Wednesday, November 30, 2011

Game Over: Countdown to Default


Apparently, cutting by 50% one daily cost of pretending the trans-Atlantic banking system is solvent deserves a 4% increase in the price of toilet paper. Only in fantasy land.

Here's the real message of today's global central bank effort to forestall massive debt implosion: protect the banks while starving the sovereigns (joining municipalities), as the latter scramble to gouge their constituent wealth producers — citizens. And so begins the exciting crescendo in a long-running countdown to sovereign (and municipal) default.

These "genius" devotees of the London School of Economics who steer central banks that, continue acting as though the trans-Atlantic banking system is not stuffed to the gills with "assets" marked to fantasy have played their part brilliantly in hastening an end provoking sovereign default. Surely on the verge of going parabolic is dissent raised by today's statement of intention to squeeze blood from the stone of collapsed national economies as antagonists most responsible for this condition continue being protected.

The question now is whether default, just like the past eighteen months' deviously misguided experience imposing so-called sovereign bailout, can be achieved piecemeal, or instead a chain reaction of sovereign defaults occurs and sends the euro-zone, then the trans-Atlantic and the entire globe into chaotic shutdown. With assets of every sort facing a future in which risks can only increase given present circumstance, the latter likelihood — chain reaction collapse — is all the more probable.

Look, when you're seeing central banks at this point forced to provide cheap financing to satisfy the overnight borrowing needs of so called "banks," the hopelessness of the situation is vividly displayed. Not that such exposure is anything new in the experience of the past few years. Yet three years into playing make believe that dead money is good — this at a cost of trillions of dollars — still finds confidence so fragile the overnight bank lending market now requires extraordinary support. There could be no clearer signal flashing "game over."

That's my humble view, and the market's technical backdrop supports it...


$SPX

Substantiating the wave count indicated above is volume coinciding with what are assumed 2nd wave peaks. Fitting is today's volume here at the peak of wave 2 of (3) less than that exchanged at the peak of wave (2), but more than that at the peak of wave 2 of (1).

So, the above prospect suggests the current moment is more like early-September 2008 than early-June. Thus, wave 3 of (3) of C lower could be on the verge of unfolding...


$SPX

Honestly, this possibility has equal shot of promptly developing as the several other alternatives put forward over the past week. We could be at the precipice of a moment following which those long today are hopelessly trapped.

In fact, from a technical perspective there simply is no saying the market's imminent collapse could qualify as an unforeseen outlier...


$VIX

Quite the contrary! The Volatility Index plainly reveals a consensus quite aware of a frightful prospect and, indeed, poised to make the market's imminent collapse a self-fulfilling prophesy.


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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Tuesday, November 29, 2011

Lost Balance Exposes Weight Problem


Supporting last night's view that, the present moment appears similar to early-June 2008 is evidence against it being similar to late-August 2010...


$NYA

Similarly improving relative strength (top panel) and momentum (bottom) are coinciding with a market similarly unfolding, now versus then, but important contextual differences make the current moment precarious. This first is revealed by technical extremes registered in the present instance.

Back in 2010 both the collapse to bottom and subsequent recovery never shook technical underpinnings to a degree upsetting the balance of forces underlying the market's drive higher off March '09 bottom.

Not so presently. Balance has been lost, and lo, the broad market is falling of its own weight — a subtle matter of circumstance amply revealed by the volume of NYSE-listed issues exchanged, both during August's collapse as well as this month.

Of course, this very well complements a market whose every step higher into July 2011 peak consistently saw diminishing interest willing to pay up for a piece of equity risk. Taken together, my thesis that the market is dominated by weak hands remains objectively supported.


$NYAD 10 v 200 DMA

More evidence revealing the present moment significantly different than late-August 2010. In fact, stark underlying weakness is revealed by both the absolute performance of the 10-day moving average of the NYSE Advance-Decline differential relative to the market's fluctuations, as well as the persistent degradation of this measure's 200-day moving average since April 2010. Under the covers the market's state is weakening.

Indeed, the next six months could be the most vicious in history. There simply is no shortage of circumstance — fundamental and technical — pointing in this direction. Present similarity to late-spring 2008 could be pointing the way to a disaster straight ahead.


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, November 28, 2011

A Late-Spring 2008 Moment


Another alternate Elliott wave count for your consideration. This one finds wave (3) of C underway since late-October...


$SPX

Substantiation follows...


SPX weekly

It looks a lot like late-May, early-June 2008 right now, suggesting early-October low is about to be taken out.

No doubt, S&P 500 weekly RSI is ominously poised, making the case for further weakness straight ahead. According to every technical measure periodically presented here, there is no time for a fall like the present ... that is following likely encore to today's explosion higher. According to the view above once selling gets underway the vicinity of $SPX 950-1000 could be the next stop.

Per the bigger picture the above view portends, what matter of circumstance raises prospect of volatility shooting off the charts during a second straight presidential election year? What greater part do power struggles naturally play during periods of financial turmoil? What better time to grease the U.S.A's stumble into the governance pit than when political power struggles are in season?


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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Friday, November 25, 2011

Cosmic Mystery Portends Imminent Collapse


Remember my "Moon & Stars," Arch Crawford moment put forward many moons ago, detailing a study done by Steven Puetz correlating stock market crashes with eclipses of the sun and moon?

Having studied eight of the greatest crashes in financial history, from the Holland Tulip Mania of 1637 to the Nikkei of 1990, Puetz found that market crashes tend to occur near full moons, and that the greatest number of crashes start after the first full moon after a solar eclipse, when that full moon is also a lunar eclipse.

Puetz found that all eight crashes occurred six days before to three days after a full moon that occurred within six weeks of a solar eclipse.

Just to review, Puetz calculated the odds of this being a coincidence are less than 1 in 127,000. Recall, too, the crashes of 1987 and 1929 were immediately preceded by a solar eclipse which was then followed by a full moon/lunar eclipse near the time of the crash.

So, guess what happened today.

And guess what is scheduled for December 10th.

Completion of wave (2) of C and commencement of a devastating wave (3) of C lower could be but days away, while this prospect's "coincidence" with celestial events sets up to be yet another unsolved cosmic mystery.

* * * * *

© 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, November 23, 2011

Elliott Alternation Exposé


It's getting time to consider the possibility that, the Elliott corrective wave forming following August's throttling is further along in its development than has been assumed up to now. Rather than a bounce of any consequence occurring prior to retest of October lows, this retest appears in progress (putting the market's ultimate undoing squarely on the horizon)...


$SPX

Up to now my assumption has been that, still forming might be wave b of (b) of (2) of C, this since early-November. A bump higher was projected to complete wave b of (b). However this does not appear forthcoming. So, let's go with the prospect that, wave b of (b) completed last week and wave c of (b) has been unfolding since.

The corrective wave forming since August's completion of wave (1) of C thus far has amply satisfied the Elliott Wave Principle's "alternation guideline." On the same account do probable gyrations ahead, as formation of wave (2) of C completes, gain substantiation.

As you can see, wave a of (a) of (2) of C took the form of a 3-3-5 "flat," unfolding from August 22nd to September 20th. Alternating, wave b of (a) of (2) of C took the form of a 5-3-5 "zig-zag" into October 4th bottom. Wave c of (a), of course, was the monster 5-wave advance off that bottom into October 27th peak.

So, wave (a) of (2) from August 22nd to October 27th has taken the form of a 3-3-5 "flat." Thus, wave (b) of (2) can be projected to unfold in the form of a 5-3-5 "zig-zag." This appears well along in developing.

Another element of "alternation" is seen via formation of wave a of (a), as well as wave (a) itself, and this offers basis for projecting where waves (b) and (c) of (2) might meet their respective ends. This is graphically displayed via colored lines drawn above.

As you can see, the component waves of the 3-3-5 flat forming wave a of (a) of (2) contracted, whereas the component waves of the 3-3-5 flat forming wave (a) of (2) expanded. Thus, "alternation" displayed in this fashion projects that, wave (b) of (2) likely will end above the low set during formation of wave (a) of (2), assuming the 3-3-5 flat forming wave (2) continues such "alternation" as has developed already. By the same token wave (c) of (2) should end shy of late-October's peak of wave (a) of (2).

The Elliott Wave Principle's alternation guideline is just that: a guideline (albeit one whose permutations in so-called "corrective waves" — i.e. counter-trend reactions — typically are diverse and pervasive, thereby advising one's awareness of the phenomenon). The above projection based on this guideline has been in play for several weeks now. My thinking today simply is that, wave (b) of (2) appears further along in developing than assumed to now.

Speaking of "in play," here's trade war at light speed in an imploding global casino, much as is to be reasonably expected these days...





An orchestrated revolt against German sovereign debt among bankers whose position is anything but stable only suggests it is late in the game of make believe where lenders of last resort are hailed as credible backstops supporting a mountain of debt whose existence rather tragically demonstrates a thorough vanquishing of "due diligence:" a failing whose full disclosure awaits a modern day Pecora Commission following on pending collapse of the present day's fantasy...





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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Tuesday, November 22, 2011

Chumming for Suckers Using Stress Test Bait


Not wasting a second to deflect what is sure to be an accelerating drive to reinstate Glass-Steagall following yesterday's JSC fail, the Federal Reserve after the close of today's trading announced its Dodd-Frank mandated bank stress test of 2012. Ever behind the curve — the curse of the legacy of Alan Greenspan — the "tests" scheduled for January are to benchmark bank performance assuming market conditions following the 2008 collapse of Lehman Brothers.

Trouble is the demise of little ole Lehman is no comparison to the pending collapse of the European Monetary Union. Intrigues still festering from the detonation of a bit player are orders of magnitude more manageable than those in waiting with the EMU's imminent meltdown.

Not to ignore prospect of some days more being bought to exercise the tired fantasy of the banking system's solvency. Thus, the view forward supposing early-October lows likely will remain intact for some weeks more seems supported by the ruse the Fed's stress test is well-suited to cultivate...


$SPX

This week's effort to hold down the cost of hedging (see $VIX) despite the market's decided softness probably is paving the way for a respectable bounce, as depicted above. A bit more weakness, though, might be in store tomorrow before any decided turn higher commences.




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, November 21, 2011

Super Congress Fail: What It Really Means


Failure of the unconstitutional Joint Select Committee on the budget deficit to build consensus on how best to gut federal outlays means but one thing: the Glass-Steagall freight train will be picking up steam and soon overrunning all resistance. Any movement to automatically trigger mandated spending cuts is sure to be met with resounding insistence that, a great reckoning of [unpayable, illegitimate] debt be imposed via a long-overdue restructuring along lines established by the original 1933 Banking Act and its contemporary Return to Prudent Banking Act of 2011. So, it's bye bye Ponzi finance. That is the implied threat of the JSC's failure.

This inevitable course cannot be traveled soon enough. Growing incidence of insane calls for further debt monetization only exposes truth of the financial system's insolvency. "Liquidity" issues should not take years to resolve. Truth is there is too much debt of which the greater bulk is illegitimate: in no way applied toward [productive] ends assuring it, foremost, will be extinguished and, likewise, will create the means for securing greater, nominal credit which to apply toward similar ends in the future (i.e. to the same general effect elevating productivity).

Zero-sum games of imperial finance yet again have tragically proven the necessity for a credit system among sovereign nation-states whose authority is absolute. Glass-Steagall, of course, is a practical first step in this direction.

Physical reality upon which finance must be based is one recognizing resources necessary for sustaining life in ever more refined states of existence are in fact finite, thus requiring increasingly concentrated, capital-intensive investment in the means by which mankind gains mastery over nature, that the posterity of our species be secured. This is a notion foreign to imperial finance whose Ponzi character today lies exposed in a mountain of debt fated to collapse because it largely has been applied toward ends seeking to extract wealth from the present means by which mankind sustains its number. Indeed, having decimated our means of survival through several evolutions of wealth extraction over recent decades, the true intention of imperial finance is laid bare: increasing rates of attrition in all things essential to life.

How anyone calling themselves American could defend this arrangement — be it squealing like a schoolgirl for more hyperinflationary bailout or mongering for war venturing destructive ends only more vivid and direct — would be mystifying were such posturing not easily assigned acts of desperation typical a moment preceding demise of a failed system. We might better call it a modern case of money changers begging to be chased from the temple.

The JSC's failure but confirms that, time for resurrecting the American System of Political Economy, indeed, has come. Inevitable restructuring of a banking system increasingly impinging on sovereign finance but raises the necessity for immediate restoration of the Glass-Steagall standard. No chorus of criminally insane subversives resisting this end can succeed in extending the life of today's hopelessly bankrupt arrangement. It is about to come down. Thus, too, days of a U.S. Congress modeled on the National Aquarium are far fewer than days remaining to the 2012 election (with political turmoil on the European continent further pressuring a fantasy land whose failure is only the more confirmed by the JSC).

So, there you have a large grain of salt with which to season rantings of lunatics incapable of fathoming physical dynamics about to overwhelm their world with chaos now likely too late to escape.


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, November 18, 2011

Just Another Day Delaying Collapse


No doubt a decided technical breakdown has accompanied the market's turn lower this week. Yet uncertain is whether at hand is the market's anticipated break slated to challenge its early-October lows...


$SPX

Having some better sense of the present moment's extraordinary vulnerability — a reality well-spoken by the market's volatile swings since August — one is inclined to consider prospective acts of desperation employing well-known technical means by which bids are manufactured. In other words, in these the dying days of sustaining appearances of the trans-Atlantic banking system's solvency technically-driven machinations extending on those behind early-October's massive short squeeze targeting hopelessly insolvent banks and financials rather seem wisely anticipated right up to the precipice of fast approaching, chaotic collapse.

This view most imminently applies to prospective development of an a-b-c Elliott Wave form down from late-October peak slated to challenge early-October lows. There's enough "reason" to assign to the likely desperation of those interests whose position is at grave risk of disintegration a supposition that, any and every opportunity to delay collapse — an end otherwise appearing only the more inevitable — will be exploited ... or, more accurately, will exploit resources available for accomplishing this end for the sake of sustaining appearances systemic solvency is not at risk. More than enough captive interest enamored with hyperinflationary bailout exists to play the game of make believe right up to the moment when "the final solution" — shakedown, and in such a manner even threatening all out war — becomes the path of least resistance forward.


$CPC

For the moment it appears a well-hedged, short equity position is due to prosecute its interest. So, continuation of this week's decline appears immediately in store. Yet every effort to forestall collapse seems the most reasonable view over days ahead. This is all the more supported by way of several technical measures still positively poised in absolute terms.

Experience since March '09 bottom strongly substantiates this posture, no matter the present view that, the market has begun to turn over, this in resuming an Elliott corrective wave whose beginning tracks back to October 2007. If ever there were a moment when echoes of the market's prior resilience might be evidenced — resilience finding the market holding up amidst various technical measures respectively maintaining a positive, absolute bias — this reasonably seems one such moment, albeit likely among the last.

Substantiating good reason for maintaining a dire outlook, though, in the grand scheme of things (while supposing any present "resiliency" probably is a dying trend), is Doug Noland's Credit Bubble Bulletin this week titled, "ECB to the Rescue?" The Fed's discrediting is at hand, as it seems those weened on a fascist outbreak's hyperinflationary prelude a la the 1923 Wiemar Germany experience are of no mind to play along any further with reckless central banking community machinations of the Anglo-American variety. No big surprise here, for sure. Yet informative reading nevertheless.

Then there's Kyle Bass' recent appearance on BBC HARDTalk. He says, "Only massive debt restructuring can save the EU." Once again, old news, yet one wonders if the likes envision the "Iceland model" for restructuring brought to your attention here the other day. Truth is such an approach is no less an act of kicking the can down the road than has been hyperinflationary bailout attempted thus far. Indeed, there is no solution possible — be it debt write down, or continued hyperinflationary liquidity provision — without there first and foremost being investment in physical economy to the tune of trillions of dollars per year. This fact must capture everyone's imagination, and likely will, as there is no other sane way forward.

* * * * *

© 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, November 17, 2011

#N17: No Cost Too Great For Police State


Having spent the day watching via live stream #N17, the Occupy Wall Street two month anniversary gala of dissent, here is my two cents on this movement's effectiveness. First and foremost, fair assessment cannot be made overlooking the movement's objective: providing a horizontal means of including and presenting many voices possessing credible, dialog-worthy grievances. It is for this organizational aspect, in and of itself, that the Occupy Movement is rather an effective demonstration, being wrapped in a certain humility: a quality sorely lacking in the American experience these days.

The theme of today's anniversary action was, "Resist Austerity, Reclaim the Economy, Recreate our Democracy." Were it my idea, the cause rather would turn on, "Reverse Austerity, Resurrect the Economy, Restore our Republic." Much splitting of hairs at first glance, maybe, or better a necessary call to optimism? For the moment we're close enough to agree on the necessity of all these intentions.

So what if the movement might not be foremost driven to forward a positive policy agenda to accomplish its end! The mere focus on qualified objects of concern — austerity, economy, representation in government — is the voice wherein if the Occupy Movement did not say it the very stones would shout out.

Truly, it is well enough dissent of several flavors finds occasion to be directed toward a most worthy target: the Wall Street - Washington axis of Fraud. Thus, OWS is proving an effective means of confirming both a problem that, orders of magnitude more souls than are on the streets agree needs fixing, as well as the fact its time has come.

Humility might be seen conceding to not having certain solutions satisfying to all those whose will it is to actively protest. Yet who cannot be but an admirer for the very fact a harmonious dissent among millions of others — righteous and proper — is likewise being raised by those who today are taking to the streets? Are not some thousands of these millions in fine position to catch the courage bug and do what must be done, that countless grievances might then move closer to gaining proper redress?

Yes, of course, and so much more likely were today's Occupy Movement to remain orderly and non-violent in continuing to raise a common voice of dissent.

So, then, what is going on with excessive shows of police force across many cities in the U.S. where the Occupy Movement has taken root, including today in New York City?

What kind of financially struggling municipality pisses away countless millions of taxpayer dollars while quite evidently attempting to incite violence through strong-handed police actions deployed through an overwhelming force?

In truth the kind run by incompetent cowards, whose very patriotism should be called to the carpet. Were these not spineless, maybe worth a taxpayer's dime, but a minimal force needed to maintain order would be sent, while resoundingly heard from a mayor would be much whining to state and federal officials about a precarious social situation whose cause rightly is laid at every governing body's doorstep where concern for the general Welfare has for decades found finance wanting. Incompetent by stupidity: how many recently sacrificed public servants now are incited to dissent, with massive showings of police force revealing considerable cost suddenly finding revenue to meet it?

When you're building a fascist police state, history has shown cowards the favored political liaison. Just another grave, republic-threatening concern the Occupy Movement is exposing to great effect.

Since Mayor Bloomberg brought up the subject of fascist police states, how about that Greece. This filthy imposition, the eminently impeachable condones? Is this how an American President should posture the nation politically as the banking system implodes? To say it is corrupt misses the mark. Misused power — wasted — is cowardice of the worst sort.

Dissent thus would find its most worthy objective were Occupy to make haste and spark solidarity to "Seize Congress: Throw Obama Under the Bus at Constitution & Main."

So ends my two cents...




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, November 16, 2011

To Prodigal Sons of American Finance


Give an inch, take a mile: this is a trend of old inviting reminder at this hour.

Today, amidst the collapse of a debt pyramid built via a leveraged Ponzi scheme, the inch given is sovereign control over finance and economy, and the mile yet to be taken runs, as ever, through a U.S. Congress whose Joint Select Committee on the budget deficit is proving but a microcosm of a supreme constitutional duty's Super failure. So-called "leaders" now cowering to an ill-formed law's mandated cuts but pave the mile of demands "the market" will yet extract, this as surely as now is occurring in the world's third largest bond market where Italian sovereign debt trades, spreading chaos across the entire European continent.

And so, as in '08, a well-scripted act is set to go down amidst chaos demanding immediate tribute. Let's call it what it really is. A shakedown. Swindle. Acceded to by gutless jellyfish in Congress and an eminently impeachable President (who should be hoisted out on a rail, if only for the sake of gaining effective redress of a vile lack of accountability in government, for it is here that grievances galore take root, such as now spark public disturbances whose effect in freedom paradoxically is directed toward insuring domestic Tranquility, bringing only the more reason to impeach the man, right away, on constitutional grounds).

What's worse now, though, is the simple fact that, outrage such necessary, continued extortion further engenders raises prospect of unthinkable war. Arguably, this end a dead Ponzi scheme's facilitators willingly risked from the beginning (recall Martin Feldstein's warning prior to the 1999 introduction of the euro). Thus, Benjamin Franklin, indeed, spoke presciently of what really is at stake in truth at this very moment in U.S. history: a republic, if you can keep it. As then, we face the same enemy. Only different soldiers today press what are ageless, imperial interests.

Yet enemy warriors might better be seen but prodigal sons in coming want, only made all the weaker by today's insolvency. So, wisdom of the American System could be like a father reunited with his long-lost blood. Today's best hope for war to be averted: kept at bay through renewed strength in powers of creativity encouraged, such as alone offers a peace that endures. For this the United States in fact was formed, and Ben Franklin brilliantly put it the way he did to challenge future generations to rise to the occasion when life and liberty's defense became an urgent matter.

So far, so good. Yet our generation could fail? This is our sovereign challenge to fulfill.

A massive, yet orderly, bankruptcy reorganization awaits. No need to worry about likely losses pensioners and the elderly will suffer. They'll be well-cared for. The 21st century investments this nation must make to the tune of trillions of dollars per year will return a sum from which we could care for a hundred times more of these, and in fact, eventually, we will.


$VIX

It probably is wise to look for the EMU's collapse only after momentum on the S&P 500's Volatility Index crosses the 0 line. After that, the art of swindle should get dicey (if not messy, as well).

Not necessarily expecting this breakthrough imminent, the market's range-bound waffling so far this month might continue for some days more, today's dip notwithstanding. Subsequently, though, a stumble to challenge October lows still remains on the radar...


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, November 15, 2011

Making Enemies


Shark on shark everywhere grows more vicious. Taking down the third largest bond market in the world, while circling toward the euro-zone's core. What ever happened to Spain? Ultimately too tightly coupled with the Bank of England? But another shark attack in waiting. Every Treasury and central bank in the trans-Atlantic stands at grave risk today.

That it's radical restructuring time is plain, but in a manner risking war? Insane.

Certain is extinction of central banking in its present form — this facilitating a wildcat securities orgy, one day AAA, the next worthless. Destroy sovereign treasuries, and you kill central bank backstops. It's that simple. So, how in hijacking treasuries does an "all is better now" game of make believe fly when further support for collapsing leverage will require but greater increments of brutality?

Physical reality in a shark pool rather suggests pretend time is near expiring. Crackdown today on dissent, too, warns the same. A big part of the game, no doubt, is "maintaining appearances." Such, though, are how wars these days are made. It is no coincidence that, everywhere you look is some interest or another under attack. You can't have wars without making enemies.

What kind of man rationalizes circumstance moving in this direction? Well, were he President of the United States, he'd be fit for the 25th amendment it seems. Knowing what's possible peaceably? What sane man wouldn't agree?


$SPX

Moving on to reality in the land of make believe, the market's extended levitation following its stumble at this month's start rather looks to continue. Although last week's peak is in the cross hairs, so too will be levitation's end once it is exceeded.


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, November 14, 2011

Fat Lady Warming Up


We're right on the edge. Capital spent manufacturing early-October's massive short squeeze targeting the hopelessly insolvent might have a few days more remaining to be recovered, as a still positive technical bias but awaits the materialization of weak hands itching to plow their nickels into such high-priced toilet paper as are equities these days.

Yet weak volume rather suggests the wait for suckers might prove in vain. So, possibly the best to be had is suspended animation before the floor gives out and, wha la, October lows challenged.


SPX 1-hr

Then again, the floor could give out in a second and send the hopelessly insolvent spiraling into the abyss with all haste and commensurate calamity. With so many vulnerabilities portending a pulling in of horns and contraction, a fat lady's singing is the only thing right here whose certain coming is confirmed in a market struggling to attract a bid.


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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Friday, November 11, 2011

A Market Certain Europe Is Doomed


There isn't a technocrat in the world possessing power either to stop the trans-Atlantic banking system's imminent slide into the abyss or contain social chaos likely to blossom as a consequence of continued political obeisance to an ongoing game of make believe pretending the trans-Atlantic banking system is solvent.

Nor is there anywhere a central bank able to do a thing right now without in fact hastening the banking system's ultimate collapse. "Monetize" debt all these like, the pace of the physical economy's chaotic unraveling will only quicken with each new tranche of "quantitative easing" delivered. Absent a burgeoning supply of new AAA-rated securities which to leverage and hedge, where to will fresh capital run but "things" — commodities and raw materials — raising input costs, squeezing margins, accelerating the pace of bankruptcies and only all the more increasing the burden on a banking system already stuffed with "assets" currently valued at prices 60-90% higher than can be fetched in any market.

What's broken is beyond repair, at least within the framework of anything even remotely resembling "business as usual." Thus are extraordinary swings in the stock market since August best understood. Being nowhere near resolution of credit market dysfunction whose effect these days rather adds political bodies to the parade of hopelessly bankrupt institutions at the core of today's arrangement, extraordinary swings in the market are well on course to becoming all the more profound, and this for as far as the eye can see. The risk that, a period wherein panic precipitating relentless collapse wins the day has never, ever been greater in the lifetime of most everyone presently living — the probability such panic is near, undeniably elevated. Why else has it remained necessary to pay up for relatively expensive "protection" in the midst of the stock market's unprecedented rally off early-October bottom? Those in the know appreciate today's danger.

Given this most precarious backdrop the threat of expanding war is not to be ignored. Desperate times call for desperate measures, and if there is anything prospectively offering the means to control the process of the trans-Atlantic banking system's implosion — this presently set to accelerate — unimaginable acts of war could provide a framework allowing today's financially and morally bankrupt cover to remain in business, that continued, destructive financial intervention and the march toward a fascist police state might proceed, while every conceivable nut bag thus enabled faithfully pitches "reasons why" (all insane) things must be this way. Sabre rattling today directed toward Iran is honestly explained only in this context. This week's IAEA report but a lever venturing to make loyal suckers out of today's faithful suckers who today call equities "cheap."

Not to worry, really. It's not like everyone in the neighborhood is unaware of what in fact is going down. Indeed, considering that well-understood is the physical reality inspiring the drive toward expanding war, one might better ponder counter-actions prospectively venturing to preempt this threat. There's little doubt conditions are conducive to financial war, particularly with so many qualified "false flags" to blame. Ditto assassinations. In other words, one could reasonably expect an increase in intrigues of the most extreme sort, generally speaking, in response to clear indications those among the hopelessly bankrupt are venturing a last ditch attempt to sustain the unsustainable, as revealed by an increase in provocations intending war's expansion. Time will tell, no doubt, yet more to the point is undeniable truth the hour, indeed, is late.


$NYA

Today's turnover on the NYSE was among the lowest of the year. Just for grins I marked those prior occasions this year when, similar to today, weak hands itching to be fleeced apparently were in short supply. Rather than supposing anything significant in prior similarity, though, just the fact in short supply are weak hands hankering for toilet paper is the more salient takeaway on a day like today when all appeared so right in the drive toward a global, fascist police state called governance, such as was evidenced on the European continent with decimation of democratically elected governments in Greece and Italy.

Speaking of which, consider the implications of Iceland's New Bank Disaster. In speculating the other day on fast approaching restructuring "[one] alternative ... sure to venture but extending today's fantasy lending 'value' to the greater bulk of current debt" Iceland appears a test case for this sort of abomination.

Rather than giving any further air to things hideous, such as are vulture capitalists made banking system commandeers, better to enlighten reality of the pending doom of even these, sometime not long after the euro-zone's imminent demise. Proof of this eventuality was laid out more than two centuries ago:
"To cherish and stimulate the activity of the human mind, by multiplying the objects of enterprise, is not among the least considerable of the expedients by which the wealth of a nation may be promoted."
—Alexander Hamilton "Report on Manufactures" (1791)
Truth is there is no financial leverage ultimately secure absent robust facility to leverage the industrious fruits of human creativity. Such alone is how wealth is made: creating things vital to human existence essentially out of nothing, and in the process elevating productivity. Suppress this facility much like Europe's dull fascists today are demanding (evidently being stuck in the 19th century), financial leverage effectively is doomed to collapse, and that's a fact. Thus, the euro-zone's imminent demise rather is assured. Likewise vulture capital.

Wisdom suggests there isn't a police state capable of erasing history's greatest accomplishments, let alone physical reality, such as might possibly sustain leverage burdening the trans-Atlantic banking system. Fantasize as many do thinking "well meaning" is intention underlying actions keeping this moribund beast alive, truth is chaos is the intended object. Such is life when misplaced leverage invariably meets its unwind. Come what may, a United States born of the American Revolution need be awakened before any 1932-like bottom is reached.

One might struggle these days imagining such prospect possible, yet the record so far suggests treachery this side of the planet eventually succumbs to resistance. So, although it is good to see this increasing, it is likewise critical that, such principle as resistance embraces gains foundation in crises past, for there has never been a more opportune time in U.S. history to export to England such fruits of the American Revolution as could depose a tyranny still dominating that old island home, which through her free market, imperial fraud bares blame, indeed, for inciting today's dissent.

* * * * *

© 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, November 10, 2011

Educated Ignorance: A Breeding Ground For Cowardice


Think of it. These days sovereign debt of nations backed by millions upon millions of taxpayers is being thrown around by "the market" like some kind of rag doll in acts of extortion following on a setup by a "banking" industry employing zero due diligence while laying a debt trap over the past many years. What are otherwise the most financially secure securities on the planet, tossed around like yesterday's trash.

Then, amidst this backdrop, no shortage of college graduates appear on TV and in all seriousness tell the audience NOW is a good time to buy equities! Really? When securities much higher in the capital structure are being viciously attacked? This is a good time to go long the riskiest asset class of all?

Oh, but that's not bad enough. We have people running for the office of President of the United States saying the nation needs to cut its spending on education!

This raises a couple questions. First, could we possibly get any dumber? If not, then where has all the money gone already spent on education? The same place as "bailout" — feeding fantasies sustaining more devious schemes? Proof is in the pudding: uncritical thinking amidst increasing chaos is making for ever more bold and daring criminal acts, committed in broad daylight, yet only the more left unchallenged, as though days of old might soon return and all offenses might be proven better forgotten.

Plainly, ignorance is anything but bliss. It is a breeding ground for cowardice.

Not to fear, though! "The market" — "old reliable" — as ever, is ahead of the curve, and notwithstanding undeterred prognostications of America's "best and brightest," shows money wisely running for the exits...


$BKX weekly

In a banking system polluted with the present day's sovereign scourge is truth of risk owning equities shown. Assuming a functioning banking system is prerequisite to economic conditions conducive to business growth, a consensus judging the banking system contrarily disposed appears exposed in the bottom panel. A banking index sinking relative to the S&P 500 rather reveals where business in fact is heading.

Sucker a glorified salesmen with high-priced analysis backing glossy estimates made to be beaten, the consensus spoken where the rubber meets the road calls into question the sanity of those who at this late hour call equities "cheap" and/or "attractive." If it were so, then would not the banking system be favorably positioned to benefit? Of course it would. As always, then, salesmen appear to have something to sell. Truth is were there "value" in equities you probably would be hard pressed to find anything but disparaging words.

(Tuck that away for reference sometime in the near future.)


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, November 09, 2011

Restructuring With Dignity and Honor


"Two systems are before the world; ... One looks to underworking the Hindoo, and sinking the rest of the world to his level; the other to raising the standard of man throughout the world to our level. One looks to pauperism, ignorance, depopulation and barbarism; the other to increasing wealth, comfort, intelligence and civilization. One looks towards universal war; the other towards universal peace. One is the English system; the other we may be proud to call the American System, for it is the only one ever devised the tendency of which was that of elevating while equalizing the condition of man throughout the world.

"Such is the true mission of the people of these United States. ... To raise the value of labor throughout the world, we need only to raise the value of our own."


— Henry C. Carey "Harmony of Interests" (1851), American System Economist and advisor to President Lincoln

Time to address "too big to fail, too big to save, too terrible a consequence not to act." The EMU is on the brink of dissolution and the hour for effecting an orderly restructuring is late. Today's leveraged financial infrastructure, precariously sustaining life as we know it — its physical capacity — rather clearly appears on the verge of calamity. As it is certain that, hyperinflationary bailout has reached the end of its capacity to be tolerated any further, there must be a new way forward. There's just no delaying any longer a decisive turn.

Thus, the time for reinstating Glass-Steagall has reached undeniable necessity. Not a minute more can be wasted. It's Glass-Steagall, or chaos venturing a supra-national, global police state whose name is "governance." That's the choice before us.

Next stop beyond fast approaching crisis, then, is "restructuring." The terms of this inevitable outcome find in the balance prospect for reasserting the American System as means of benefiting all humanity along lines Henry Carey wrote in the 19th century. The alternative, contrarily, is sure to venture but extending today's fantasy lending "value" to the greater bulk of current debt (in some yet to be determined, restructured form), and enforcing this new arrangement by means overtly employing a police state further compromising the sovereign power of nation states, as, indeed, is a necessary precondition.

Do not think this is but a fantastic exercise in sensationalism. Just look how much our President has done toward accomplishing this end! The Joint Select Committee on the budget deficit — probably the most profound case of "taxation without representation" since the Boston Tea Party — and an illegal war in Libya whose consequence surely cultivates the rage of a known terror threat: these two "accomplishments" in particular condemn the man a useful tool in promoting a police state (all the more substantiated with execution of three American citizens in Yemen absent any due process whatsoever). Add the President's non-performance at the recent G-20 meeting and the intention of those backing the man are laid bare. Likewise is the historical significance of his Financial Times of London endorsement during the 2008 campaign. Chaos and police state are official Team Fraud policy, and by sheer force of nature, given present circumstance, the trend is unmistakably hurtling in a dangerous direction with haste, as the present day's developments in the euro-zone make clear.

So, in addressing "too big to fail, too big to save, too terrible a consequence not to act" matters much larger than money are at stake in action made necessary by chaos about to sweep the globe. An American imperative harmonious with its history in war against tyranny simply demands Congress immediately reinstate Glass-Steagall. This President being a known, clear-and-present danger only need be called to account on this matter specifically, and if not on board, promptly removed, being eminently impeachable on constitutional grounds.

This is the moment we are living in truth. "The land of the free, and the home of the brave" finds our time demanding proof. Will it be life, liberty and happiness, or will it be a fascist police state? In fast approaching "restructuring" the answer certainly will be told.


$SPX

With credit markets in disarray and U.S. bond markets closed Friday for Veteran's Day, tomorrow just might prove one doozy of a nasty day. Leading lightweights of the fascist right — having affirmed tonight the Tory party's, er uh, I mean the Republican party's "opposition" to euro-zone bailout — must be stirring a fright among Pavlov's dogs (patriots or otherwise) who insist this is "the party of big business." It'll be big business alright as mega bank after mega bank take a knife in the back with threat of sovereign default looming large.

And a three-day weekend to worry about such risk most immediately no less! Time for a huge capital raise appears ripe. Tomorrow could prove a most devastating day of trading, quite possibly the worst so far this year...




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, November 08, 2011

Volatility: The Deadly Enemy of Leverage


Looks like anticipated technical deterioration set to pave the way for the next round of selling whose consequence is likely to result in major indexes challenging lows established early-October, if not take these lows out, is well along in forming...




Today's "disconnect" between euro-zone credit market conditions and those in the stock market in truth probably should be thought more a case of a delayed feedback loop whose operation functions at the behest of a consensus belief that, players on the world stage (both in the public- and private-sectors) are exercising sound reason via positions taken within respective domains. However, there is no shortage of circumstance thoroughly discrediting any assumption sound reason actually is forming a solid foundation likely to abate risk of systemic calamity. Combine a leveraged speculating community whose present exposure leaves the group more vulnerable now than in '08 and a fascist body politic, and stability rather should be seen the last thing being cultivated here.

This might seem counter-intuitive, but volatility's increase only is likely to astronomically elevate extraordinary challenges the leveraged speculating community is sure to face in the period ahead. Leverage works great when markets run on a one-way street (remember the "Greenspan put?"), but in an unstable environment breeding chaos, leverage all too likely will prove deadly. It is with this in mind today we find scarcely a soul pondering prospect of leverages' chaotic unwind: day after day, limit down, circuit breakers triggering — all in a mad scramble to raise capital — and today's sanguine consensus hopelessly trapped. That's where we're heading. So-called "masters of the universe" revealed mere mortals, making today's Jon Corzine a representative poster child.

For now, though, notwithstanding the market's relative technical deterioration as revealed above via the NYSE McClellan Oscillator, still-positive technical dispositions across the board in absolute terms suggests the period straight ahead might find the market holding up, relatively speaking. In the framework of yesterday's prospective view forward an impending decline challenging October lows could be preceded by a sideways trending market whose development over days ahead finds technical conditions presently substantiating the probability.


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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