Something of a reversal of fortunes today raises prospect that, there's more fantasy yet to milk pretending a hopelessly insolvent trans-Atlantic banking system can be saved with but fiscal discipline and another wave of hyperinflationary bailout. So, a few days more maintaining the market's levitation of the past week-and-a-half appears in store...
Following yesterday's first sign of underlying weakness indicating exhaustion of buying interest while money was being taken off the table, today saw selling entirely abate, suggesting an intention to levitate the market for some time longer.
Taking the same view out to 15-minute intervals the market's underlying strength coincident with its advance since last Monday (11/28) appears very much intact. So, once relative strength here deteriorates to a similar degree as occurred yesterday at 5-minute intervals, then we'll probably have indication the market's turn south is nearly at hand.
There have been a number of occasions over the past three years when momentum (bottom panel) of short equity hedging via call options reached a decided extreme just like now. All marked market peaks, much as presently appears upon us.
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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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