Clarity Through the Magic of the Market ~ The Risk Averse Alert

Wednesday, February 16, 2011

Clarity Through the Magic of the Market

Congressional representatives whose political fortune depends on the impossibility that, fantasy masking spreading insolvency might prevail indefinitely, that cowardice displayed today in response to the Financial Crisis Inquiry Commission Report might not sorely irritate those 100-to-1 among constituents who in 2008 rightly sensed they were being swindled in the rush to bailout an unsalvagable entanglement created via a fraud-rife Ponzi scheme whose most visible effect has been the ruin of millions: welcome to the gateway of your political doom.

There is no way the game of semantic head fakery will fly through devastation straight ahead, as the Great De-leveraging proceeds as it must. At hand is the hour necessitating sudden command over fraudulent financial claims — a capacity that, otherwise is proven effectively raised with constitutional power granted the House of Representatives to "establish ... laws on the subject of bankruptcies." With 100-to-1 staunchly opposed to any further bailout swindle — be it through the front door or the back — there is but one inevitability: Glass-Steagall. Indeed, were restoration of the 1933 Banking Act well on its way to being accomplished by the end of this year, thus would be circumstance fitting an outlook projecting, first, the worst year in the history of the stock market, followed by a bottom rivaling that in 1932.

OEX 5-min

All things technical continue supporting the possibility that, a dizzying decline could commence at any moment. Warning much the same is today's unanimous bullishness of Fast Money traders. Their positive disposition stands in stark contrast to the same group's unanimous bearishness in early July, 2010, when the "rising wedge" whose completion is at hand was just beginning to take form.

Likewise, today's excitement over the fact that, the S&P 500 has doubled from its March '09 bottom stands as a red flag. Any double off a lasting bottom rather should be met with great skepticism. There is none today.

Seen in light of those historic, systemically threatening vulnerabilities as precipitated collapse into the bottom from which the S&P 500 now has doubled, presently revealed, then, is but widespread complacency believing the worst has passed. Yet when everyone believes — with skepticism conspicuously scant — who else remains, that belief's reward might be all the more assured?

If all believers largely are in the game, then how might support grow?

Thus, do foreboding questions with no compelling answer gain clarity through the magic of the market...

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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