The Three Bears ~ The Risk Averse Alert

Monday, January 30, 2012

The Three Bears

Having indicated on Friday that, "2012's buoyant start seems likely to persist, at least to the effect of sustaining major indexes at current levels," just how much longer this might go on is in doubt. Indeed, just how very close major indexes are right now to rapidly sinking to levels last seen in the 1987-1994 period finds one measure suggesting the tipping point could be at hand...

$NYAD 10-DMA v 200-DMA

The 10-day moving average of the NYSE advance-decline differential presents a telling divergence (i.e. contrasted with NYSE Composite) whose recent precedents offer fair warning of possible pressure about to hit the market. Then again, what's to say present levitation might not persist for some days longer — divergent underlying conditions notwithstanding? Nothing, really, other than the matter of the momentum trend mentioned Friday.

As you can see above, though, developing over the past couple years has been the same manner of growing weakness as was shown via $NYHL on Friday, January 27th and $BPNYA the day before. So, this gives us our own cast of characters in an "Occupy Reality" production we can call, "The Three Bears." Theirs was a world, too, whose confidence was shattered by an intruder...

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!