A Complex-to-Simple Case For Collapse ~ The Risk Averse Alert

Tuesday, April 26, 2011

A Complex-to-Simple Case For Collapse

Believe it or not, there is widely accepted, sound technical basis for supposing that, the year 2011 remains poised to become the worst in the recorded history of the stock market. This prospect in fact is founded on the Elliott Wave Principle's alternation guideline (which in my 6th edition was called "the rule of alternation").

To wit, in formation of complex corrective waves, component waves most often will trend either in a simple-to-complex, or complex-to-simple fashion.

Since Y2k top — this to a 5-wave advance from 1932 — a complex corrective wave is seen forming in complex-to-simple fashion. The final component wave forming this complex corrective wave is due to form wave C in a simple, 5-wave decline carrying major indexes to levels last seen in the 1987-1994 period...

OEX weekly

Particularly interesting are those well-known fundamentals underlying development of this complex corrective wave since Y2k. The story this wave count recalls is devolution of the church of Adam Smith's leveraged Ponzi scheme, first at the close of the era of Pastor Ayn Greenspan, and now under Bishop "Bottomless Pockets" Bernanke, America's Rudolf von Havenstein clone. The story's title is, "Securities-Based Finance Swansong: From Sub-Prime Fraud to Treasury Swindle, A Due Diligence Dereliction of American System Principles."

The one thing I would impress upon you is the speed at which the market's pending unraveling is likely to develop. Consider the moment as being similar to August 2008. Trouble's warning, already amply given, likewise finds momentary disbelief in anything that would diminish deeply seeded promise rooted in the 1995-2000 experience, when "buy the dips" became an oft-cited mantra whose utility was proven over several decades. Despite years now spent challenging this sentiment, many still keep to its promise even in the face of extraordinary acts of desperation at the heart of the operation animating it.

Thus once again to the dismay of a disbelieving consensus, trouble's warning (now only louder) sets the stage for a terrible throttling whose rapid unfolding could make 2011 the worst year in the stock market's history. Easily.

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.

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