Tuesday, May 31, 2011

Death Warmed Over


Shortly after the market's initial decline from May 1st peak I suggested major indexes might trend sideways for some days (now extending a few weeks) before an Elliott corrective wave that has been forming since early-November 2010 (i.e. wave 4 of (c)) completed. Now, why did I think that?

And why following last Monday's thud (5/23) did I imagine a fairly decent bounce might develop before a final bout of weakness completed this corrective wave?

Simply put, the bankrupt pricks are running out of time to adequately support their wildly overvalued stakes in Adam Smith's Leveraged Ponzi Scheme. Every minute counts when denied is added time's futility.

Yet maintaining the appearance of solvency really matters only to the biggest sharks presently staring at a shrinking supply of nourishment, contemplating what might be eaten when the trap door caging the financial dogs of fascism (QE being the most recent manifestation) soon opens again. Just what thing might induce the necessary precursor (panic) is a matter that, increasing dissent on the other side of the globe toward austerity and a dead Osama bin Laden suggest could even be some terrible act of war, forcing capitulation to the full measure of sacrifice the deadbeats of the trans-Atlantic demand.

Of course, the framers of the IMF's alleged Jacques the Raper probably well-understand this dynamic's potential at this desperate moment for a dying financial system. So, Congress had better hurry up and restore Glass-Steagall, that our woefully confused President might be spared! (Ditto Germany's Angela Merkel.)

Ranking House Democrats, anyway, apparently perceive great risk ahead, as the likes of Waters, Slaughter and McDermott have become co-sponsors of H.R. 1489. This is a most significant development, as leadership finally is leading on something that emphatically matters, particularly if you are someone who desires that, the riskiest financial asset of all find durable support once the bottom falls out from under the collapsing Ponzi Scheme that is the trans-Atlantic financial system.


NASDAQ McClellan

In the spirit of Memorial Day NASDAQ presents, Death Warmed Over: money aggressively leaving the preponderance of listed issues, and this amidst a buying interest incapable of stemming the tide. That is why I am betting today's pickup in NASDAQ volume was not driven by bargain hunters. Rather more likely was it the wiser fellow who understands that, Germany dropping its demand of a Greek restructuring does not mean Greece will not unilaterally default.

The risk of a chain reaction collapse starting in the European banking system and quickly engulfing everything on both sides of the Atlantic no doubt is intensifying. That political pressure has increased within (while political pressure without grows only stronger) rather suggests among the dead is bailout.

Funny how all kind of economic weakness is being reported and lamented at a time when lender of last resort liquidity gushers are near drying up. So much for avoiding another Great Depression...


Fast Money
* * * * *

© 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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Monday, May 30, 2011

Commemorate Memorial Day Wielding the Mightiest Weapon


"A certain man went down from Jerusalem to Jericho, and fell among thieves, who stripped him of his clothing, wounded him, and departed, leaving him half dead.

"Now by chance a certain priest come down that road. And when he saw him, he passed by on the other side.

"Likewise a Levite, when he arrived at the place, came and looked, and passed by on the other side.

"But a certain Samaritan, as he journeyed, came where he was. And when he saw him, he had compassion.

"So he went to him and bandaged his wounds, pouring on oil and wine; and he set him on his own animal, brought him to an inn, and took care of him.

"On the next day, when he departed, he took out two denarii, gave them to the innkeeper, and said to him, 'Take care of him, and whatever more you spend, when I come again, I will repay you.'"

Luke 10:30-35

Were there a moral principle giving rise to a sovereign government explicitly organized to "establish Justice," the Christian parable of "the good Samaritan" could be thought at the foundation of it. Yet the parable's most obvious pull brings me here this Memorial Day.

A few days ago I received a distressing letter from a long-time reader asking for help in raising awareness about political dissident Mikhail Bulatov who today faces extradition to Kazakhstan on charges he and his family entirely dispute (to put it mildly). This reader is a friend of the Bulatov family and simply wishes to raise awareness about Mr. Bulatov's reason for seeking asylum here in the United States, hoping this effort will help his cause.

If you go to the article to which I have linked, you will read:

The Bulatov’s are in need of help. The legal advice they have received thus far has been amateurish at best. The U.S. judge who presided over the first hearing for asylum ignored a mountain of evidence that would have freed Mikhail & discredited everything the Kazakhstan government has accused him of – with no proof.

Yet if you are not interested in the details about Mr. Bulatov's predicament, all you really need contemplate is the idea put forward at the article's beginning:

Here in the United States of America, we pride ourselves on being enlightened in the ways of liberty and justice. We presume that those who are accused of a crime are innocent until proven guilty. We guarantee a speedy & fair trial in which the accused have the right to face their accusers in a court of law.

Is this not among the causes for which men and women have given even their lives, for whose precious sacrifice we memorialize today?

So, will you be a Good Samaritan and write your congressional representative, as well as your two senators, that justice more assuredly might be established?

Simply ask that they please look into Mr. Bulatov's case. Chances are they probably are not aware of his situation, so your bringing it to light might result in Mr. Bulatov receiving a full and fair asylum hearing. Were this to occur, and were his family's claim that Mr. Bulatov is a victim of political intrigue vindicated, then the effort you make might play a decisive part in saving the life of a stranger in need.

All you need do, then, is but wield that mightiest weapon whose form is a pen...

Just link them to this post, that they might gain access to the following documents related to Mr. Bulatov's situation, a predicament described as being a matter of life and death...

Documents in Defense of Mikhail Bulatov in US Immigration Hearings
Thanks in advance for your help. If you have other relevant documents that might prove useful to representatives and senators, please make these known in comments.



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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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Saturday, May 28, 2011

IMF in the Past Tense


Filed under "Better Late Than Never" are the past two Fridays, which to now were delayed because the dirt needing digging was on more solid ground than is the precariously levitated stock market...

5/20/2011: Increasing Shortage of Greater Fools

5/13/2011: On a Trade Challenging Patience

And if IMF'd has not yet entered the texting lexicon, then surely its day has come...


LOL! BRB...
* * * * *
© 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. There's an easy way to boost your investment discipline... Get Real-Time Trade Notification!

Friday, May 27, 2011

No Middle Ground: What To Do With Barking Lap Dogs


"I come here today to reaffirm one of the oldest and strongest alliances the world has ever known. It has long been said that the United States and the United Kingdom share a special relationship. ... Of course, all relationships have their ups and downs. Admittedly, ours got off on the wrong foot with a small scrape about tea and taxes. There may have also been some hurt feelings when the White House was set on fire during the War of 1812. But fortunately, it's been smooth sailing ever since!"
U.S. President Obama Address to British Parliament, 5/25/2011
I invite you to watch the entire speech President Obama gave to the British Parliament on Wednesday. To my way of seeing things, it might be the most dangerous speech ever presented by any U.S. president over the course of my fifty years of life.

The President's message was clear: the bailout/austerity regime has powerful protagonists on both sides of the Atlantic — albeit Team Fraud marionettes, everyone — who will do whatever it takes to force this insanely ruinous policy upon the globe. As our taller, tanner Herbert Hoover amply demonstrates, no shortage of sophistry can be used to rationalize all that must be done to maintain the appearance of solvency of those several enterprises whose attack on human dignity is as grossly offensive to an ever-widening circle of Americans (as well as world citizens), as it is legendary.

Yet what should we make of this commitment to the bailout/austerity regime? Can anything in Team Fraud's bailiwick really stop the inexorable descent into financial and economic chaos?

No! The cat let out of the bag in the build-out of Adam Smith's Leveraged Ponzi Scheme simply cannot be tamed, no matter how much cat nip is stuffed down its throat.

However, the more relevant question is whether entrenched political interests might act in a fashion serving to alter the global landscape in a manner further solidifying a plainly fascist arrangement imposed over the past forty years under the banners of "globalization" and "free trade."

And the answer is absolutely. Thus, the great danger in President Obama's speech.

Then again, should anything else be expected here? Partners in crime rather might more likely present a public face of loyalty to their shared parts in a still unwinding Ponzi Scheme, whose demise otherwise is assured: this either by hyperinflationary blowout or deflationary collapse. There is no middle ground, since over many decades necessary investment has been purposely stymied.

Furthermore, even chihuahuas bark, and a bankrupt world-view is but a little lap dog in the face of accelerating desperation ... such as, too, H.R. 1489, the demise of the IMF's alleged Jacques the Raper, and UBS reveal about the nature of our present climate. The little lap dog that will not stop barking simply is being kicked aside.


$CPC

The present moment, technically, bears a striking resemblance to circumstance mid-February and early-April. Thus, my "short equity hedging" suspicion mentioned Wednesday stands.

(No doubt, some call option activity is taking advantage of suckers being brought to the trough for their month-end feeding, too.)


$NYA

With both relative strength (top panel) and momentum (bottom panel) decidedly shading to the sell side of their respective ranges, further weakness still appears on the horizon. Continuation of the market's descent from its May 1st peak should result in such technical degradation, fourth wave (near ending, having been forming since early-November 2010) versus second wave (having ended late-August 2010), such as has been anticipated and discussed here over recent weeks.

The past two weeks I have shorted you a Friday post. I have the charts I wish to comment on with a message that, of course, will be no less relevant today. Once I have competed my remarks expect a heads up. Let's just say I have been landscaping these past two weekends to cover up for time the world in which we share a mutual interest has been busy going nowhere ... much as was anticipated earlier this month.

Then, on Monday I have a special Memorial Day commemoration that hopes to enlist everyone who believes the pen is mightier than the sword, particularly when applied to the same cause for which many thousands of men and women have died. Such are life and death matters...



* * * * *

© 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.


There's an easy way to boost your investment discipline...

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Thursday, May 26, 2011

Sugarplums of QE3


"We’ve got a creative-destruction economy, without the creation: the startups, the venture capital, the entrepreneurship. MySpace and LinkedIn don’t count: they are a faddish extension of old technology, a means by which Americans who bowl alone can pretend to have lots of friends."
—"The People’s Republic of America Reports 1.8% GDP Growth"
(Inner Workings, 5/26/2011)

Ain't that a kick!

What's more, MySpace already has demonstrated the trouble with the internet's low barrier of entry. So, chances are Facebook, too, will fade, just like MySpace has.

Ah, but with so many suckers to bleed and crooks to feed a fix of days gone by, well, LinkedIn will be made to shine, if only that the promise of sugarplums in a Facebook IPO might keep the suckers at the trough of those many hopelessly insolvent banks that otherwise have been offloading risk since 2008.

And speaking of sugarplums, anyone thinking today's raft of bad economic news did not stir visions of QE3 must be a financial diabetic.

However, there's more bad news, suckers: UBS just unloaded on Team Fraud's marionettes who go by the names of Bernanke and Geithner.

I so disagree with David Goldman's claim that, "there’s no more risk to be shed." Apparently, so too does UBS...


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

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Wednesday, May 25, 2011

Mark Haines and the End of the World


You cannot make this stuff up! The following report was the last filed by Mark Haines on Friday, May 20, 2011...




Eerie.

Speaking of which...


$CPC

Quite a pickup in call option buying these past two days. Might this largely be short equity hedging?

Today's whipsaw during the final hour of trading suggests this very well could be the case...


A Tribute to Mark Haines






Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Tuesday, May 24, 2011

The Coming Bull Market in Pope-Mobiles


Yesterday's mention of evidence that, back in March was indicating increased risk of market weakness finds another technical measure likewise conferring...


$BPNYA

Relative strength on the NYSE Bullish Percent Index (below 30) once again is warning that, a further bout of selling could be in store, much is it consistently has similarly warned on several occasions since March '09 bottom.

More telling here, though, is how the Bullish Percent Index, itself, is confirming formation of a fourth wave of five waves up from late-June 2010 bottom. Increasing underlying weakness registering at higher lows in the NYSE Composite index since December 2010 bolsters the Elliott wave count made necessary once February 2011 peak proved not to have ended a "rising wedge" off late-June 2010 bottom.

Judging, too, by the Bullish Percent Index's present position, the end of wave 4 of (c) appears nearly at hand. One final turn lower in the market probably will do it.

The question then turns to wave 5 of (c), slated to end the market's counter-trend rally off March '09 bottom. There is ample reason to believe this final advance could be rather tepid and, indeed, could fail to exceed May 1st peak.




On one point I might disagree with Steinberg. There is one thing Bernanke and Geithner can do. Take the next trillion and buy a fleet of Pope-mobiles. Many a legislatively sheltered criminal probably will be needing the added protection (and many, many prayers no longer backed by taxpayers).


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Monday, May 23, 2011

Bounce or Not, More Weakness Ahead


With today's thud one might conclude that, the risk of disarray crippling Team Fraud following the arrest of the IMF's alleged Jacques the Raper is beginning to sink in. In a climate marked by razor thin confidence the take down of a major Team Fraud player is no trivial matter. The bailout/austerity regime appears to be under an intensifying siege, and crooks let off the hook via this insane scheme eventually will start taking notice.

Thus, takers of toilet paper might not be so easy to come by in the near future. So, better trim exposure at any price than mount a serious bid at establishing a bottom...


$CPC

As soon as the pricks step up and hedge their wildly overvalued equity inventory with a show of commitment demonstrating seriousness, then will the market's turn lower from its May Day peak likely be completed. Until then, southbound the market likely will remain.

Which is not to say that, a further move lower probably will unfold immediately (although it most certainly could). In fact, a fairly decent bounce might rather develop prior to the well-hedged bottom I am anticipating being in place.


$NYA

Today's move lower from May 1st peak was confirmed both by relative strength (top panel) and momentum (bottom panel). Thus is there additional evidence that, a further move lower could be in store.

No doubt the same could have been concluded at mid-March bottom (and here most certainly was on account of having supposed a "rising wedge" had unfolded from late-June 2010 bottom to mid-February 2011 top to form wave (c) , thereby completing an a-b-c corrective wave up from March '09 bottom). Yet "once bitten, twice shy" will not discourage this reasonable conclusion, particularly with so much underlying technical weakness being present, having accumulated for many months now.

Two bounces we have seen since May 1st might light the way to a third upcoming, only to be followed by a further throttling worse than today's. The end result should be an additional increase in underlying technical weakness again confirming that, an historic financial collapse lies fixed on the horizon, quite likely awaiting but the demise of a Lehman among sovereigns...


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Friday, May 20, 2011

Increasing Shortage of Greater Fools


More evidence suggesting that, the market has not yet completed its advance off late-June 2010 bottom...


$SPX

The percentage of bullish investors taken from the American Association of Individual Investors weekly poll of investor sentiment is superimposed on a chart of the S&P 500 over the past six months. May 18th's reading of 26.7% rather suggests upcoming the anticipated fifth wave of five waves up from late-June 2010.

That being the short and sweet of it, let's not overlook the all-important context of this rather low reading of bullishness among individual investors, particularly at this point in time following a substantial rally, first from mid-March, then late-June 2010 and March '09 before that. Has bullishness waned, first mid-March, then now, in a climate of expanding wealth, or in a recovery of former wealth? No doubt, it is more likely the latter.

This contextual distinction segues to a recollection of circumstance with sentiment back in '08. You might remember that, during the market's bounce of August '08 and into early-September bullish sentiment had recovered off its July low, yet still was nothing to write home about, as its increase was by no means extreme. Just prior to the collapse of Lehman Brothers on September 15th one could have viewed then still-muted bullish sentiment amidst a recovering market (NASDAQ's bounce was particularly notable) as a sure sign the market was about to go higher. Of course, this proved dead wrong.

The point is that, sentiment, generally speaking, is bound to behave differently in a bear market than in a bull market. Moreover, sentiment is likely to resonate with the market's performance over years past. Indeed, sentiment can echo investor experiences extending back decades.

Today's remarkably low bullish sentiment among individual investors speaks plainly about the shallow depth of buy-side interest: a quandary consistently evidenced by diminishing volume of shares traded during advancing periods since March '09. Thus, we have confirmation that, contraction in buying power underlying the market's advance is only likely to continue. With an increasing shortage of greater fools on the horizon, then, there's but one reasonable forecast ... and it remains Dow 3600.

* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Thursday, May 19, 2011

More Than a Sinking Feeling


Another "PGA Cinderella Story" in the making?


$NYAD

Descending peaks and valleys the NYSE Advance-Decline differential has registered since late-June 2010 bottom before have been noted, this in substantiating a so-called "rising wedge." Naturally, this trend continues despite a revised Elliott wave view. Still-increasing underlying weakness the NYSE Advance-Decline differential reveals likewise substantiates this revised view toward the market's advance since late-June 2010.

Now, a further permutation of this same evidence in relation to the unfolding, 5-wave advance...

As downward corrective waves have unfolded, a common, positive divergence consistently developed. Wave 2 (August 2010) found bottom with the market's underlying strength increasing. Likewise did the same occur in formation of waves a and c of 4.

Presently, wave e of 4 — another downward corrective wave — still appears to be unfolding. Yet it rather appears the same increase in the market's underlying strength might not materialize. Instead, increasing underlying weakness accompanying the market's advance since late-June 2010 might rather be but further evidenced.

Already, the NYSE Advance-Decline differential during formation of wave 4 has weakened from its worst during formation of wave 2 (see green line), thus demonstrating typical technical behavior common to 5-wave advances. Yet confirmed underlying weakening could extend further as wave 4 completes straight ahead.

Indeed, I dare say it should. Surely, if underlying weakness were to increase as wave 4 [of (c)] completes over upcoming days, then only further confirmed would be an Elliott wave-based view warning of the market's impending dismantling...


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Wednesday, May 18, 2011

A Hit Ahead of the Curve


In a recent post titled, "Prospective Swings Upcoming" was a view of things that, so far, have developed quite as anticipated...


$NYA

In the formation of wave e of 4 we're about midway.

My thinking per this present period bouncing in a sideways trending trade regarded the matter of time necessary to draw momentum (bottom panel) down to a position where it might likely sink below its low set during formation of wave 2 of (c). This momentum sinking has been achieved...


$NYA

Seeing momentum now in the negative, and relative strength (top panel) on the sell side of its range, there is plenty of reason to believe the worst of wave e of 4 could unfold at any moment.

The effect of this on other technical measures is expected only all the more to add to underlying weakness building up for many, many months now — the likes of which you might rightly expect would precede such an unparalleled collapse as is slated to make 2008 appear a walk in the park (itself no long shot given the debt trap consuming lenders of last resort)...


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Tuesday, May 17, 2011

Increased Hedging Amidst Shrinking Demand


The CBOE Put/Call Ratio offers an interesting addition to yesterday's VIX commentary noting swings in volatility in relation to the presently unfolding Elliott wave (namely, wave 4 of (c))...


$CPC

As wave e of 4 completes over upcoming days, the Put/Call Ratio could exceed its mid-March peak, set as wave c of 4 was bottoming. Indeed, given that the Put/Call Ratio's mid-March peak barely exceeded its peak when wave 2 of (c) was forming into late-August 2010, it seems reasonable that, a more certain sign of increasing weakness (as is typical in a 5-wave advance, fourth wave versus second wave) might register via the CBOE Put/Call Ratio.

So, the question is, might a greater measure of long equity hedging / short equity positioning register via an increasing CBOE Put/Call Ratio as wave 4 of (c) completes, while volatility during formation of wave e of 4 (currently unfolding) fails to exceed that registered during formation of wave c of 4 (mid-March)?

This presents a fitting technical backdrop so near the market's pending collapse. Seeing relatively increased hedging (such as now appears necessary to levitate the market a little longer amidst a shrinking long equity demand), itself, demonstrates a shifting undercurrent. Yet that positions are being acquired more cheaply than just a couple months ago when the market similarly was under pressure reveals increasing complacency at a time when the downward pull of debt deflation grows stronger in the face of big guns whose already emptied chambers have taxed to the max the world as we know it.


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Monday, May 16, 2011

Volatility on a Complex Corrective Wave


The S&P 500's volatility appears poised to increase...


$VIX

This sets up well for a sell-off slated to complete the fourth wave of five waves up from late-June 2010 bottom.

Having commenced early-November 2010, volatility registered during wave a of 4 into late-November was exceeded by volatility registered during wave c of 4 into mid-March bottom, despite wave c bottoming above wave a's bottom. So, with wave e of 4 thought presently unfolding (set to complete an Elliott "contracting triangle" complex corrective wave), one wonders if coincident volatility upcoming might spike above that registered during formation of wave c of 4.

Since wave c's mid-March bottom stands to be considerably more challenged by wave e of 4 than wave c of 4 challenged wave a's late-November bottom, one might think volatility likely to increase above that registered during formation of wave c of 4. Then again, the measure of an Elliott third wave's dynamism (in this case, wave c) might find volatility during formation of wave e of 4 falling short of that registered mid-March when wave c of 4 was forming.

This might be worth keeping an eye on for the sake of confirming an Elliott wave count presently supporting the probability that, the market's levitation extending its counter-trend rally off March '09 bottom, although nearing completion, still has legs enough to postpone collapse for some weeks yet...


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Friday, May 13, 2011

On a Trade Challenging Patience


As you know, the bear case I have made largely is founded on the absence of animal spirits. This condition has persisted over the entire course of the market's counter-trend rally since March '09 bottom. It foremost has helped focus upon finite Elliott Wave possibilities projecting the manner in which the corrective wave forming off that bottom might develop.

Yet though finite in number, their prospective forms still were several. This reality has met a bear trade whose challenge over the past year puts to the test my manta claiming, "patience pays."


$NYA

The green line in '09 marks the period during which my risk capital (non-retirement) was allocated into ProShares Ultra Short (2x) positions tracking major U.S. indexes. This ETF position originally was established on account of a reasonable expectation that, the market's counter-trend rally off March '09 bottom might unfold in a manner substantively different than occurred from March - May 2008. My thinking was that March '09 bottom might be more greatly challenged as the corrective wave unfolding developed.

Well, to put it bluntly this was not to be. Yet even going into April 2010 top — a good six months following my final allocation of risk capital into ProShares Ultra Short ETFs — solid technical evidence substantiating the Elliott wave count I thought most reasonable was sustaining cause for maintaining a patient disposition. No doubt, this stance was all the more bolstered by apt, underlying technical weakness, and this despite previous disappointment delivered in the face of similar indications of increasing underlying weakness.

In the aftermath of last year's "flash crash" my position came back to a point where breakeven was within striking distance. Contrasting the market's technical state as a result of the sharp turn lower a year ago (a year already!) with the same in July '08, there seemed a reasonable basis for expecting my trade's imminent vindication. Then came more hyperinflationary happiness from the trans-Atlantic loony bins propping up our insolvent financial system. Yet again, my trade paid the price ... but only in time it will require to become profitable, as animal spirits remain entirely subdued, thus confirming my bearish outlook.

Some trades quickly materialize, others take longer than anticipated. I am not about to gnash my teeth over the slice of humble pie I have been made to eat over the past year in particular. Although a triple-digit percentage gain was not my assumed objective when my ProShares Ultra Short ETF trade was initiated, now that the corrective wave off March '09 bottom appears near its end, the double-digit percentage loss that today I must patiently endure really is no burden on account of prospect that, a favorable reversal of fortune very well could be at hand. The market's resiliency notwithstanding, only the more likely has become its sudden unraveling. Thus do I soldier on believing patience will pay...

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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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Thursday, May 12, 2011

The End of Large Cap Leadership?


Technical evidence once supporting a view toward the market's advance off late-June 2010 bottom supposing a special Elliott wave called a "diagonal triangle," or "rising wedge" had formed into 2/18/2011 top — this to complete the market's counter-trend rally off March 2009 bottom — might still support possibility that, this special wave form unfolded in the Dow Jones Industrials Average into May 2nd top...


$INDU

Consider this possibility in the context of broader-based indexes presently thought in the process of completing wave 4 of (c) over coming days, then wave and 5 of (c) subsequently (possibly registering a "fifth wave failure" of sorts, as well, in the process). In other words, the BRIC darlings of the Dow might have seen their best, despite still appearing among the market's leadership.

This quick stab at refining present possibilities — one among several, all leading to the market's ultimate collapse — also offers a useful point of reference in assessing the evolving reaction to what rapidly is appearing a growing risk of debt deflation throughout the trans-Atlantic financial system. Global capital flows into dollar-denominated investments — shunning risk far more aggressively than has been the trend these past couple years while insane monetarists were digging out every last trick available for postponing systemic bankruptcy reorganization — should reach higher up in the capital structure than the Dow 30...


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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Wednesday, May 11, 2011

Certain Smell of a Bull Trap


More technical evidence supporting prospect that, a fourth wave (of five waves up forming since late-June 2010 bottom) still could be unfolding, and portending a bout of pronounced weakness straight ahead...


NASDAQ McClellan

The McClellan Summation Index applied to the NASDAQ Composite has been dogging the same applied to the NYSE for as long as the market has been advancing off March '09 bottom.

Most simply and consistently this, of course, is yet another objective measure confirming animal spirits are not driving the market higher. Rather, consistent weakness, broadly speaking, all things NASDAQ, rightly produces the certain smell of a bull trap, again, putting it simply.

And now, more immediately, finding NASDAQ's McClellan Summation Index negative, following a string of bearish divergences to NASDAQ's peaks over the past few months ... it appears a fairly hard turn lower here might be baked into the cake ... notwithstanding further bouncing around, going nowhere, evolving over coming days.

Thus, might NASDAQ, too, soon complete a fourth wave of five waves up from late-June 2010 — five waves completing an a-b-c counter-trend, Elliott corrective wave up from March 2009 bottom — following which a terrible market collapse (quite likely the worst ever) seems predestined here at the junction of a technically well-justified case and a still bankrupt trans-Atlantic banking system.


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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Tuesday, May 10, 2011

Added Substantiation on a Wave Count


The CBOE Put/Call Ratio might offer additional substantiation supporting the prospective Elliott wave count put forward here over recent days...


$CPC

Recall that, the dynamic consistently revealed via the CBOE Put/Call Ratio since March '09 bottom has been one where covered call options written beget a CME-driven short squeeze, beget call options exercised, beget long equity distributed.

Well, first off, it appears call option buyers are becoming scarcer. These would be the suckers looking to add to long positions — their interest in exercising their call option rights piqued by rising prices. A persistently declining volume of shares traded on the NYSE speaks of their dying interest — a crowd "all in."

Fittingly is this revealed during formation of wave 4 of (c), when technical weakness typically increases. However, such increased measure of hedging as one might expect when weakness builds has not yet materialized. Peak hedging registered during formation of wave 2 of (c) (late-August 2010) has not yet been exceeded. That distinction might come as wave e of 4 completes sometime over the next few weeks.

Seen in the context of the above described technical dynamic underlying the market's counter-trend advance since March '09 bottom, the trend of "call option pushing" during advancing waves since late-June 2010, and "put option hedging" during corrective waves reflects typical Elliott wave character for each respective wave thus far to unfold, and this particularly when considering each wave in relation to the others. For example, in keeping with a third wave typically being the most dynamic Elliott wave, wave 3 of (c) (early-September 2010) saw heavy put option hedging early in its formation (indeed, more than at any time since late-June 2010 bottom!), and this soon was followed by several months spent at peak capacity pushing call options, this as wave 3 of (c) completed and wave 4 of (c) began unfolding with its upward bias.

Now, as higher lows have been established in formation of wave 4 of (c) (since early-November 2010) an increasing measure of put option hedging has been required to bolster the market's floor. It seems a safe bet this trend will continue as wave 4 completes sometime over the next few weeks.

Should this occur as expected — with increasing technical weakness relative to wave 2 displayed — the prospective Elliott wave count discussed here over recent days only would gain further substantiation.


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.


There's an easy way to boost your investment discipline...

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Monday, May 09, 2011

Prospective Swings Upcoming


Behold the picture of prospective swings upcoming, as fitting so many words describing the same on Friday...


$NYA

Seeing momentum (bottom panel) now turning down ... and projecting it to fall below its low registered during formation of wave 2 of (c) ... and with room presently to roam lower on the positive side of its range ... it seems wave e of 4 of (c) might take some time to develop.

With declining momentum now also finding relative strength weakening to the sell-side of its range, odds are the turn from May 2nd peak is not yet complete. So, in a prospectively drawn out manner might wave e of 4 break below the lower boundary of an Elliott corrective triangle ("contracting") forming since early-November 2010 ... and in so doing carry momentum (bottom panel) below its late-August 2010 low (as wave 2 of (c) completed).

Now, if wave 5 of (c) should prove a so-called "failure," then it seems possible that, momentum might never reach back into the positive side of its range during wave 5's formation. That certainly would be a fitting precursor to disaster slated to follow.


Fast Money
* * * * *

© 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.


There's an easy way to boost your investment discipline...

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Friday, May 06, 2011

Counter-Trend Rally Technical Substantiation


Here is technical perspective substantiating the Elliott wave count applied to the market's counter-trend rally off March '09 bottom, this as it nears its end...


$BPNYA

Consistent divergence the NYSE Bullish Percent Index has registered since late-June 2010 (relative to the NYSE Composite's performance) supports the idea that, the market's counter-trend rally since March '09 is, in fact, nearing its end.

Yet the relatively more dynamic technical character one might expect during formation of a third wave — in this case wave (c) of an a-b-c corrective wave up from March '09 bottom, forming since late-June 2010 — although not revealed by the NYSE Bullish Percent Index itself, instead is substantiated via relative strength (top panel) applied to the NYSE Bullish Percent Index. As you can see, the NYSE Bullish Percent Index's relative strength peaked during formation of wave 3 of (c) — a third wave of a third wave — going into early November 2010.

Already during formation of wave 4 of (c) relative strength of the NYSE Bullish Percent Index has fallen below the low it registered during formation of wave 2 of (c). This presents a manifestation of technical deterioration typical as a 5-wave advance nears its end. Much the same is revealed by the greater bulk of technical measures accompanying the market's advance off late-June 2010 bottom, as well as March 2009 bottom before that.

Now, seeing the NYSE Bullish Percent Index's relative strength presently in an area where over the past two-plus years market weakness has coincided — this I noted back in March — one wonders whether completion of wave 4 of (c) along lines mentioned yesterday might be in order. Thus, a fairly sharp decline completing wave 4 of (c), and likewise setting up a fifth wave failure, could be signaled by the NYSE Bullish Percent Index's relative strength falling below 30.

As for today's rumblings warning of Greek debt deflation (a.k.a. "restructuring"), the lesson learned during the Bear Stearns-to-Lehman debt deflation fiasco of 2008 simply is that, first, policy options are limited in their capacity to mitigate financial collapse ... and second, as for these, another liquidity gusher is out of the question sans a terrible panic.

By all [technical] measures and [Elliott wave] counts, such a precarious state of affairs remains the one thing pending whose elevated probability demands exclusive attention notwithstanding the market's resiliency.

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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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!