Like A Sinking Stone ~ The Risk Averse Alert

Wednesday, December 14, 2011

Like A Sinking Stone


Technical conditions like those late-July persist. So, let's consider prospect that, the market's collapse is imminent, a la an awful throttling comparable in relative terms to that in August...


$SPX

Red boxes drawn above present relative perspective. Differences in the absolute position of the S&P 500 to its 50- and 200-day moving averages, now versus late-July, as well as a qualitative degradation of underlying conditions confirmed by these moving averages offer objective points of reference projecting the market's imminent doom. A collapse significantly larger than that in August could be at the door.

Should this prospective, near-term view forward pan out, then get ready for a 2011 close at the low for the year and a not-so-happy start to the New Year...


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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