Friday, September 30, 2011

Remember August?


A perfectly lousy week of trading completes the S&P 500's fifth straight month in decline. Looks like September's similar, relative performance contrasted with July could make October look a whole lot like August...


$SPX

Technical measures are in fine position for a moment preceding a prospective throttling over weeks ahead. Relative strength (top panel) and momentum (bottom), both negatively poised, have plenty of coincident market weakness prospectively to mark, as August recently displayed.

This week's letdown made a failure of a banks and financials short squeeze and a triple CME drive to coax a bid. This being recognized by week's end suggests there's no juice left to hold the S&P 500 above its line of support since 2009.

Present similarity to the market's condition early-August could find another tidal wave of selling materializing straight ahead.

* * * * *

© 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!

Thursday, September 29, 2011

No Less Foreboding Despite Deceptions


As they say, looks can be deceiving...


$NYA

It might appear the NYSE Composite Index registered positive relative strength and momentum divergences last week when the index sank below its August low, but it's not late-June 2010 and the following proves it...


$BPNYA

Precariously few NYSE-listed issues are sustaining the NYSE Composite Index, which at 7000 is about where it stood in the June-August 2010 period.

Last week's Bullish Percent dive positively diverges from readings in August, but this week's market recovery to early-September levels (again, around 7000) finds the NYSE Bullish Percent Index badly languishing.

So, in penetrating its deceiving looks the NYSE is seen still ominously leading the way lower. Circumstance demonstrating that, "Prices can fall of their own weight, but it takes buying to put them up" is amply displayed with this month's trading on the NYSE, this particularly so last week now extending into this week's trading, featuring a massive short squeeze of hopelessly insolvent banks and financials to start the week followed by three consecutive, failed CME jam jobs.

In fact given this week's buyer-less trading protesters on Wall Street might do the nation a favor were they to toilet paper the place, just so everyone knows what we're dealing with here...


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!

Wednesday, September 28, 2011

$SPX: Targeting 900, Stat


Given the likelihood that, the S&P 500's line of support identified yesterday soon will give way, there's a chance its violation might precipitate something dramatic. Not a crash (although some will call it that), but a decline possibly exceeding August's loss.

Again, the lesson of 2008 is expect the unexpected when the outlook is negative. The market's upcoming leg lower could prove a case in point. Weakness upcoming might have the technical effect of further separating the current moment as one far weaker than the May-June 2010 period.

To wit: what if the $SPX momentum (MACD) divergence mentioned yesterday does not materialize as the S&P 500 takes out its line of support? What if selling precipitated by support's violation accelerates the S&P 500's momentum lower, with MACD confirming the market's increasing weakness?

Still, no matter if in store is a steeper throttling than was alluded to yesterday, capacity to buy time ultimately might not be impacted. Present, hallowed levels of years to come might be sustained in but a wider band over weeks ahead...


$SPX

So, possibility remains that, the market's greatest risk of spectacular collapse might be delayed until late this year and/or early next. Over coming weeks wave (2) of C might form as indicated above.

Prospectively you see a downwardly biased head-and-shoulders top forming in conjunction with a "running correction," second wave (i.e. wave (2)) of five waves down targeting index levels last seen in the 1987-1994 period. This possibility certainly is not a long shot. At this point definitely worth considering.

Momentum (bottom panel) turning down again after recovering from deeply negative to now being relatively in balance (all fitting the market's sideways trade since August) is a trip down memory lane, back to mid-June 2010, and early-January 2009 before that. Indeed, this latter instance bears notice on account of deeply negative momentum late-2008, for in fact the depth to which the S&P 500's momentum sank in August 2011 rivals that of November 2008.

The market's current technical state very well supports this possibility that, once the S&P 500's line of support is broken a throttling down toward 900 could be in store.


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!

Tuesday, September 27, 2011

Weakness at a Line of Support


It takes a lot of guts to be bullish right now! Technically speaking, it is the wrong trade...


$SPX

Good lord, here at a key line of S&P 500 support since the "liquidity crisis" of 2008 we find $SPX's relative strength (top panel) well poised for further market weakness. After having faded for months at successive new peaks prior to August's collapse, the S&P 500's relative strength presently shows sellers in command, notwithstanding yesterday's short squeeze (banks and financials) and today's CME grease.

Not long ago I suggested the August 2011 low might be tested like the May 2010 low was tested, and in so doing have a similar, positive technical effect, much like that following late-June 2010 bottom. Before saying more about this, do you see how relative strength going into this year's $SPX top weakened, whereas going into April 2010 top it persistently strengthened? Thus the present moment finding the S&P 500 at a significant line of support is technically more perilous than in May-June 2010. All the more do the worst momentum readings since March '09 (in August, bottom panel) add to the market's present weakness, now v. 2010.

So, this line of support looks sure to turn into resistance if a genuine momentum divergence is to register, like occurred late-June 2010. Yet in producing a positive momentum divergence upon sinking below its line of support, the S&P 500 will be poised to rise back up to it and likely test its resistance.

In other words, one's first thought might be that, if the S&P 500 falls below this significant line of support, it's game over: time to crash. However, there appears a technical case possibly building (requiring MACD and [likely] RSI divergence upon the S&P 500 falling below support) allowing for more time in forming wave (2) of C (since 8/22) ... let alone waves 1 and 2 of (3) of C following.

Tonight's is first thought the market's crash (wave 3 of (3) of C) might be delayed to sometime late this year or early next. There's prospective, technical justification for this view. Time is of the essence considering that, present market levels might not be seen for a period lasting decades following the market's upcoming collapse. With plenty of weak hands believing otherwise (CNBC has a bead on these folks) some weeks playing these hands is fitting prospect per a prolonged wave (2) of C.

Be that as it may, straight ahead still appears a tailspin below the S&P 500's line of support, the past two days bounce notwithstanding. Some hours more holding up could be in store before heated selling takes out S&P 500 support, then finds bottom registering with positive technical divergences signaling a subsequent bounce.




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!

Monday, September 26, 2011

A Beatles Moment: Anabell is Buffett


Speaking of cows being milked, that Buffett is becoming a prize Holstein!

Apparently, he called book value an "understated proxy for intrinsic value." Not mentioned, however, is whether "intrinsic value" has any meaning were, say, the trans-Atlantic banking system to implode.

Yet in lowering the bar in considering repurchasing Berhshire Hathaway shares Buffett plainly is being defensive. Of course, that's not how the news was sold.

A revealed urgency to defend a core equity stake is a tip off that, Buffett might better have spoken about the furniture business for information more relevant to his macro view.

Across the Atlantic pressure is on to lever up. How this is possible when disparate creditors already are demanding collateral be pledged by EMU nations buried in debt, this while being given no hope of escape, is a mystery.

Just as recent years' "liquidity crisis" illusion was put to rest earlier this year with the Fed's Maiden Lane II auction fail, an attempt to leverage Europe's EFSF could meet a similar investor reception were the policy adopted with haste accelerating that with which the proposal presently is being pushed. Such possible outcome would be fitting a market on the verge of crashing over weeks ahead.

Today's advance did nothing to alter the negative technical state in which the market finds itself, as detailed on Friday. Fast Money Traders noting elevated cash positions among hedge funds and suspecting a move to put money to work before month's end apparently failed to notice the work this group likely is responsible for today: squeezing shorts in hopelessly insolvent banks (+5.29%) and financials (+4.45%).

For his part Whitney Tilson loves these dogs, calling them "cheap," and singles out Goldman Sachs as being particularly attractive here. Unfortunately, this is a badly broken stock absent strong hands showing any willingness to support it (the last of these bailed out April-May 2010). Indeed, technically speaking, Goldman Sachs appears on the verge of collapsing.







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!

Friday, September 23, 2011

Titanic (adj): Market technicals in a word


Tonight, upon first inspection, my outlook settled on the following possibility...


$SPX

Then, upon closer examination of the market's underlying technical state, I realized the view forward over the next couple weeks might find more likely a considerably weaker trade...


$SPX

This view gains substantiation on several fronts...


$VIX

First, the Volatility Index finishes this week's trading — the worst for the Dow Jones Industrials (no small component of total market capitalization) since October 2008 — smack dab in the zone I identified earlier this month as the "Kiss of Death."

Likewise, the Volatility Index's upwardly biased momentum trend (bottom panel) appears to portend a good deal more weakness ahead.


$BPNYA

Then, too, is the NYSE Bullish Percent Index knock, knock, knockin' on Hades door, with its relative strength (top panel) poised to fall below 30. This has been one of the most reliable indicators of pending weakness since March '09 bottom.


NASDAQ McClellan

Finally, NASDAQ's underlying technical weakness noted Monday was but further confirmed with NASDAQ's gassing on Thursday. This all the more belies NASDAQ's continued leadership, as the Composite Index was one of the better performers this week.

So, if your job depends on coming up with good "ideas" in the market, here's my advice: be very bearish. Remind your firm that, most of the passengers on Titanic perished, and be a lifeboat while shorting everything "unsinkable." Judging by the market's technicals, you'll be in the company of strong hands...

* * * * *

© 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!

Thursday, September 22, 2011

A Tiny Taste of Things to Come


And a "strong move lower" it was...


SPX 5-min

Supposing that, five waves down from Tuesday's peak are unfolding, typical relative strength improvement, fourth wave versus second, began taking shape late this afternoon. So, a further move lower completing these five waves down should be upcoming.

Whether five waves down from Tuesday's peak will complete the bout of mid-stream weakness discussed yesterday is uncertain. Much depends on whether wave (2) of C still is forming, or wave (3) of C has begun. With the market on track for its worst week since October 2008, I am rather siding with the latter possibility.

Not that this distinction matters much. Once the market bounces following its present decline, it probably will be Katy bar the doors time.


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!

Wednesday, September 21, 2011

Pre-Collapse Weakness Ahead


Up until about 2:40 p.m. today I was of the view that, the market's advance since last Monday (9/12) probably had a bit more upside remaining. However, following release of yet another Fed statement reiterating reality that, the U.S. banking system remains hopelessly insolvent, and subsequent trading resulting in Monday's opening low being taken out, my view toward further upside prospects appeared at risk of being discredited.

So, after spending a few minutes reviewing the situation across major indexes I came to the conclusion that, a strong move lower appeared in store. Yet I was thinking the greater bulk of this apparent, downside risk would not materialize until Thursday.

Bzzzzz. Wrong! Although not without technical substantiation indicating significant underlying weakness, today's final hour provided a lot more hurt than I was anticipating. Unexpected though today's finish was, my immediate outlook remains unaltered. The market's "strong move lower" appears to have only just begun, and the greater bulk of it still could come tomorrow.


$CPC

Curiously enough, the state of the CBOE Put/Call Ratio finds similarity to recent moments when the market began to come under pressure. This is indicated in the bottom panel.


$SPX

As you can see, each of these noted, prior instances when the market was on the verge of coming under pressure (early-April and early-July) were but mid-stream bouts of weakness en-route to an ultimate peak (indicated via green dots on both charts above) where strong hands short equities were well-hedged with call options, and ready for subsequent selling of a larger magnitude. Look for the same upcoming.

Given that the current bout of weakness finds the S&P 500's relative strength (top panel) in a weaker state than at those two prior instances, the market's anticipated, "strong move lower" is further substantiated. Just how the market's pending decline and subsequent recovery fits into the development of five waves down from July 7th peak — this targeting index levels last seen in the 1987-1994 period — remains to be seen.


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!

Tuesday, September 20, 2011

Is There A Doctor In The House?


One sick market for your consideration...


$BPNYA

The NYSE Bullish Percent Index, right now, has recovered about half its loss from its July peak to its August bottom. Yet the NYSE Composite Index, right now, is nowhere near recovering similar ground...


$NYA

At the start of September the NYSE Composite Index was close to recovering half of its July-August loss. However, right now it stands well shy of this mark.

Now, it's true, the market's sell-off over the first half of September left the NYSE Bullish Percent Index in a stronger position than at August bottom. So, last week's advance was not lacking a positive technical backdrop on this account.

Yet with the NYSE Composite Index lagging badly right now, and this despite considerable improvement in the underlying technical state of component issues, a red flag is raised suggesting a heightened urgency to sell dogs (today's lousy advance/decline ratio only more subtly bears this out). Not good when the "all is well" ruse run on NASDAQ finds an underlying technical state even more precarious than that on the NYSE...


$BPCOMPQ

A considerably smaller portion of NASDAQ-listed issues are supporting the NASDAQ Composite Index's advance off August bottom than is the case on the NYSE. Yet, just like off March '09 bottom, NASDAQ is made to shine brighter notwithstanding its razor thin leadership...


$COMPQ

Suckers holding beloved tech darlings rather than taking a cue from the NYSE's lead and selling continue making for fine appearances, anyway. This might last another day or two. Then, judging by the overall fundamental and technical state of things, we could be on the fast path to chaos in no time at all.


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!

Monday, September 19, 2011

Proof Positive Collapse Is In The Cards


Despite its foreboding leadership higher off August bottom, NASDAQ presently finds its underlying technical state weakening, suggesting end of the market's corrective wave off August bottom is nearing...


NASDAQ McClellan

Negative McClellan Oscillator divergences noted above reveal NASDAQ's weakening state at present. Once the Oscillator goes negative again, be on the lookout for the market's imminent collapse.

Have no doubt, NASDAQ's McClellan Summation Index presents proof positive collapse is in the cards...


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!

Friday, September 16, 2011

Foreboding Disparity


Again under consideration is a relevant market performance contrast from 2008, NASDAQ versus NYSE. Let's see how the present, anticipated disparity is developing...


$COMPQ 2008
$NYA 2008

During both the market's sell-off from its mid-May 2008 peak and its recovery from mid-July through August, the NASDAQ Composite by some notable measure outperformed the NYSE. This is interesting, of course, on account of the fact that, this behavior occurred during the initial phase of a massive market sell-off.

The same dynamic likewise is seen presently, and this just prior to a long-anticipated throttling...


$COMPQ
$NYA

Relatively greater NYSE weakness since May in fact is increasing as the ongoing correction off August bottom unfolds. This simply confirms broad market conditions are conducive to collapse.

With imminent prospect of a "third wave of a third wave" down (i.e. wave (3) of C) it is fitting in the grand scheme of the past forty years that, long interest would appear to favor more speculative, NASDAQ-listed issues. This reflects how sentiment born of a long-passed bull market dies hard. Yet were it not for recent decades' circumstance ingraining selling restraint, the market right now would be falling of its own weight. Look forward to this over coming months and years, once the market collapses and suckers are shunning stocks, rather than treasuring them like today.

Just how the market's ongoing correction proceeds is uncertain. There seems time and room for nothing too terribly exciting in the grand scheme of things. August bottom could hold for some days or weeks more, while further upside is limited.

* * * * *

© 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!

Thursday, September 15, 2011

The Time and Space of the Moment


Did you hear about record flooding in Binghamton, NY, the stomping grounds of my youth? My aunt's house was flooded to the basement windows. Others, well up the first floor. The damage was spread over dozens of miles, effecting countless neighborhoods. Owego, NY (about 20 miles from Binghamton) was crushed. The levels to which the Susquehanna River and its tributaries rose was, to someone familiar with their normal levels, just mind boggling.

Anyway, the past couple days were spent ripping out my aunt's finished basement right down to the studs. Hard and dirty work it was. Somewhat tiring, but only a little more than staying ahead of the Geithner curve.

To put it simply, odds are terribly low that, 2011 will be the year when added leverage restored confidence in a plainly bankrupt trans-Atlantic financial system. Indeed, the hyperinflationary effect on physical economy is only surer to accelerate with each new leveraged bailout furthering credit access imbalances. This effect, of course, alludes to matters at polar opposites to what fascist tools at the top say is their intent. Truth is each new bailout assures confidence is further shattered in a negative feedback loop widening credit access imbalances.

And to the stock market this spells doom.


$SPX

Two days absent comment did not leave expectations defied. The market continues correcting August's loss, while technically remaining negatively poised. Lo and behold there's upside space to remain much the same. However, more important than space is time. Every minute commanding exorbitant prices for toilet paper has political interests desperate to forestall demand destruction for it and the mighty mountain of crap on which its value is based, the likes of which no added leverage can save.


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!

Monday, September 12, 2011

NYSE Bullish Percent Index During Third Waves Down


Behold technical similarity in formation of Elliott third waves down presented via the NYSE Bullish Percent Index...


$BPNYA 2007-2009

First, from May - November 2008 when wave (3) of A down from October 2007 top unfolded.


$BPNYA

And now, since early July 2011 the beginnings of wave C, set to complete an a-b-c Elliott corrective wave from October 2007 peak and targeting index levels last seen in the 1987-1994 period.

The similar circumstantial setup is rather interesting. Likewise is the present moment's relatively weaker position. All very fitting a massive third wave down whose component five waves began unfolding early-July 2011. The second of these five wave down (forming wave (3) of C) soon should see the NYSE Bullish Percent Index challenge the upper green line drawn above, just as occurred when wave 2 of (3) of A unfolded from August - mid-September, 2008. Over this interim that bump in short equity hedging I have been anticipating likewise could develop.


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!

Friday, September 09, 2011

Low for the Year is Nowhere Near


At a moment when in the blink of an eye today's could become lofty levels not to be seen for years to come, you begin to understand why, in the midst of an endless parade of foreboding circumstance developing over months (now extending years) and still more dire than ever the market continues holding up.

This is no show of resiliency, though. Rather it's a case of suspended animation as reality invariably sets in and reveals that, a mountain of assets higher up in the capital structure are at risk of severe markdown.


$SPX

So, with this in mind imagine how over the next week or so waves b and c of (2) of C might unfold in a manner raising the count of insane observers who, in the midst of increasing risk of chaos everywhere are claiming the low for the year is in. These folks obviously are not my readers.

Volume "appears" to be indicating selling exhaustion with its successive contraction over the past few weeks, so suckers will have their technical "justification" for claiming bottom is in. However, "where's the beef" &mdash the buying interest — never has been called to question by the likes.

A more complete sweep of the market's technical foundation built over the past two-and-a-half years suggests strong hands fear chaos coming. These presently have no good reason to step up and buy "cheap" equity, either, not when the price tag on a mountain of debt is evermore glaringly dear.

So, buying time — the legacy of lenders of last resort during the dying days of Adam Smith's Leveraged Ponzi Scheme — probably will characterize trading over days ahead. There remain many weeks in 2011 for the low of the year to take out March '09 bottom...

* * * * *

© 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!