Friday, July 29, 2011

Will the Real [AAA-rated] PIG Please Stand Up!


The U.S. economy grew less than expected in the second quarter as consumer spending barely rose, and growth braked sharply in the prior quarter, a government report showed on Friday.

Growth in gross domestic product—a measure of all goods and services produced within U.S. borders—rose at a 1.3 percent annual rate, the Commerce Department said.

First-quarter output was sharply revised down to a 0.4 percent pace from 1.9 percent.

Economists had expected the economy to expand at a 1.8 percent rate in the second quarter.

In addition, fourth-quarter growth was revised down to a 2.3 percent pace from 3.1 percent, indicating that the economy had already started slowing before the high gasoline prices and supply chain disruptions from Japan hit.
Economy Grows at Sluggish 1.3%; Consumers Pull Back (CNBC, 7/29/2011)

Bravo Herr Bernanke! Bravo Herr Geithner! Bravo fascist-in-chief Barack Obama!

And what is Congress' response? Accelerate hyperinflationary breakdown by cutting demand! Brilliant! What's the price for an Ivy League education these days? Subtract a penny and you will have the exact figure revealing how much was overpaid.


$BPNYA

Here we go again ... knock, knock, knockin' on Hades door.

Since March '09 bottom the market consistently has been subject to protracted bouts of selling whenever the NYSE Bullish Percent Index's relative strength crossed below 30. Oddly enough, too, $BPNYA's momentum (bottom panel) is flattening at its 0-line, much as occurred in February, as well as leading into May 1st peak (two points of reference that, coincidentally bear significance in what increasingly appears a distribution whose ultimate culmination finds hopelessly insolvent financial institutions reduced to desperately petitioning elected representatives).

So, open up Satan! Your children on Wall Street have met the appointed hour secured by the man who on this side of analytical heaven is disdainfully known as King Ponzi, Alan Greenspan.


$SPX

Sometime next week we are likely to witness a crush aiming to coerce alignment of Femocrats with their Rethuglican colleagues in Congress, this that increase in Treasury's tribute laid at the likely soon-to-be bloodstained alter of Adam Smith's Leveraged Ponzi Scheme might be more assuredly secured (with such swindle having become standard practice made necessary in the internet age, as cover once provided by faux journalists protecting enemies of the state more or less has been obliterated).

Yes, it is true. I have been all over the board of late. Yet this not so much in assessing the market's technical state, but rather in projecting what likely was most immediately to develop as a result. This present conclusion, then, might prove equally inaccurate.

However, volume's pickup this week is confirmation fear is growing. We know already that, wherewithal to absorb any increase in supply brought to market is thoroughly shattered. Indeed, through selling restraint alone since March '09 bottom has the market been kept levitated. Diminishing volume consistently registered over the entire course of the market's counter-trend rally since March '09 is conclusive confirmation that, the market has been living on borrowed time paid solely with will to restrain, healthy, fear-driven selling typical in bull markets that possess staying power, the likes of which find volume increasing as prices advance.

Most recently we see evidenced in formation of the rising portion of the right shoulder of a prospective head and shoulders top this ongoing tendency since March '09 for volume to shrink during the market's advance. A head and shoulders, among technicians, is a well-known pattern indicating distribution of shares into weak hands and finds confirmation of its prospect via muted volume at this specific point in its formation (i.e. the advancing phase forming the right shoulder). Long-time readers are aware of this critical, distinguishing characteristic, as detailed by Edwards and Magee in their classic, "Technical Analysis of Stock Trends." And so there it is.

Up next, then, should be a high-volume break below the head and shoulders neckline (this, again, according to the same source). Expect this development sometime over the next week or two.

Looking beyond this upcoming prospect, the month of August could find useful comparison to August 2008 and set up for a vicious ten year commemoration of 9/11. Were the neckline to the head and shoulders top violated over coming days, a period in which develops a reaction back up to the neckline likely would follow. This, again, would be typical behavior according to Edwards and Magee. Thus, too, might striking similarity to August 2008 take shape, as this was the brief period when the market more or less flat-lined following its May-July '08 sell-off, and set up the market's breathtaking swoon initiated when Lehman Brothers took a dirt nap.

Speaking of the market's May-July '08 tumble, be aware that, the S&P 500 has declined for three straight months now, albeit ever so modestly. Likewise, on account of this week's rather soft trade the worst appears nearer on the horizon than has been supposed of late. Observing theatrics surrounding a still-developing debt ceiling swindle, the risk of an orchestrated flight forward making 9/11 pale in comparison is, I am afraid, all too real, as well. Desperate times call for desperate measures, and plainly Team Fraud is out of gas and sinking fast, as developments throughout the trans-Atlantic continue portending chaos ahead.




(For a review of the one chart proving that, the United States in fact is in the midst of a hyperinflationary breakdown see: "Assorted Nuts and the Nuts We Need.")

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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, July 28, 2011

Most Genuine Thanks to the Captains of Finance


We're saved! We're saved! Wall Street's great lovers of Main Street have written the President and members of Congress, issuing "A Call to Reason - And Action" (which is code for "reach for the barf bag in the seat pouch in front of you and prepare for a rough ride")...

An Open Letter to America's Elected Leaders

Dear Mr. President and Members of Congress,

We work on behalf of millions of Americans from all walks of life who are "invested in America." They are leaders of businesses large and small that want to grow and help America grow; police officers, firefighters, teachers and nurses who save for their retirement through pension funds; and investors and entrepreneurs who have placed their faith in America and its leaders.

I warned you about needing a barf bag! What the authors did not specify is whether those for whom they are "working" include Americans formerly employed in the indicated professions whose livelihoods no longer can be sustained because capital formerly affording their services is now needed to fill the bottomless pit dug by the zero due diligence machine whose name in these parts goes by Adam Smith's Leveraged Ponzi Scheme. No mention, either, of those citizens who "have placed their faith in America and its leaders" swindled beyond imagination, while the perpetrators remain at large.

The people we serve are the nation's savers, its innovators and job creators. They want a strong future for America. But today our nation's economic future is in doubt, and so is America's financial leadership in the world. Our country faces threats to its economic well-being that will inflict pain and hardship on all our citizens for many years to come if we fail to act - and act now.

Well, this at least appears honest enough. Of course the greater preponderance of "savers, ... innovators and job creators" (up until the Ponzi scheme's collapse anyway) were the very firms whose heads authored this letter. So, what credit should be given for admitting "serving" themselves I'll leave you to decide.

As for "pain and hardship" awaiting failure to act, the time for idle threats has passed. Any required action "now" simply begs Glass-Steagall and nothing less, and this whether Team Fraud is ready for the fallout portending its own bankruptcy.

As a debtor nation, America must show the world that the nation's word is its bond. Raising the debt ceiling is vitally important, but that alone is not enough. The huge budget deficit, both current and long-range, must be dealt with urgently as well.

Per Glass-Steagall's utter necessity, "[showing] the world that the nation's word is its bond" is what it's all about! So, we're on the same page here.

As for our "huge budget deficit," once the toxic crap these firms manufactured (and Treasury currently backs to the tune of tens of trillions of dollars) is returned to its rightful owners, the budget deficit will have entered rehab with genuine prospect of never again falling off the wagon.

Addressing the current federal debt ceiling crisis, by itself, will not fix the entire problem. We would be deluding ourselves as a nation. If we want strong economic growth and job creation we must fix the deficit for real, for good, for the future of all Americans.

These folks go to the same schools as do our elected representatives. All are masters in sophistry.

As custodians of Americans' savings, we urge Congress and the Administration to reduce the deficit substantially. Without a credible action plan to reduce the budget deficit, the U.S. debt will likely be downgraded by one or more rating agencies.

And so we discover just who "owns" Standard & Poor's.

The idea of America losing its AAA rating was once unthinkable, but now highly likely if our leaders fail to act. If that were to happen, six countries, including France and Germany, will have credit ratings above that of the United States, signaling America's diminished ability to pay its debt. And, make no mistake about it: the consequences of such a downgrade are very real and very serious.

Please. Rating agencies criminally incompetent could not possibly bring the United States to its knees. "Consequences" called "very real and very serious" apply only to a bunch of swindling cowards who, alone, have a vested interest in giving deference to rating agency thieves. Among this crowd includes many members of Congress, as well as the President of the United States.

Interest rates today are low. But a rating downgrade inevitably means higher interest rates - not necessarily immediately but over the course of years to come. As a nation, we are highly dependent on foreign purchases of our debt. With a weakening US outlook, global lenders will demand a higher return for assuming the increased risk - and many investors may simply give up on America and be more likely to seek other places to put their money.

You already know the truth about interest rates. If Congress buckles to such insane demands as originate in the London school of economics — these prescribe that, governments contract both demand and supply throughout the physical economy — will interest rates rise to and through the stratosphere, as the mountain of debt amassed during the build-out of Adam Smith's Leveraged Ponzi Scheme meets an economy whose wealth-generating capacity has been purposely sent spiraling into the abyss. Those liquid markets where debt securities might fetch a reasonable price, then, will find sellers aplenty and buyers few, thus sending interest rates to the moon.

As for investors "[giving] up on America," in times like these we should agree that, money fleeing the world's greatest nuclear power rightly should be classified "dumb money."

In addition, the US inflation rate has been much lower than that of other countries because we are a reserve currency for investors worldwide. If we are no longer among the highest rated government borrowers, investors will increasingly seek other currencies to store their wealth. The decline in the value of the dollar will intensify inflation risk in the future, which will further erode our standard of living.

Sorry to repeat myself, but in times like these, money fleeing the world's greatest nuclear power rightly is classified "dumb money." Truly, too, the most profound risk of inflation — the likes of which finds compelling precedent in 1923 Weimar Germany — awaits but adoption of the very policy prescription these usurpers of sound banking practice advocate.

This fallout will be felt all across America. It will mean fewer and more expensive loans for homes, cars and college expenses as rates rise and credit becomes even harder to secure than it is now. The decline in the value of the dollar will eat into retirement savings. Businesses will find it more expensive to create jobs. Ultimately and most painfully, economic growth for our nation will slow for years to come and diminish the quality of living across America.

Hurl.... Hurl... Hurl... Good thing I warned you about that barf bag! How full of themselves are these "captains" of finance! How ever did the United States become an economic powerhouse prior to being lured into a debt trap the likes of which these folks set and now demand the nation's self immolation that appearances of its viability be sustained?

Such a devastating outcome is by no means inevitable. We urge you to act with unity of purpose and spirit of commitment - and to act now.

Indeed! Glass-Steagall NOW.

Never before have insiders given clearer indication that, the banking system is hopelessly insolvent. These men have done a fine service here letting the average investor in on a dirty little secret before circumstance forces the plug to be pulled. I mean this most genuinely.

Likewise, if there is any hope for this country, then response given here will meet the eyes of our elected representatives with frequency several orders of magnitude greater than the original. With opposition to TARP having registered at 100-1, there's hope for the United States, but only if swindlers who have brought the nation to the edge of its destruction are taken on courageously and in truth.


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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Wednesday, July 27, 2011

Enemies of the State and a Doomed Market


Today's House Financial Services subcommittee oversight hearing featuring representatives from credit rating agencies (during the second panel, 90 minutes in) makes one thing abundantly clear in the matter of circus surrounding the Treasury debt ceiling charade presently consuming Washington: Standard & Poor's rightly should be regarded an enemy combatant of the people of the United States, several orders of magnitude more dangerous than al Qaida, and begging to be shut down immediately. This agency's past misdeeds already widely acknowledged, its present fraud in assuming authority over the financial wherewithal of the U.S. Treasury is nothing short an act of treason and should be dealt with swiftly and harshly. That half of the second panel not among Team Fraud are our allies in this sense about villains we otherwise all know. These others are heroes, and should be cited in pressing the Senate Banking Committee to come down hard on any firm acting as enemy of the United States of America, much as the big three still prove themselves to be.

I will not elaborate any further here tonight and instead let you reach your own conclusion once you have watched today's hearing. (You might just skip the first 90 minutes, as this featured representatives of the "see no evil" fantasy lands at the Fed, the SEC and the OCC.) Again, let me reiterate: the stock market is doomed, no matter if by Glass-Steagall or hyperinflationary breakdown (the latter being an outcome Team Fraud through its rating agency tools ventures to further in a manufactured debt ceiling swindle extending bailout of hopelessly insolvent financial institutions). There's no harm pressing your representative jellyfish in Congress as hard as you possibly can, then.

And if you're not out of stocks, well, days when you, too, might be thought well-qualified for Congress are running short. Yet if you are still thinking about politics, ask Dave Goldman if he can hook you up with some jackboots, because if companies like Standard & Poor's continue being tolerated, you will need them if you are going to fit in...


$SPX

Today's gassing rather suggests wave ii of 5 of (c) did not complete last Monday. Rather wave c of ii of 5 of (c) — specifically, its third wave — apparently unfolded today. Duly note momentum's trend continues rising (bottom panel, red line). Call it a measure of an irrational debt ceiling hysteria being manufactured by a President, no less.

In other words, Mr. President, your backers are not buying your panic. They're busy catching bait while you stock the Treasury pond with the big fish. The hopelessly bankrupt pricks you otherwise claim must be saved (lest we suffer depression) are readying another take. Only a hopeless romantic could not see the hammer about to smash the herd and take a whole lot of bull with it...


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...

Get Real-Time Trade Notification!

Tuesday, July 26, 2011

Mystery Solved?


The mystery surrounding the McClellan Oscillator's moonshot off June 16th bottom is solved...


NYSE McClellan

During formation of wave 1 of (c) last July the McClellan Oscillator reached its highest reading of any since. Unfortunately, this peak has dropped off the 1-year chart above, but it came in just slightly higher than that reached last month when wave i of 5 of (c) was near completion.

So, applying the Elliott Wave Principle's "like from like" quality to the McClellan Oscillator the evidence indicates wave 5 of (c) is well under way. Likewise, much as occurred all the way up from late-June 2010 bottom, expect the McClellan Oscillator to fade every step of the way higher as wave 5 of (c) develops.

By the looks of it, too, this final leg of the market's counter-trend rally off March '09 bottom appears slated to take the form of a "rising wedge," whose five component waves each subdivide in threes (although not indicated above, these are labeled a-b-c). We plainly see this three-wave subdivision in formation of wave i of 5 of (c).

Now, whether wave iii of 5 of (c) presently is unfolding should be confirmed sometime over the next several days. Having been inclined to suppose that, the market was likely to extend its advance from last week, presently developing this week, then, is thought wave b of iii. Wave c of iii [higher] should develop promptly ... unless, of course, wave ii of 5 of (c) did not complete at last Monday's low and, instead, still is forming.

I rather suspect time is running short for debt farmers whose tools in Washington are taking a beating with their debt ceiling swindle venturing another huge wad of taxpayer capital to fill the banking system's void. One can just imagine what vile reactions from constituents these folks are enduring. Nothing like an informed citizenry with access to a broader knowledge base inspiring the national will to turn up the heat on whores of "the market" in Congress...





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...

Get Real-Time Trade Notification!

Monday, July 25, 2011

Gangsta Dress Rehearsal


Will you just listen to that bi-partisan collection of intellectually bankrupt tools in Washington speaking about risk of a 2008-like market swoon caused by the debt ceiling impasse! Why these folks actually believe they can prevent such an outcome if only they find consensus on how best to piss on the Constitution! Truth is no matter their final solution, the stock market is doomed.

Now, why this crush to free a greater share of the U.S. Treasury's wherewithal from budget-related obligations? Does anyone really believe Treasury's outlays will shrink as a consequence of whatever cuts are agreed to? Truth is Treasury's debt cannot, and in fact will not, contract. The remnants of Adam Smith's Leveraged Ponzi Scheme absolutely, positively and without doubt need increasing support, lest the mountain of debt created in the build-out be left to crumble. Such is the way of Ponzi schemes generally.

There's little argument that, budget cuts, in and of themselves, portend economic contraction. Yet on the flip side capital freed that an insolvent banking system might gain Treasury's increasing support — this to sustain appearances of the banking system's viability — is the very fuel accelerating the economy's hyperinflationary breakdown. With Treasury and the Fed providing the means for massively faking the true state of bank balance sheets, capital freed as a result becomes finance directed toward a shrinking supply of viable "investments" whose final effect further consolidates "excess capacity," removing it from play.

So, in other words, the geniuses in Washington are doing their level best to accelerate the nation on its course to inevitable collapse, this by venturing policy sure to contract demand as well as supply. Thus, the task of faking growth will only become increasingly difficult from here on out. Assuredly, then, the stock market is doomed to collapse, just as the consensus of sophists in Washington are warning. What they simply do not understand is their role in hastening this end.

A final, relevant remark on this subject is to score anyone claiming the U.S. Treasury is at risk of default. The nation will sooner write off its sorry collection of intellectually bankrupt, Team Fraud marionettes before one thin dime of Treasury debt fails to be honored. Senate Democrats whining about Republicans reticent to raise taxes (remove capital from a banking system that needs every last penny? dream on!), too afraid to insist on Glass-Steagall's reinstatement, this forecast is for you. Such is fair price for buckling to casino thugs infesting the Republican party.


$CPC

Something I failed to notice on Friday in identifying moments over the past couple years when cows were prime for the culling is seen above via the CBOE Put/Call Ratio itself. At moments when the herd was making haste (this being evidenced via MACD) purchasing rights to own a bigger piece of the farm (i.e. call options) there were indications revealing that, cows had been milked to the last drop, and these preceded the moment when the hammer was brought down on their heads.

Seeing as today's Treasury stickup dress rehearsal scripted by Bugsy Obama and Cry Baby Face Boehner had the effect at the shortest of time intervals (1-minute, 5-minute and 15-minute) of sending relative strength to fairly deep sell-side extremes, the "reset" today's heist attempt established at the open paves the way for further gains off last Monday's bottom upcoming.

Although I am not yet inclined to suppose with any measure of confidence that, wave 5 of (c) — the last gasp of the market's counter-trend advance off March '09 bottom — presently is unfolding, indications are this very well could be the case, while Doug Kass' call to buy the battle and sell the deal appear both technically well-justified and fundamentally sound thinking at this point...


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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Friday, July 22, 2011

Counterbalancing Destruction


And so now with insolvency threatening every corner of finance, both private and public ... with political leadership made hopelessly inept through corruption born of adherence to a distorted view of contemporary circumstance in which the ratio of sophistry to truth is directly proportional to the ratio of hatred and resistance to the status quo this view promotes (which might be objectively quantified by, say, the collapse in newspaper readership, or by 2008's opposition to TARP) ... now come vile acts of aggression and bloodshed with increasing frequency. Today's Oslo bombing, of course, was not the first such act, nor will it likely be the last.

Yet keep this fact in mind, too: nearly 40,000 people die each year in accidents occurring on American highways. In other words, there's no good reason to fear terror, in and of itself, which likely is to come. Rather, one's outlook is better centered on the means available for effectively reducing risk of catastrophic loss on any front no matter the cost.

Thus, the imperative that the United States immediately move to reinstate a Glass-Steagall reform of its banking system and lead the world forward in cultivating conditions conducive to accelerating productivity and growth.

In and of themselves, highway deaths and acts of terror will not be eliminated, of course. Yet their risk, nevertheless, in truth can be reduced only through positive action. Toward this end, gaining most efficient control over finance is both a necessary precursor, as well as a power deeply embedded in the U.S. Constitution. Glass-Steagall represents the means by which this power most assuredly is to be commanded and held to account. The end, of course, is unleashing the greatest measure of creation — making something from nothing, as is the principle underlying the idea of incorporation — whose effect serves to counterbalance destructive forces, both natural and man-made, standing as a barrier to reaching a multitude of difficult, yet desirable objectives.

Thus, Glass-Steagall — the U.S. Constitution's principle made policy — carries forward the American Revolution as a creative flanking operation against those many evils arrayed in opposition to the promotion of such conditions as are best suited for a humanity rightly assumed equally endowed to life, liberty and happiness.

If only we had a president who spoke this language, rather than that of a pathetic bean counter (you can watch Il Duce's Q&A here). You might think it a pity that, a president would not lead in promoting policy exerting principle upon which the United States is founded. Yet the man's endorsement by the Financial Times of London during the 2008 campaign made clear from the beginning this was not the intention. One can only hope the row Mr. Obama is creating among the Democratic party's leadership in Congress in his drive to bankrupt the U.S. Treasury through death by a thousand cuts, this that a bunch of insolvent swindlers might buy time to further position their interests for the coming kill, rather will hasten his prompt impeachment. There are crimes against the Constitution for which this president can and should be indicted. Likewise, the current climate appears increasingly ripe for bi-partisan action. However, the Congress being well-proven, sophist cowards there's little reason to be optimistic.

Thus, too, does today's Oslo represent the sort of imposed condition whose effect could prevent any positive action serving to arrest the growing risk of abundant life as we know it becoming a distant memory. Plainly, a field cultivated in hatred is ripe for the harvest. Yet cowardice still persists. Much as illegitimate debt in the grand scheme reveals but tolerance of ignorance — a reasonable comparison in principle harkens back to any Middle Age, European city where human excrement was discarded in the street — much as the evil insisting on its continued imposition is not averse to violence, such are preconditions by which even the United States for all intents and purposes is at increasing risk of being destroyed.


$CPCSeveral times since the 2008 showing of "The Emperor's New Clothes" cows have quickened their relative hunger for a piece of the farm much as now (see MACD, bottom panel). Then, afterward, without fail, the farmer, ever capital starved, found it necessary to cull the herd.

Thus does the market's near-term outlook appear challenged. Bolstering this view is the weak relative state of Bullish Percent Indexes — both NYSE and NASDAQ — a precarious underlying condition but bolstered by ever-diminishing leadership — again, both on the NYSE and NASDAQ.

So, distribution continues to be the order of the day, one whose present moment finds cows largely corralled and apparently ready for the culling. Nevertheless, another day or two calling cows in still might develop. This week's advance certainly appears to have legs yet.


$NYA

The question is how long these legs will prove to be. I'm inclined to think wave 4 of (c) of five waves up from late-June 2010 continues to unfold. Thus, any follow-through to this week's advance should be rather limited, paving the way for another declining period whose unfolding likely will complete wave 4 of (c).

Yet the current, absolute position of both relative strength (top panel) and momentum (bottom) raise the possibility that, wave 4 of (c) ended at this past Monday's low, and wave 5 of (c) has begun to unfold. Still, underlying technical weakness mentioned above bolsters the likelihood that, completion of wave 4 of (c) awaits the unfolding of another leg down to the lower end of the market's trading range so far this year...



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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!

Thursday, July 21, 2011

Euro-Fiction: Titanic Is Saved!


"Most of all, there’s no leverage, or rather, far less leverage than a few years ago. The regulators have seen to that. You have crashes when market participants are compelled to sell levered positions. No-one has big positions any more. They can’t get the financing. There’s no structuring activity underway, and the old bonds lie moldering in the grave of buy-and-hold portfolios."
Not a Crisis, But a Negotiation (Inner Workings, 7/21/2011)

No leverage, Dave? What, then, is this...


Fixed Income Market: Total

Oh, these are just "the old bonds ... moldering in the grave of buy-and-hold portfolios." Yet are these not debt securities — leverage, indeed — whose very viability once was largely sustained by "structuring activity" — Adam Smith's Leveraged Ponzi Scheme? And now, sans a vibrant physical economy, which in bygone days otherwise had safely anchored these securities — now shut down and replaced by a casino, where money chases money for money's sake, indifferent to the elevation of labor's productivity — Goldman expects these to continue moldering in the grave?

NEWS FLASH! As debt comes due amidst a hyperinflationary breakdown whose overriding dilemma brings continued shutdown of the physical economy — otherwise called "excess capacity" by the Federal Reserve's incompetent chairman — lacking new wealth being created, then, what ever holdings find liquid markets will be sold to meet a mountain of unsustainable obligations that, as you can see with your own eyes, was built up during the era of structured finance.

Fixed income securities, therefore, will rise from their grave ... and in so doing, accelerate the trans-Atlantic financial system's spiral into the abyss, as interest rates reach for the moon, taking the place of the Apollo Project.

Not to fear because any thug worth his jackboots knows...

"There’s no crisis–not when all of the problems are transparent, on the table, and subject to negotiation. Instead, there is a change in lifestyle underway for Greek railway conductors, Minnesota firemen, New York City teachers, and a great many other people."

But most emphatically no swindler included, because, of course, these are all about due diligence: which for any railway conductor, fireman, or teacher simply infers having picked the wrong profession. Speaking of transparent problems, what vile social commentary from the London School!

Which brings us to the European continent, where there's good news to report ... particularly for fiction lovers: "Europe Approves Bailout Plan For Greece, Other Nations"

Here's the catch...

"... the plan [has] many hurdles to overcome."

Now where have we heard that before? Oh yeah, with every other recent attempt to continue bailing out the collapsing Ponzi scheme the ECB, like its brethren at the Fed, allowed to run wild throughout the European banking system.

Not to worry because, "Europe Eyes Expanded Powers for Rescue Fund." Trouble is this so-called "power" hinges on the one nation that, once suffered terrible loss in an externally imposed, hyperinflationary looting of its economy, whose indignation paved the way for National Socialism:
"The proposed expansion of the EFSF's role would have to be ratified by national parliaments, and could fall foul of critics in Germany..."

Ya think?

"Many economists believe the only way out of the euro zone's debt crisis in the long run may be closer integration of national fiscal policies -- for example, a joint euro zone guarantee for countries' bonds, or issuance of a joint euro zone bond to finance all countries.

"Germany has firmly ruled out such steps, but [Britain's finance minister] Osborne said the second Greek bailout would only be a step toward a necessary fiscal union in the euro zone."

Inasmuch as the United States has failed to shed its Herbert Hoover-like belief in the magic of markets, the British in Neville Chamberlain-like fashion apparently still think that, simply by redrawing the map "peace in our time" will be had. Fantasy-filled, romantic saps.


XLF

So, a euro-fiction well-promoted earns a short squeeze whose consequence, technically speaking, changes absolutely nothing. Titanic still is doomed.


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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Wednesday, July 20, 2011

The World Before Casinos Owned Washington


Back in the day when the United States fielded presidents boldly asserting America's preeminence at all costs, because these understood that, to be preeminent you must invest in your nation — for younger readers this was before Congress was stuffed with a bunch of pathetic bean counters who could not discern sound investment from a crap shoot, such as presently makes this body a perfect mark for policies promoting the spirit of fascism — today was one of the most wondrous days ever in the nation's history...




I was a young boy of ten. How could I not assume this would be the way of life forever on end?

Who would have thought the next generation would find its leadership so inept that, rather than challenging it to greatness, would reduce it to smallness in a never ending stream of petty existence with the most enduring quality finding those most incompetent elevated all the way to the top (leaving 9/11 to show for this, and producing a most noteworthy, "What!").

The party of Lincoln — savior of the Union and builder of the trans-continental railroad — skilled in thuggery necessary to manage a casino, and not much else. You might say more proof of hidden inflation, as an expensive education does not get much these days.

The party of Roosevelt — the bane of fascism and developer of the nation's natural resources — these have become but hot air for windmills. What next wooden shoes?

Forty-two years ago political leadership meant vision and courage. Today it is little else but subservience to swindlers, with both parties smearing their support with sophistry so thick that, few see through it and recognize base cowardice: rudderless wimps, jellyfish!

We are so close to unimaginable chaos. The destructive battering ram — vice's lever — no doubt having well-served its intended purpose, moves closer to its date with destiny in the dustbin of American history, where every form of snake oil sold from sea to shining sea finally meets its inglorious end...


XLF

Technically speaking, those who call the euro-zone "Titanic" find confirmed in Financials a growing sense of panic. By all measures she's listing badly now.

So, take it away Frankie ... if only that Congressional sheep well on their way to slaughter might come to their senses soon enough to realize sound investments transforming the United States into the greatest nation on earth, indeed, require a U.S. Treasury dedicated to difficult missions no bean counting casino operator can manage...




In other words, Titanic is going down.


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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Tuesday, July 19, 2011

Stupid Cows Pay Up for Faith in Bean Counters


You have to hand it to those cows...


$VIX

They finally wake up and demand more feed for protection written to the bankrupt debt farmer whose ranch still burns, the likes of whom have dripped the farm's wildly overvalued, scorched equity to the herd for as long as a bi-partsan box of tools in Washington have wittingly propped up the farmer's fraud-rife, unmarketable, credit securities ("assets" unmarketable at least at a price anywhere near their mark on the farmer's books), and thinking the farmer in the end intends to keep the farm, step up in a show of faith in the farm's posterity and pay the steeper price they just earned, this for the right to gain an added piece of the farm's future promise...


$CPC

Stupid cows. Several times already this year they've similarly hungered for the farmer's tainted oats — fertilized with enough monetarist sophistry to keep the herd salivating — only to come away unfilled...


$SPX

Since February, when per the new Elliott Wave view the fourth wave of five waves up from late-June 2010 began unfolding, each time cows stepped up for a right to own a slightly bigger piece of the farm — apparently either being upwind from the burning barn, or blinded by the smoke — soon afterward were made to suffer the consequence of having swallowed the farmer's poison pill disguised as financial Viagra.

TRANSLATION: cows being yesterday's put option writers today stepped up to become net call option buyers ... and this time paying the highest price yet commanded by savvy debt farmers.

The things you can achieve when you have stuffed Congress with a bunch of pathetic bean counters who wouldn't know Alexander Hamilton from a Hamilton Beach toaster and Abraham Lincoln from Lincoln Logs! When the U.S. Treasury is likened to a typical American household, you know you are dealing with a bunch of intellectual weaklings, mental midgets, jellyfish: cowards.

You want proof? Name one American household possessing power to levy taxes. Proof out.

Quack "businesspeople" mainly dominating the Republican party ought spend an evening studying Treasury Secretary Alexander Hamilton's persuasive argument made to President George Washington in defense of the Bank of the United States. Since this wouldn't take more than an hour, there would be plenty of time to brush up on Lincoln's "greenbacks" policy. If these glorified bean counters calling themselves "businesspeople" weren't so busy doing Team Fraud's bidding and instead started acting like Americans brave enough to stand up to tyranny, then maybe we would all be a lot less pissed off...


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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Monday, July 18, 2011

Back to the Bad News Banks


Just a quick look ahead at prospective improvement in the market's underlying technical state that might precede its further lift higher completing its advance off late-June 2010 bottom...


NYSE McClellan

Although I might venture a guess that, the NYSE McClellan Oscillator's sizable contraction since the start of the month probably has run its course (at least for the most part), still in store likely will be a period during which its improvement materializes along lines seen last November, this to set up the market's final mover higher.

Being so late in the game, evidence of increasing underlying complacency would be fitting the moment. Thus, the NYSE McClellan Oscillator is thought to have come in about as far as it will here. Should the rising trend of the Oscillator's bottoms since March remain intact, complacency's technical demonstration will be confirmed, then.

Likewise confirmed across the trans-Atlantic, and with increasing frequency these days, is the banking system's insolvency...




It was a mistake repealing Glass-Steagall, indeed! Yet those whose lust for power requires they be good liars batting for Team Fraud apparently remain slow to perceive their own infection with the DSK disease, as well as increasing risk they might need to be isolated...


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!

Sunday, July 17, 2011

Endless Bailout and the Debt Ceiling Swindle


(Use "ShareThis" above to email this post to someone you know.)

Enough is enough. The time has come for the Senate Banking Committee to tighten the screws on brazen bond rating agencies who are threatening a downgrade of the U.S. Treasury's debt. This, after the U.S. Treasury — American taxpayers — saved their sorry asses for their "brilliant" job of due diligence — only the best from the best and brightest! — in stuffing the banking system with enough funny paper to supply Thanksgiving Day parades all across America for at least the next one hundred years! The fraud just keeps getting thicker.

How all the little ducks do line up in a who's who of quacks, too: "tools" in the ongoing take down of the American economy. The rating agencies just can't help themselves. They're in too deep.

Most critically, Standard & Poor's with its further threat levied on key finance companies makes it abundantly clear that, it is the U.S. Treasury, alone, effectively supporting the paper of enterprises whose securities could not have come to market at all were it not for fraudulent ratings given by rating agencies.

And now the Congress should sacrifice the nation's posterity, that the U.S. Treasury might cover for this? Indeed, the rating agencies demand it! No mas! No more. Glass-Steagall reform has found its rightful first marks: Moody's and Standard & Poor's. Start here and the can of bankrupt worms will naturally separate and be exposed to the light of day.

In Pecora Commission fashion the Senate Banking Committee should take immediate aim at rating agencies per findings detailed in the Financial Crisis Inquiry Commission Report.

So, do your country a favor. Write your senator. Link to this post and make your subject line: "ENOUGH IS ENOUGH." Demand their action. Let your senators know you are aware that, austerity imposed while the debt ceiling is increased has but one aim: further bailout of hopelessly insolvent financial institutions. These, and these alone, bear primary responsibility (by far) for the astronomical increase in the nation's debt over the past five years. Through their rating agency tools, these frauds aim to swindle taxpayers yet again by gouging savings in Medicare and Social Security, as well as by routing the nation's defense.

Enough is enough. The time for Glass-Steagall is NOW.






* * * * *

© 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!

Saturday, July 16, 2011

Technical Analysis for the Day/Swing Trader


As I indicated yesterday, Friday's trade could have been considerably more positive, as the technical setup going into the day rather supported a constructive outlook. However, despite Friday's disappointment (with the market up only marginally), no sudden, unexpected surprise developed, either.

Keep this in mind as you reach the conclusion of this report, because more often than not, the reward accruing from my brand of technical analysis is greater clarity in one's outlook. You might have missed my announcement a couple weeks ago, but if you are a day/swing trader, now you can tap into my intra-day insights, and supplement your trade-related decision making with timely perspective elevating your odds of success.


SPX 5-min

Following Thursday's close there were positive relative strength divergences (red line), as well as healthy indications of fear (circled in green), such as typically register during the initial phase of an advance (this via relative strength remaining on the sell-side of its range, below 50). Thus, Thursday's mid-day lift off bottom was thought possibly beginning a solid move higher.

Now, a further advance still could come to pass, but there's reason to doubt the likelihood. To wit, modest price appreciation late in the day Friday left SPX contained in its downtrend, while RSI at 5-minute intervals peaked at the upper end of its range over the past week. So, despite being poised for a solid breakout following Thursday's close, the jury remains out on whether a decided turn higher still might materialize.

Evidence casting doubt on the prospect is uncovered at longer time intervals...


SPX 15-min

At 15-minute intervals we see the same positive RSI divergence (red line) right up to Friday's late-day lift higher. However, with SPX relative strength not yet decidedly established on the buy-side yet (above 50), there's a case for doubting the staying power of Friday's positive finish.

Those counter-trend rally contrasts marked in black — each in their own right a positive indicating improving underlying strength — have yet to confirm a buy-side turn in relative strength as a result of last week's trading. Thus, further selling, how ever muted it might prove to be, could materialize and sink SPX below its low on Thursday.

Obviously, Monday's open could deliver the positive turn in relative strength needed to put a sustainable floor under the market. Yet here, too, there's reason to doubt the likelihood...


SPX 1-hr

At 1-hour intervals relative strength remains decidedly locked on the sell-side of its range. There is every reason to expect further selling ahead.

About a month ago I began logging intra-day observations on both SPX and NDX with an eye toward creating a fee-based service for short-term traders. So far, about a dozen observations per trading day have been published, and these along lines presented here today.

Before launching this service, I am seeking feedback from those who trade stocks/options/ETFs using some proprietary system, and who desire more consistent success. With my intra-day observations supplementing your decision making, the profitability you seek finally could be yours to enjoy.

So, if you're curious, then write me (subject: SPX v NDX). I will point you to my intra-day blog (it functions like Twitter in that updates automatically appear without you needing to reload the page). There's no charge, so you have nothing to lose.

Right now, I'm just looking for constructive feedback. No doubt most readers here, like me, probably are not short-term traders. But if you are, then write me. My email address appears in the blog header above.

Let's see if by incorporating my succinct, short-term-oriented, technical observations into your current trading methodology a barrier to your more consistent and profitable success might be breached.

* * * * *

© 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, July 15, 2011

Another New Elliott Wave View


Technically speaking, today's trade could have been considerably more positive than it ended up being. The setup depicted in yesterday's S&P 500 chart at 5-minute intervals was well-suited for a strong move higher.

Not that today's more subdued outcome motivates in any way what follows. Rather the element of doubt about prospects over the coming week makes this a suitable moment for presenting a view toward developments since late-June 2010 bottom unlike any yet detailed here...


$SPX

I imagine there are readers well-versed in the Elliott Wave Principle who have taken to disagreeing with the wave count previously presented here, where wave 4 of (c) was assumed to have begun at the market's early-November 2010 peak. Here, then, is an alternate view you might like better.

Quickly reviewing why I had preferred the former view, the first point of reference was my assumption going into February 2011 peak that, a "rising wedge" — a "special" Elliott wave form always appearing in the final wave within an unfolding sequence — had formed off late-June 2010 bottom to complete wave (c) of an a-b-c corrective wave up from March '09. Since every component wave within a "rising wedge" (a.k.a. "diagonal triangle") subdivides into threes — one of the features making this wave form "special" — it was easy enough to maintain this 3-wave view toward the market's advance from late-November 2010 through mid-February 2011 once the market's further advance in April killed the prospect of a "rising wedge." Forced by circumstance to assume a contracting triangle (with an upward bias) instead might be forming in wave 4 of (c) position, it was easy enough to continue viewing the market's advance from late-November 2010 through mid-February 2011 as forming wave b of 4 (rather than wave 5 of (c), as was the case when a "rising wedge" was thought forming), given that component waves forming corrective triangles likewise subdivide into threes.

Then, there was the matter of underlying internals accompanying the market's advance from late-November 2010 through mid-February 2011. This I discussed in "Assorted Nuts and the Nuts We Need" on June 8th, detailing the conspicuous performance of the NYSE Advance-Decline differential during that period. Evidence that, "something is not right" was displayed in a manner fitting a "b" wave (in this case wave b of 4).

Not to abandon this former view, but the above, alternate Elliott wave count might be thought possessing more of "the right look," as detailed in the Elliott Wave Principle. Per necessity to view the late-November 2010 through mid-February 2011 advance as subdividing into five waves (such as the above view requires), rather than three, the Elliott Wave Principle also duly notes that any 5-wave sequence can be misinterpreted as a 3-wave sequence, and so cautions the practitioner on this account.

As for other, prospective, alternate wave counts detailing the market's advance off late-June 2010 bottom, there is one thing I will say here with unbending conviction: the market's advance from late-November 2010 through mid-February 2011 was not wave iii of 3 of (c). A "third wave of a third wave of a third wave" would not be accompanied by undeniably pathetic NYSE Advance-Decline differential readings, such as we saw during the market's move higher during this period. No way! Labeling this advance, instead, wave v of 3 of (c) is as generous as I am willing to be here.

Now, as I said, today's trade — more subdued than thought likely — is not the motivation behind presenting the above, alternate Elliott wave count. Rather, this distinction rests with momentum (bottom panel) accompanying the market's recent advance (following June 23rd "capitulation"). Suffice it to say that, such a sharply positive turn in the market's momentum following many months where, the market's momentum was materially weakening simply does not pass the smell test. Today's less-then-stellar outcome, given a fairly promising technical setup (as presented at the conclusion of yesterday's ode to the cows), only further encourages consideration of this alternate Elliott wave view.

One point of similarity in formation of fourth waves since late-June 2010 bottom, however, finds precedent to the market's recent, unusual momentum surge. Check out the market's early-November 2010 burst higher during formation of wave iv of 3 of (c). Momentum had been flat-lining for about a month prior to that burst. Following this, the market gave back all of its gains made during that burst higher, and then some, to complete wave iv of 3.

So, maybe something along these lines is unfolding presently in formation of wave 4 of (c). Thus, any weakness to develop over the next week or so might best be viewed in the context of developments last November when wave iv of 3 was completing.

One other contrast I would make with last November regards momentum's absolute position, as well as its relative behavior. There are considerable differences on both accounts, now versus then. Indications of increasing underlying weakness presently abound. Thus, substantiated is both the likelihood that, completion of wave (c) up from March '09 is approaching, as well as probability that, wave 5 of (c) will not advance nearly as decisively as did wave v of 3 of (c).

* * * * *

© 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!