Wednesday, February 29, 2012

The Weight of Mad Monkeys


You might argue there's no urgency to sell, so proceeding is a technical trade greased with hyperinflationary happiness from lunatic keepers of beans so rotten they can't be counted, but weighed the burden is great. ("Unthinkable!," the mad monkeys scream.) Thus does a technical trade leave the market appearing vulnerable to falling of its own weight...


NYSE McClellan

If you're not shaking your head back and forth, you just might be dead. 'Nuff said.

As for today's gold thumping and its relation to Ebenezer Bernanke, chief monkey at the Fed, the connection rather serves those who know when push comes to shove, dollar liquidity always will be made abundant by bankrupt central banks across the globe whenever it is needed, and this no matter its effect in quickening the pace of the physical economy's shutdown. So, per Fast Money traders thinking today's monthly gold reversal a seminal event, theirs likely will be among supply fed to strong hands who today took gold down to rest above its rising 50-day moving average, which, itself, is above its still rising 200-day moving average. Judging by today's increasing gold price volatility, though, things could get interesting fast.


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, February 28, 2012

Light on a Trap Door


Presented here earlier this month was a chart of the CBOE Put/Call Ratio showing an aspect of its position over the past three years coinciding with market tops. Specifically, whenever the momentum at which the ratio was falling measured a relatively marked bias in call option activity, the market's turn lower soon followed.

Now, these prior noted instances have turned out to mark the onset of but interim declines over the course of the market's counter-trend rally off March '09 bottom. So, then, maybe that is why over the past few months on several occasions we have seen this same condition appear. To wit, maybe this signals that, what's being anticipated is not an interim decline, but rather resumption of the downward trend begun for many major indexes in 2007, and for one in 2000.


$CPC

The market's relatively tight trading so far this year certainly finds the CBOE Put/Call Ratio testifying to a balance between buyers and sellers, of which among both, of course, there are increasingly fewer. Likewise finding balance right now is the put/call ratio's momentum (bottom panel).

Following the already noted triple whammy momentum extremes, occurring in rapid succession since late-October, and now seeing the put/call ratio's momentum in balance and, indeed, turning positive, and this while the ratio itself diverges in a manner typical at tops, well, isn't that interesting when you're someone thinking a trap door soon could be sprung, and send the market into a terrible tailspin...


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, February 27, 2012

Cheap Share Sugar Daddies


Bring 'er right down to our long-defined channel's lower parallel, and bounce 'er right back up. Momma still got legs, it seems.


$NYA

Oh, momma gettin' tired, she is, but she's a sturdy girl whenever she gets high. Been this way for three years now, just making the boys crawl and still cry for more, this if only out of force of habit competing for her faith-feeding fruits to fondle their hyperinflationary happiness, even now, while the elixir sours and threatens momma's collapse.

Just look at her milk these guys, settin' up as many as will become her cheap share sugar daddies sometime ahead. These boys keep holding on, though, thinking she's dear and surely will take 'em still higher and never let 'em down again. The higher she's gone, the more they hold on. Delirious is their hyperinflationary happiness.

Momma's boys are a witless bunch too dull to see danger hanging on for dear life to her diminishing delights. Like Greece discovered in its due time, though, a future made for beaten and bruised, cheap share sugar daddies all too plainly awaits. That the "con" in confidence is now an irreparably evident perceived sentiment widely shared finds no shortage of confirming technical perspective measuring in dollars and cents, more or less, this psychology's adverse impact. What's dear today, then, is on course to being tomorrow's disease born by cheap share sugar daddies who will be plucked for a cure when the price of their interest has been adjusted to meet a true bottom in the physical economy's collapse.


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, February 24, 2012

Non-Existent Recovery Good As Dead


With "the invisible [black] hand" at the gas pump these days a hot news item and everyone wondering if high energy prices will "kill the recovery," to those not yet convinced there, indeed, never has been a recovery, I present you the market's verdict, which is that "the recovery" is as good as dead...


$SPX weekly

The bottom panel shows the relative performance of $WTIC (West Texas Intermediate Crude) versus $SPX. As you can see, while the S&P 500's levitation is continuing, the price paid for the most vital raw material powering the [shrinking] global economy is becoming more dear, relative to the consensus valuation on future earnings measured by $SPX. Therefore, absent some revolution in economy facilitating expanding productivity and increasing margins, this while energy throughput contracts (the present consequence of a hyperinflationary policy animating a comatose banking system), "the recovery" is doomed.

I know this is a simplistic view. Likewise, ongoing increase in the size of the global slave labor camp (Greece is the way) is an aspect of reality the $WTIC:$SPX relative performance does not capture. So, "productivity" positively effecting margins might already be having its "revolution." Yet in the midst of increasing want and shrinking resources with which to satisfy this, where ever in the aggregate will growth come? And how will a mountain of debt not ultimately face write down in an environment where demand has no choice but fall? Thus, again, "the recovery" is doomed.

As to which direction crude might be heading, it depends on the winner of the fast-developing race to a crippling crisis. If first over the finish line is nasty in red, then crude could herald a comeback of the horse and buggy. However if Glass-Steagall wins the day, then crude could be on course to suffering the horse and buggy's fate in a manner likewise fitting mankind's creativity. No matter which proves the winner, political will alone will be the deciding factor.


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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Thursday, February 23, 2012

Extended Channel


Noted here about a month ago was an Elliott wave channel marking a 5-wave advance off mid-December 2011 bottom. The view then was that, five waves up were completing, this as the market moved higher into late-January.

Interestingly enough this same channel continues to contain the market's progress since then...


$NYA

It would be easy enough to suspect the fifth wave of five waves up from mid-December is extending. So, rather than it having ended late-January, its formation is seen continuing. Just how much longer this might proceed is entirely uncertain, yet there nevertheless appears room for a move higher. That is without factoring in recently detailed overhead resistance.

Then, too, relative strength once again is diverging (top panel). You might recall an observation made here the 1st of February when, ever so slightly, relative strength again was diverging, and this for the first time at a market peak in quite some time. That one didn't work out. Maybe the present divergence will. Bolstering the probability is momentum (bottom panel) now turning down and, likewise, diverging as well.

Very much on the radar is possibility that, in an instant a stunningly sour undercurrent could appear with a vengeance and have a "deer in the headlights" effect more or less magnifying the market's present sanguine psychology dilemma highlighted yesterday. On this count the matter of prospective Elliott wave views presented here over recent weeks might seem contradictory. However, what is rather true is that, were the market to rapidly collapse and sink major indexes to levels last seen in the 1987-1994 period over the next few months, living would be prospect that wave forms unfolding in various indexes were to be seen as more distinctly unique in their development since 2007 top, and the year 2000 top before that. Right now, what really matters most, though, simply is that, fundamental, systemic vulnerability whose persistence over the past few years has coincided with abundant technical evidence indicating confidence is fading continues substantiating the probability that, the market is subject to collapsing in a fitful manner challenging to the core many institutions that, today, more or less are taken for granted. The exchanges, themselves, quite likely will be among these.


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, February 22, 2012

Prelude to a World Record Unraveling


How long has it been my view that, prelude to the market's rendezvous with destiny in which it could come unglued even more rapidly than occurred in '08, NASDAQ likely would relatively outperform the NYSE? The thought was this would occur in a manner whose setup might be rather similar to August 2008.


$NYA
$COMP

In the market's fall from May-July 2008 each index behaved slightly differently from the other, this in relation to respective March 2008 lows. NASDAQ's relatively better performance presented a market, overall, whose psychology might be called sanguine. All the more was the market's sanguine psychology on display off July 2008 bottom, as NASDAQ recovered a good portion of its losses from May-July 2008, whereas the NYSE Composite barely budged. Subsequently, well, the rest is history. Yet living history at that.

In bottoming in March 2009 both indexes have in relation to their respective October 2002 bottoms performed precisely the same. The NYSE Composite bottomed below its October 2002 low and the NASDAQ Composite above it. So, over a broader horizon — a longer-term perspective — again, one might regard market psychology as entirely sanguine. That the riskiest of the riskiest, the most speculative of the speculative (generally trading on NASDAQ), are holding up relatively better since 2002 rightly allows this conclusion. Of course, it is largely substantiated in the context of an Elliott wave view projecting a steep decline sinking major indexes to levels last seen in the 1987-1994 period, and this straight ahead (as in any minute now).

Relative developments off March 2009 bottom again mimic the lead-up to Lehman Brothers' bankruptcy. Indeed, the complacency is so thick now — all hail the monetarist monkeys! — even the relatively harder to move NYSE has been able to catch a bid (unlike the August 2008 experience). Double dip sanguine is NASDAQ's relatively better performance versus the NYSE off October 2011 bottom, this but following on its superior performance off March 2009 bottom, as well.

The point here is a market collapse thought imminent finds eyebrow raising substantiation in physical evidence of circumstance involving movement of money whose distinction is revealing. There probably are not many people in the world who suspect a collapse of 70-80% by mid-year were possible, but really, does one go out on a limb all that much, given vulnerabilities unlike anything anyone living has ever before seen? Today's incredibly sanguine attitude truly is fitting prelude to an unraveling for the record books.


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, February 21, 2012

Harvesting Revulsion


Just as quickly as German President Christian Wulff was taken out late last week, a return volley aiming at the French bailout crowd scored a former IMF chief turned sex freak. Vicious intrigues affecting political dynamics within the euro-zone's core member states have to be a concern when, beyond a still hopeless Greek situation are problems uniformly judged an order of magnitude greater...


Word has it, "The EU will fracture ... as more serious issues [in Spain] are confronted." Hmmm, what shocking developments might await NATO, then? Not helping on this account are U.S. Senators chiming in as political contenders for the "Allen Schwartz, nothing to see here(?)" 2012 foreign diplomacy award. These men are not terribly vigilant pressing their case for democracy, at least in any way that can be taken seriously. And where is the Secretary of State, a "friend" of Syria, promoting the virtues of American history: how a Declaration of Independence drafted by a unified opposition against a tyrannical oppressor has proven invaluable to securing the longevity of this nation's righteous cause. Absent voice seeking and advising "a decent respect for the opinions of man," American policy embracing the Syrian uprising is to be seen none the less trustworthy? Not in its own right, and not even if contrasted with the not-so-unrelated Greek deal. Only shades of gray, really, separate policies feeding death on one side with munitions arming a terrorist-linked "opposition" while on the other a nation of innocents is willfully starved at the behest of "the market." All together, plentiful is the harvest for a worldwide U.S. revulsion and discrediting: a possibility whose fruition, as well, could upset the Pentagon's recently announced strategic realignment to the Asia-Pacific region. Thus, General Dempsey's wise call to reason vis-a-vis Iran. The ground for cultivating political will to reinstate Glass-Steagall, too, thus is made more fertile now for rational actors on the American stage. Lord knows, the relentless impact of hyperinflationary breakdown of the physical economy is bringing out the best in sophists trying to blame growing tensions with Iran for the massive theft by the "invisible hand" occurring at the gas pump. Yet supply collapsing faster than demand rather lies at the root of this problem...
Unknown is whether the same hyperinflationary breakdown process is behind the shortage of drugs for treating many kinds of medical conditions, including cancer. It's rather likely increasing shortages over the past couple years are attributable to such policies as lenders of last resort have adopted to prop up a mountain of debt made unsustainable with the collapse of Adam Smith's Leveraged Ponzi Scheme in the 2007-2008 period. No one can blame the Fed for a lack of transparency per this potential resulting from a quantitative easing whose continuance assuredly will only intensify its destructive effect. The more illegitimate debt of old is "stabilized," the faster "excess capacity" (the Fed's euphemism) will be shed. No doubt, the incompetent hacks at the Fed and Treasury must be big "Talking Heads" fans...
Death delivered under cover of policy said to venture something beautiful comes with being an imposing fascist. 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!

Friday, February 17, 2012

Volume Presents Big Problem for Bulls


Confidence, years downstream from the 2007-2008 collapse of Adam Smith's Leveraged Ponzi Scheme, remains as fragile as an egg shell. Yet did you know if you place an egg in the palm of your hand, close your fingers around it and squeeze it with all your might, you will not break the egg? Go ahead, try it. So, the egg shell in a way aptly describes another aspect of today's market: it simply will not break, despite being squeezed from all sides. Yet it is an egg shell all the same.
Humpty Dumpty sat on a wall,
Humpty Dumpty had a great fall.
All the king's horses and all the king's men
Couldn't put Humpty together again.

Thus, too, are political unions. Wasting no time in the fast lane to assassination, terror and escalating warfare came today's fall of the German President in yet another trial by an oh-so-penetrating media. Apparently, Mr. Wulff is a staunch supporter of the German Constitution and, as you know, these constitutions can be pesky things when you're running a criminal ring (a.k.a. the EMU). So, lighting a tinderbox at the core of euro scrip's financial support only confirms bloody nastiness cannot be far off.

Yet just how it is contemporary affairs continue hammering confidence that, otherwise must be restored if the market is to remain levitated, is made rather plain in technical observations revealing the presence of far more hopes and prayers than money backing the "bullish" current keeping the broad market afloat...


$NYA

Begin at a March '09 bottom that was confirmed by a positive momentum divergence (this is marked with a green dot in the bottom panel). This former, positive momentum divergence was much like that occurring at early-October 2011 bottom (again marked with a green dot). So, this is our starting point for making comparison showing confidence is fading.

First observation is the market's relatively weaker lift, percentage-wise, in the current instance. Following on this is the market's slightly greater giveback (again, percentage-wise) going into late-November 2011 bottom versus that going into early-July 2009 bottom. And finally, again, the market's vastly weaker lift off this bottom in the current instance versus the former.

Now, what is right there in front of everyone's face explaining this present disparity? It is as plain as day! "Show me the money, Jerry." The "money" is busy plugging holes higher up in the capital structure, and this is graphically indicated presently by a fairly diminished volume of shares exchanged on the NYSE. Contrasting these two, discreet periods during which the broad market was advancing, the present's disparity confirms "confidence" levitating the stock market is in fact waning. Exposed and vulnerable only all the more than was true off March '09 bottom are weak hands whose equity stakes must remain inflated, lest their entire stake running the gamut of securities be destroyed. Yet only the closer to doom does fading confidence in the riskiest securities of all move weak hands who today are reduced to holding on for dear life.

I'm not just making this up! Volume says it loud and clear. Confidence is shot, and yet weak hands have no choice but pretend it's not. All with eyes fixed on the exits, no doubt. Never in my lifetime did a rush for these, now long seeming probable, appear so positively inevitable.


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!

Thursday, February 16, 2012

Nasty in Red


Something subtly troublesome has been occurring with fair regularity of late. We should all wonder whether it might be likened to warning noises a machine emits prior to seizing...


NYA 1-min

Bam! The Feed Nazi says, "No data for you!" Are the owners of the NYSE too busy scalping via HFT and/or flat broke following a failed bid for Deutsche Boerse to afford a reliable feed? Reported over recent months have been other data delivery problems deeper in the exchange's architecture. So, you have to wonder is this a case of "what goes around, comes around" finding the NYSE stuck with a dearly priced IT system to rival the many piles of overpriced garbage listed on the exchange?

And now adding credibility to prospect for a Great U.S. Discrediting dead ahead is growing risk of NATO's dissolution brought on by Europe's financial disintegration...




One wonders just how out of touch are Washington's warmongers. Senator John McCain is a worthy case in point here. Big hawk. Not my cup of statesman. Yet also a co-sponsor of the Glass-Steagall amendment introduced with Senator Maria Cantwell to the Dodd-Frank FinReg bill on ... drum roll ... May 6, 2010. What's his feeling on the prospective collapse of NATO as the EU disintegrates? Might be worth a tweet.

It's rather plain there is a whole lot of posturing going on right now, and most certainly some things are not what they seem...




It is no news here the Germans are posturing to force Greece from the EMU. The larger matter, though, is the EMU's likely disintegration once Greece falls. That's what Germany apparently wants, notwithstanding all the Alan Schwartz standup performed by German Chancellor Merkel.

Germany's entry into the EMU was a condition imposed principally by Britain, France and the United States as a price for reunification of the former East and West German states. And what is the position of this trio these days? In a word, vulnerable. Why wouldn't Germany seize an opportunity to abandon a project it originally wanted no part of?

Now, who could deny the diplomatic lengths Germany has gone to accommodate the euro's flawed arrangement turned deadly on account of breach upon breach of treaty agreements underlying the EMU? So now, Germany's firm posture is a breath of fresh air. There's not a lot the bankrupt nation state victims of a collapsed Ponzi scheme can do to a Germany effectively turning monetarist sophistry into an instrument of self-defense. Outside of sicking hapless ratings agencies barking threats of downgrades, for the bankrupt there's only assassination, terror and war remaining on the play card.

So, either we get Glass-Steagall now, or ushering in nasty probably will be bloodshed.


Fast Money
* * * * *

© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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

Get Real-Time Trade Notification!

Wednesday, February 15, 2012

Bear Food: Heads I Win, Tails You Lose


There are two market "meters" whose present position aptly coincides with a stock market thought extraordinarily vulnerable. Each speaks of opposing outcomes whose consequence for stocks in both cases is disastrous.

First is the hyperinflationary-blowout-o-meter...


$GOLD weekly

Is there a central bank in the world not breathing life into this imperial relic? Forget not the shutdown of physical economic capacity — the foundation on which, alone, new wealth is created — occurring every step of the way during gold's parabolic advance. This shedding of capacity will only accelerate as lenders of last resort continue in their hyperinflationary ways, further driving profit margins into the ground while increasingly precipitating business insolvency.

How ever will stocks flourish in an environment where not only is physical economic capacity contracting, but more critically, so too is issuance of new debt that is of any value to a hopelessly insolvent banking system? Somewhere in the neighborhood of nasty likewise lives this nightmare where new debt can no longer be expanded at a rate sufficient to sustain existing debt. Truth is, too, I'm not the only person in the world who recognizes this. Money pouring into the safest debt security in the world understands this dynamic, as well...


$UST10Y weekly

When the name of the game is "inflate or die" and your banking system's lifeblood — new debt — is at grave risk of becoming in short supply, awaiting will be a whole lot of revulsion toward old debt no longer easily papered over. No doubt, the world's safest debt security likewise will be impacted. Bad enough, then, is the fact today's buyers have no choice but accept this risk. Forewarned is the fact they are doing so at an increasingly alarming — insane! — pace. Thus, does a deflationary-collapse-o-meter read "Danger Will Robinson!"

Rates on 10-year U.S. Treasuries might offer another benchmark for assessing the market vis-a-vis "resistance" the NYSE Composite index presently is meeting. You will notice how over the past three years "risk on" in stocks naturally meant "risk off" in U.S. Treasuries. Yet has there not been much supposedly "settled" in Europe these past couple months? Then why no "risk off" in U.S. Treasuries? I should say this behavior rather seems a fitting backdrop to a gold market thought having remaining one last parabolic march higher before it (along with stock and bond markets) subsequently collapses.

One way or another a whole lot of "wealth" destruction is in order. Once this runs its course the fact that, a whole lot of real — tangible — physical wealth was destroyed leading up to this pending implosion of fantasy "wealth," the stage will be set for such necessary investment in physical economy as is likely to prove conducive to investing in stocks for the long-term.


Fast Money
* * * * *

© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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

Get Real-Time Trade Notification!

Tuesday, February 14, 2012

Prepping a Hard Turn South


No need to get breathlessly carried away anticipating the market's approaching, sharp turn lower, as the appointed moment awaits a pickup in volatility of sufficient degree to indicate big trouble is more likely imminent...


$VIX

Once $VIX momentum turns positive (bottom panel) the market could be well-poised to nosedive sometime soon after. In the meantime additional evidence of increasing, underlying technical weakness likewise should materialize. So, looking over the immediate horizon it appears the market remains some days away from a hard turn south...


$NYA

The above chart of the NYSE Composite was presented on Friday. To it a prospective Elliott wave count has been added, as well as a near term projection drawn.

You might have noticed the "rising wedge" drawn last Friday, marking the NYSE Composite's advance from late-June 2010 bottom to early-February 2011 top. Even at the time it was unfolding, long-time readers will recall this so-called "special" Elliott wave form was on my radar. Immediate developments subsequent to its formation, though, seemingly diminished its probability. Now, however, the possibility appears back in play.

Supposing that, wave (a) of B off March '09 bottom took the form of a 5-3-5 "zig-zag," wave (b) of B, then, likely will take the form of a 3-3-5 "flat," this on account of the Elliott Wave Principle's "alternation guideline." So far, wave a of (b) of B has completed (itself, taking the form of a 3-3-5 "flat," ending early-October 2011), while wave b of (b) of B currently is unfolding (taking the form of a 5-3-5 "zig-zag," again satisfying the Elliott Wave Principle's alternation guideline).

Well-established resistance against which the NYSE Composite presently is contending further raises prospect that, the 5-3-5 "zig-zag" forming off early-October 2011 bottom is nearing its end. This zig-zag's "c" wave (forming since mid-December) finds the NYSE Composite index's coincident momentum (bottom panel) falling short of the same coinciding with the "a" wave off early-October bottom. Oddly enough, this same fading momentum condition was displayed during formation of wave c of (a) — the "rising wedge" off late-June 2010 bottom — in relation to wave a of (a) preceding it. Something of a significant trend, it appears, in the ongoing development of an Elliott corrective wave off March '09 bottom. All the more, then, could resistance at hand prove insurmountable.


Fast Money
* * * * *

© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

Nothing is set in stone. Nor is the stock market's path of least resistance always known. More often than not, there are no stock index option positions recommended.


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

Get Real-Time Trade Notification!

Monday, February 13, 2012

Dead Ahead: A Great U.S. Discrediting


Okay, having turned the corner only to see nasty, what is your natural reaction? Of course, you look back to see where from it is you have come. So explains today's trading.

Yet as Greece definitively shows, there is no going back. So, get ready. Rapid disintegration of everything European Union is waiting in the wings...




Molotov cocktails being thrown at police outside your national parliament is not the kind of testimonial likely to bring lasting stability to that piece of scrip called the euro. To wit, if this is Europe's idea of an effective military force suitable for backing a currency, then suckers even bolder than those who today find "value" in equities are the likes apparently willing to sacrifice even their national dignity to sustain the euro's empty — bankrupt! — promise.

Choking on tear gas, petroleum fumes and burning wood is the fantasy of the trans-Atlantic banking system's solvency these days. Given still massive systemic leverage permeating to no small degree even lenders of last resort, only the countdown to chaotic collapse is accelerated by an increasingly violent undertow whose spread throughout Europe is a virtual certainty. That the so-called troika is but exposed in Greece as 21st century speak for "fascist" represents an iron-clad guarantee.

One wonders the extent to which events presently converging venture a Great U.S. Discrediting. As if propping up a dead Ponzi scheme on the backs of sovereign individuals the world over were not bad enough — this while condoning destruction of the very institutions of government where, supposedly, every individual's democratic voice should have hope of resounding in effective policy — today we learn that, Al Qaeda in Iraq shares with the U.S. the same objective of regime change in Syria. You just can't make this stuff up! Yet this revelation's coincidence with a rapidly unraveling European situation — a hopeless cause, no doubt, but one which the U.S. Treasury and Federal Reserve both are committed to defending no matter the cost — is an eyebrow raising curiosity to say the least. Just how close we might be to an earth shattering calamity seems only the more certain probability in a world where blurred is the distinction between nation-less terrorists and the nation-state whose currency increasingly backs a dead Ponzi scheme.


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, February 10, 2012

Doing Lines on the NYSE


Maybe it is no coincidence today's relatively sharp turn lower finds one of the broadest measures of equity bank — the NYSE Composite Index — bumping up against a well-established line of support/resistance whose immediate presence, given the index's technically stretched state at the moment, raises prospect a decided turn lower is at hand...


$NYA

Letting this line of support/resistance speak for itself while those many other matters of bearish underlying technical circumstance add to its significance, the trip upcoming likely will destroy support off which the market bounced early-October 2011. Of course, some coinciding, systemically threatening convulsion or orchestrated swindle can be duly anticipated, as there are an abundance of qualified vulnerabilities existing at present.

Sometime subsequently, and as consistently has been demonstrated over the past few years (and, indeed, over the entire decade preceding), the next tranche of hyperinflationary happiness likely will be served up. So, October 2011 support soon to become resistance might be retested in like fashion as is presently occurring at a higher NYSE Composite index level.

Such is how completion of an Elliott corrective wave forming since March '09 bottom might proceed. This corrective wave is unfolding in standard, a-b-c form. Despite on several occasions over the past two years having appeared prospectively completed, this corrective wave's formation apparently is continuing. Yet its better days likely have passed. In completing the "b" wave of its correction off March '09 bottom the market could be imminently gassed, bringing major indexes to retest March '09 lows sooner than most dopes imagine.


$NYAD 10-day v 200-day

Yes sir, in a word the 10-day moving average of the NYSE Advance-Decline Differential — its fade long-established, too, as but further testified by the measure's 200-day moving average — today went "crack!" In keeping with what was suggested last week, it appears the corner around which nasty lives might have been turned today.


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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Thursday, February 09, 2012

BAC: French for très fatigué


Filed under "a picture is worth a thousand words" is a Bank of America poised to fulfill the adage "buy the rumor and sell the news." The news, of course, confirms investors in mortgage-backed securities are to be trimmed via a backdoor bailout masquerading as fraud settlement.

Now, what effect does theft have on confidence? So we agree, killing investors is not how a bank is made a powerhouse. Rather this is how it is made vulnerable to a run. Well, what do you know, Bank of America appears ready for the show...


company chart (BAC)

The bank of goodnight America is well poised for a killing fall. Washed out. Finished. Très fatigué.

A front door bailout failure, a backdoor bailout capital flight victim in waiting. Right before your eyes.


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, February 08, 2012

Weak Hand-a-thon Continues


You might have missed it, but to yesterday's post I added a long-term view of the NASDAQ Composite presenting overhead resistance the index is bumping against. This resistance is all the more noteworthy in the face of NASDAQ's weakening relative strength over the past five years.

Per NASDAQ's monthly RSI still being positively poised above 50 (just like the Dow Industrials), my takeaway is strong hands would not be so revealing following a prolonged period of relative strength weakness — weakness that, indeed, only was the more confirmed at March '09 bottom. Rather, some prolonged period finding RSI basing below 50 would be more typical coincident technical circumstance raising probability of a sustained advance upcoming (this, of course, to be driven by strong hands causing RSI's basing in the first place).

Strong hands would not be giving away an intention that, today might be thought decidedly positive on account of monthly RSI remaining above 50. It's my contention weak hands instead are being afforded a moment to make something of the game. From this view, then, monthly relative strength's weakening over the past five years is rather ominous. Likewise, a blow-off top is better thought the lesser probability against a panicked race for the exits, such as could hit from practically out of nowhere at any minute.

On daily scale, too, do we find significant technical distinction that, separates strong hands from weak. Once again we find the latter in command...


$SPX

A couple weeks ago or so I mentioned a qualitative difference in the market's present bounce recovering from August's disaster contrasted to the market's bounce following the May 6, 2010 "flash crash" and its immediate aftermath, a bounce commencing late-June 2010. Via the S&P 500's daily MACD (bottom panel) this contrast can be detailed. Exposed at present is a greater relative presence of weak hands, this as the S&P 500 challenges its 2011 peak.

Both periods saw a similar, positively diverging bottoming process (see black, then red dots), then subsequently parted ways. During the S&P 500's initial lift off late-June 2010 bottom its momentum peaked well below its late-April 2010 peak. Contrarily, the S&P 500's initial lift off early-October 2011 bottom saw its momentum blow out its early-July and early-May 2011 peaks.

In the former instance strong hands well-disguised their capacity to carry the market higher. However in the current instance the mask is off. Weak hands are being herded for fleecing. Momentum's divergence, now versus late-October 2011, looms quite large, particularly in the face of other, accumulated technical disparities prior to early-October 2011 bottom.

Contrast MACD now, as the S&P 500 presently challenges its peak off March '09 bottom, to its position when in early-November 2010 the S&P 500 had breached its April 2010 peak. By the slightest margin MACD confirmed this early-November 2010 breach. This likewise followed early-September 2010 MACD confirmation of the S&P 500's further lift off late-June 2010 bottom, as the index exceeded its early-August 2010 peak. Of note here, too, is that late-June 2010 bottom saw a positive MACD divergence from its late-May 2010 depths, which itself was well above the depths MACD reached in March '09.

What we saw in 2010's post- flash crash turn higher was relative trepidation persisting amidst an increasingly constructive technical backdrop (per MACD). So, once April 2010 peak was exceeded (early-November 2010), the market's subsequent follow-through was, technically, a well-substantiated probability. All the more as the S&P 500's momentum remained positive (i.e. MACD above 0) coincident with S&P 500's November 2010 pullback.

The situation now (per MACD) is markedly different from 2010. Trepidation? There's none. Not in the initial lift off early-October 2011 bottom, nor in subsequent follow-through since mid-December. There's only negative divergence at the height of hope in hyperinflationary happiness for as far as the eye can see. This negative divergence is revealed via the market's lift off early-October 2011 bottom, both in how momentum during advancing states technically relate, as well as how its entirety contrasts to technical developments since March '09 bottom.

On this latter account momentum's surge following October 2011 bottom presents another objective piece of evidence suggesting weak hands simply being played. As circumstance in 2010 amply demonstrated, a stronger interest possessing some staying power is more apt to temper its "enthusiasm," while at the same time lending underlying strength to the market's legs.

Considering presently negative momentum divergences (see daily charts) in the context of weakening long-term relative strength (see monthly charts), immediate prospect finds more likely a sudden collapse, rather than a "blow-off" top. Not to entirely discount this latter possibility, yet its likelihood probably is better thought slim. Rather all eyes should be on momentum. Once it turns negative, look out below.


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, February 07, 2012

The Pump at the Dump


If sometime over weeks ahead a blow-off top develops, NASDAQ-listed issues joining along likely will be from among a shrinking list of candidates...


$BPCOMPQ

Bear in mind NASDAQ's Bullish Percent Index of 61.82% compares to NYSE's 75.65%, and yet NASDAQ's Composite outpaces the NYSE's, having reached new high ground, post-March '09 bottom. Considered separately and together a mark of undue hope gains physical evidence in increasing restraint exercised toward the growing pack of dogs lagging the leaders.

You really get a feel for the smokescreen put up these past couple years, both in comparisons across exchanges, as well as via technical divergences coinciding with successive NASDAQ peaks...


$COMPQ

The period following collapse of Adam Smith's Leveraged Ponzi Scheme has been all about buying time whose clock is set to expire the minute a weak link in a game of extortion breaks. Could be Greece following a forever long weekend. Could be mortgage-backed securities investors following another backdoor bank bailout masquerading as fraud settlement. Could be a geo-political head fake venturing hysteria for war.

Bottom line all is not well, no matter how good folks are at faking it.

Per prospect of any upcoming blow-off top carrying the NASDAQ Composite still higher, its probability will be thought increased should overhead resistance be breached...


NASDAQ Composite monthly

Just like the Dow Jones Industrials Average, the NASDAQ Composite's long-term relative strength remains positive, and this despite weakening (apparently proceeding to turning over). So, things could go either way at this point.

Yet seeing relative strength depths reached 2008-2009 being immediately followed by strength absent any indication of trepidation (such as would pin RSI below 50) is but another revelation of weak hands in command. Strong hands would not so decidedly tip their hand following such weakness as has developed over the past 10+ years: weakness recently only the more confirmed (2008). It is unclear, though, whether weak hands in command have shot their wad, and so, are incapable of mounting a blow-off top.


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!