Titanic (adj): Market technicals in a word ~ The Risk Averse Alert

Friday, September 23, 2011

Titanic (adj): Market technicals in a word

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


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...


This view gains substantiation on several fronts...


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.


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...

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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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