, Tired Levitation


Underlying technical conditions similar to those prior to 2008's autumn blowup presently can be seen via a view of the NYSE Advance-Decline differential contrasting its 10-day moving average with its 200-day...


$NYAD

The lower depths to which the 10-day moving average fell in May 2010 confirming the NYSE Composite's coincident, lower low in relation to February 2010 (as well as late-October 2009) presents the starting point from which the market's subsequent bounce amidst a persistently weakening underlying participation (as evidenced, again, by a fading 10-day moving average simultaneous with a fading 200-day moving average) is seen suggesting that, trouble could be looming.

However one positive presently versus 2008 is the simple fact that, the 200-day moving average of the NYSE daily advance-decline differential is above 0. Back in 2008 the 200-day was negative.

Still, the NYSE Composite presently trades at its high of the past year, while the advance-decline differential's 200-day moving average is nearer the lower end of its range over the same interval. Thus, weakness is seen building and the market vulnerable to a rush for the exits...


Fast Money
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© 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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