Strength Enough to Milk a Fantasy ~ The Risk Averse Alert

Tuesday, December 06, 2011

Strength Enough to Milk a Fantasy

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...

SPX 5-min

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.

SPX 15-min

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.

Fast Money
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