Kapowzer! ~ The Risk Averse Alert

Wednesday, June 01, 2011


Since every minute counts when denied is added time's futility, then following today's well-managed tumble, a bounce certainly could be in order yet again.

Indeed, judging by fluctuations in the CBOE Put/Call Ratio and the Volatility Index over the past few weeks, recovery of today's loss seems likely. Whether some of it or all of it remains a mystery. Unclear, too, is how quickly any recovery might develop.

Half a holiday-shortened week gone and to show for it are rather sharp swings in both directions. An aura of a market in transition is beginning to take form. By this I mean, specifically, the end of an [upwardly biased] corrective wave forming since early-November 2010 (i.e. wave 4 of (c)) ... to be followed by the final advance in the market's counter-trend rally off March '09 bottom (i.e. wave 5 of (c)).


Still waiting for momentum (bottom panel) to confirm completion of wave 4 of (c) once it falls below its low registered late-August 2010 during formation of wave 2 of (c).

At this point it seems only an immediate and decided turn lower in the market will do the trick. Only then will the positive effect last week's bounce had on momentum be sufficiently reversed, that momentum's further turn lower (as projected) might ensue.

Thus the mystery surrounding the breadth and speed of any bounce to follow today's unraveling...

Fast Money
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