Only to a larger, more ominous degree are the market's technical underpinnings revealing how vulnerable to collapsing are stocks...
The same technical setup as preceded the May 6, 2010 "flash crash" can be seen developing presently. As revealed by the NYSE McClellan Oscillator, underlying weakness has been building with every step higher the market has taken since late-June 2010 bottom.
The Summation Index, too, reveals the greater degree to which the market presently is vulnerable. Its diverging at April 2010 top — presenting a measure of the market's underlying weakness — certainly proved problematic when the mere whisper of radical reform of a dysfunctional financial system was heard in the U.S. Senate in response to serious cracks appearing in the eurozone.
Over the many months since then these cracks only have widened. Plainly, too, where the rubber meets the road this fact is well-known. Hence the Summation Index's decided languishing. Little surprise given the growing insolvency of the securities-based, trans-Atlantic financial system whose day of reckoning, at least by some measures, appears at hand...
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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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