Technical conditions raising prospect that, the stock market could imminently collapse remain intact — nothing challenging this prognosis anywhere, and this now for many consecutive months — and so, a simple point of reference in this context for your consideration...
Should momentum's presently flattening, diverging state (lower panel) persist as a technically well-justified "rising wedge" completes its formation over hours ahead, then the market's collapse — a possibility technically well-substantiated — is better feared at hand.
Unlike April 2010 peak which saw coincident momentum confirmation, the market's approaching peak more reasonably should coincide with a momentum divergence in keeping with an outlook supposing that, the top at hand will not soon be exceeded.
It's the same message from large-caps leading the market's rally since early-December 2010. Indeed, over the entire duration of this year's trading thus far momentum continues confirming growing, underlying weakness long-revealed by several other technical measures.
Yet, still being positively positioned, there appears underlying strength enough to buy at least a few hours more of levitation. Then, something along lines as developed late-April 2010 should develop, and kick off what might become the worst year in the history of the U.S. stock market.
NASDAQ completes the picture. Relative strength and momentum divergences galore, while a five-wave Elliott wave channel forming off March '09 bottom reaches its completion.
Now, a question...
What news brought on the crash of October 1929? October 1987? Or NASDAQ's collapse in the second quarter of the year 2000, wiping out 40% of its value in a mere matter of weeks?
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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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