Fading Hope Floated ~ The Risk Averse Alert

Thursday, January 26, 2012

Fading Hope Floated

No rush to call a top here because the art of floating hope has taken hold in the New Year and those who enjoy to float have spread their joy, and could a bit more as long as the euro-zone cooperates...


In joy's increase, though, is there better seen a mark willing to be fleeced? Consider above noted, underlying technical dynamics in relation to price action since July 2011 in particular....


Such apparent certainty as could widen the NYSE Bullish Percent Index in the midst of falling prices might be better called a "Chip Diller Stand:" smartly dressed and poised to be trampled.

Following a divergent May 2011 top (comparing $NYA with $BPNYA performance) — itself but a marker on a long established march building underlying weakness (see below) — increasing certainty on display at present seems all the more misplaced. Checkmate is October's $BPNYA confirmation of $NYA's low. Were a sustained advance rather commencing, underlying strength measured by $BPNYA at early-October bottom would have better positively diverged, rather than confirm $NYA as occurred.

Well enough, then, is $BPNYA RSI (top panel) and MACD (bottom panel) diverging at October bottom and setting up the bounce whose effect now finds RSI hitting its upper edge. Just how much longer a monstrous turn lower can be delayed appears only a question of how many more hopes can be floated in an age when for 2+ years hope has been fading...


Comparison of circumstance underlying the market's jump following its August 2011 thumping with what followed May 2010's also is instructive. Today's greater measure of underlying certainty only is the more suspect taken in contrast.

Back in 2010 a similar measure of bullishness as registers now found $NYA in new high ground, post-March '09 bottom. Obviously, this is not so now. Seen rightly in context, then, one is given to wonder how much more must $BPNYA increase before $NYA exceeds its 2011 peak. Or, more relevantly, does the trend established over the past three years suggest long-fading hope, well-established, more likely might overwhelm those who today in the face of diminishing reward float it?

Fast Money
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