Manna Seekers Need Convincing ~ The Risk Averse Alert

Tuesday, August 30, 2011

Manna Seekers Need Convincing

"Manna for the long trade" is how elevated options premium is read (see $VIX)...

Yet also reflecting a measure of unwillingness to write options contracts, the Volatility Index remaining elevated likewise is indicating that, a retest of recent market lows might be necessary to coax the will of yield hungry money managers to juice their returns collecting options premium. A successful retest should serve to bolster belief the worst of selling has been seen.


Coming right up, if similarity in the S&P 500's technical configuration with the same during the latter half of June 2010 bears any significance. With elevated weakness preceding the present moment a retest of this month's lows seems rather likely.

It will be interesting to see how the S&P 500's weaker technical state is repaired over weeks ahead. Momentum-wise (bottom panel), standing out are sharp spikes higher, late-June (2011) and presently. Nothing quite so steep developed during formation of wave (c) of B. Thus do interests long equities appear both trapped and desperate to coax a bid. We probably will see further evidence of this, as wave (2) of C develops over the next few weeks.

Fast Money
* * * * *

© 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.

There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!