Prime to Drop Weight ~ The Risk Averse Alert

Wednesday, December 07, 2011

Prime to Drop Weight

A couple of the boys on tonight's Fast Money were rather cocksure the market's path of least resistance into year end is higher. Yet not even for a trade does the market's technical state advise this position, no matter how blind one insists on being toward imminent risk of the banking system's collapse and skyrocketing geopolitical tensions threatening world war...


Indeed, the NYSE Bullish Percent Index rather gives the appearance of a market prime to fall of its own weight.

Most interesting following October's recovery, first, is how only a modest withdrawal of support led to November's setback, and now how support underlying the market's relative buoyancy remains suspect. This is particularly noteworthy in light of the Bullish Percent Index's derivative technical measures (RSI and MACD) both presently being at a threshold where the market's breakdown appears well-poised to develop.

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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