Death Cross & Death Cross on Ponzi Place ~ The Risk Averse Alert

Wednesday, June 29, 2011

Death Cross & Death Cross on Ponzi Place

There's no need to alter yesterday's conclusion that, the market's technical state remains notably weak, leaving the market at heightened risk of extending its loss off May 1st top. This perspective is particularly weighty with national treasuries being torched today in a fit of rage directed toward cowardly parliamentarians who once again bowed to corrupt financial enterprises which, themselves, appear on the verge of destruction...


It appears the dirty secret that, the trans-Atlantic banking system is an insolvent train wreck is becoming common knowledge despite mighty efforts pretending it isn't so being put forward in heavy doses of sophistry spewed by a herd of perishing dinosaurs dominating high places in both the public and private sector on both sides of the Atlantic.

The question now is where will capital needed to prop up the king lender of last resort — the U.S. Treasury — be found once the bankrupt Federal Reserve ends its hyperinflationary QE madness tomorrow?

And how many European finance ministries must be torched in defense of the indefensible? Let's face it, as many as need be in order that interest rates at the core of Adam Smith's Leveraged Ponzi Scheme be indefinitely held down...


Death Cross numero two. Come Italy, come Ireland, come Portugal, come Spain ... into U.S. Treasuries. Worry not! China can prop up your euro scrip while it eats German manufacturing for lunch. Thus, the euro-zone periphery shall not suffer alone. Every European nation, rich and poor, will be made to endure its own disintegration, as physical shutdown brutally imposed removes excess supply at the very dear price of millions of lives simply no longer sustainable in this, the collapsing phase of the greatest Ponzi scheme the world has ever seen.

This is all very bad for the riskiest financial asset of all, particularly since expanding consumption is the basis upon which its lofty valuations are founded.

SPX 15-min

Relative strength's receding phase (like that last Tuesday and Wednesday) believed yesterday to have begun following the market's strong lift higher at the open, proved a premature expectation in the face of today's excitement over seeming success extorting the weakest among European sovereign nations. Following on last Thursday's capitulation, though, seeing how soon has come its polar opposite — irrational exuberance — evidenced by RSI at today's open reaching a fair, buy-side extreme, the greater gravity of undue conviction among bottom fishers in the face of some of the weakest, underlying technical conditions since March '09 bottom weighs on prospects for a further bout of selling taking major indexes lower still from respective May 1st peaks. Indeed, one rationally supposes the risk of the market's imminent collapse only is increasing.

SPX 1-hr

Best estimate at the moment is that, resumed weakness of any consequence probably will not develop until next week. First, top to the presently unfolding counter-trend rally off last Thursday's low ... probably occurring tomorrow with the market moving little higher. Then, an initial fade and recovery, leaving relative strength in a weakened state and the market but more vulnerable to disappointment. The setup toward this end could carry through to Friday's close.

Of course, near-term prognostications of this sort require dynamic assessment during the course of each trading day, with useful conclusions reached contrasting index performance at various time intervals and contexts. Likewise, for the sake of gauging animal spirits — whether they be waxing or waning — one might also compare, say, the S&P 500 with the NASDAQ 100.

NDX 15-min

Survey says animal spirits be waning, notwithstanding appearances on the surface.

Now, short-term perspective useful for day trading generally has not been the focus here over the past few years. Instead greater attention has been (and will continue to be) given to bigger picture considerations with a view toward a July 1932 moment approaching. An historic buying opportunity like then but first awaits inevitable unraveling of Adam Smith's Leveraged Ponzi Scheme, then capitalism's return to sanity, this beginning with restoration of Glass-Steagall (which two things need not proceed in the order I have stated, much as May 6, 2010 amply demonstrated).

Over the past couple weeks I have begun logging intra-day observations on both SPX and NDX, and doing this with an eye toward creating a fee-based service for short-term traders. However before I launch this, I want feedback from those who could immediately use it. Those who, say, might get their trading ideas using some automated stock/option/ETF trading system and desire more consistent success using it. With my intra-day observations supplementing your decision making, your more certain ability to profit might finally pry from the market the rich reward you rightly deserve.

So, if I have your attention, then write me (subject: SPX v NDX). I will point you to my intra-day blog (it functions like Twitter in that updates automatically appear without you needing to reload the page).

Right now, I'm just looking to get your constructive feedback. Let's see if by incorporating my succinct, short-term-oriented analysis into your current trading methodology a barrier to your more consistent and profitable success might be breached.

My email address appears in the blog header above. Go ahead and write me.

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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