The longer it takes to confirm that, a presumed "rising wedge" forming off late-June 2010 bottom ended on Friday, February 18th, the greater is probability its end has not yet been reached. Levitation's extension along lines discussed on Dinosaur Day thus remains an open possibility.
Of course, having some reasonable sense about how gravely threatened is the house of cards called the trans-Atlantic financial system, there is no need to quandary over denial's seeming persistence. The vicinity of the market's present level — only the more tenuously held over last year's best — is one that, once the plug is pulled, will not soon again be seen thereafter. Once present, monetarist fantasy no longer can be maintained, a massive de-leveraging whose reversal's impossibility will gain wider acknowledgment thus, too, will become a new normal making an impossible dream levels at which the stock market trades today.
So, there should be little wonder that, every minute possible would be widely spent ignoring extraordinary risk whose "systemic" exposure is sure to become a profoundly difficult education in folly. Few facing war ever much ponder its devastation, nor prepare their escape should it land on their doorstep. And therein lies a double-edge sword. Once "school is in" the study all too likely will become intense, rapidly paced and relentlessly driven. Thus, does this approaching moment's peril warrant attention to every sounding bell...
Should February 18, 2011 in fact mark the end of the market's counter-trend rally off March '09 bottom, correction of its initial decline from its peak that day might be proceeding as indicated above. Overhead resistance (presented by the gap lower at the open on Tuesday, February 22nd) lies not much higher than has been reached over the past seven trading days.
What further comment might be made on the prospect that "school is in" awaits but that tiny bit of downside confirmation likely to raise fear among the faithful about the growing prospect of being the last to reach the exit. For the moment, and for as far as the eye can see, this fear stands destined to intensify with every move defying today's widely subscribed illusion of "recovery."
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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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