Friday, March 30, 2012

Growing Belief Gasoline Is Cheap


One of the more interesting trading developments this week occurred in the worst of all places, where higher prices more likely portend accelerating business and personal insolvencies...


$GASO

With its relative strength and momentum falling into balance unleaded gasoline is consolidating its huge gains since December — this with an upward bias, as noted one week ago — and seeing buying interest increase all the while. This week's $GASO volume pickup is another technical feather in the cap atop the head anticipating much higher gasoline prices.

$5/U.S. gallon probably is a slam dunk.

$10 by the first Tuesday in November is not out of the question, not with hyperinflationary breakdown of physical and financial economies on both sides of the Atlantic set to accelerate toward 1923 Wiemar Germany proportions, as pressure to expand bailout of a hopelessly insolvent trans-Atlantic banking system can only grow as contraction imposed via fraudulent "structural reform" and austerity today shaking the euro zone periphery spreads to the core and threatens lenders of last resort today propping up the banking system.

No mere coincidence with the ECB's helicopter drop of the past few months, then, is the push for war in the Middle East. This push, however, is not the driver of skyrocketing energy costs. Rather war might be better seen venturing cover for a still deeper swindle in store, imposing brutal sacrifice for a contrived cause whose full pursuit likely would shake the world to its very foundation.

Hyperinflationary bailout of the trans-Atlantic banking system simply cannot stop. Attending collapse of the physical and financial economy in fact is the real driver upsetting the social applecart and provoking war. Flat-lining economic readings hailed as "recovery" in truth are drowning in dissent sweeping across Europe. Yet hyperinflationary bailout will not stop, and so further physical breakdown threatens acceleration of a negative feedback loop whose effect could push energy prices straight through the roof. Thus, at the trailing edge in the eye of a financial hurricane is view of 1923 Wiemar Germany. Brace yourself for an insidious shakedown.


$SPX

Once consensus turns from "we're not collapsing today" to "stocks might collapse tomorrow" the green, support-resistance line drawn above could prove an early pivot point in the long journey down to levels last seen in the 1987-1994 period. All the more following its successful test twice these past two years while a wealth of technical evidence reveals growing underlying weakness backing each subsequent bounce. Given an ominous fundamental and technical backdrop, then, the market's upcoming transition could develop rapidly and take out support like a hot knife through butter.


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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Thursday, March 29, 2012

Another Pre- Flash Crash Moment


The CBOE Put/Call Ratio, much like yesterday's highlighted measure, suggests the market could be poised for a major setback...


$CPC

The present moment's similarity to that leading up to the "flash crash" of May 2010 is both noteworthy, as well as fitting a consensus sentiment placing the threat of a crash nowhere on the radar. Evidence presented by other technical measures indicating underlying weakness consistently increasing over the past two years finds the CBOE Put/Call Ratio suggesting we might be just minutes until Spain implodes.

Sensational claims that, the ECB's liquidity flood brings Europe's problems "under control" only the more reveal the threat of a crash fittingly is being ignored — a risk with fundamental basis in fact, given extraordinary actions being taken by lenders of last resort on both sides of the Atlantic. Appreciating that, hyperinflationary happiness simply cannot stop is understanding the trans-Atlantic banking system's complete dysfunction. Yet that no one perceives imminent calamity exposes naked greed with very little basis in reality to reasonably expect its satisfaction. Thus, an hour made for experiencing grave disappointment rather rightly finds a consensus sentiment apparently quite oblivious, as indeed, it rightly should be.


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, March 28, 2012

Dire Warning Under Cover


By some measures it looks a bit like late-April 2010...


$NYAD 10-day v 200-day

This is the 10-day moving average of the NYSE advance-decline differential (blue line) versus the same measure's 200-day moving average (red line). By both measures the market presently is seen having weaker underpinnings than in April 2010, yet relative to its position back then the NYSE Composite index today trades higher.

So, given ample technical evidence long indicating a hard turn south is at increasing risk of developing, here we have indication a sharp reversal could come at any minute.

Still, the art of levitating garbage on the back of a diminishing pack of darlings being the well-established result of a hyperinflation-induced technical trade, how many days more this could persist is anyone's guess really. Judging by this year's levitation whose tendency has kept the above measure likewise levitated (notwithstanding its persistent divergence as the market has moved higher), there's just no telling when increasing underlying technical weakness will win the day and subsequently sink the market. Yet by the above measure, too, there's reason to fear the moment of truth could be at hand.


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, March 27, 2012

In the Eye of a Financial Hurricane


It is safe to say that, following the market's 2008 collapse, with its suddenness and its depth, there was ample reason to suspect a turn of affairs had come to pass, separating the market's past from future prospects in a manner more likely keeping in check any recovery from 2008's depths. Although this position has proven incorrect by a sharp, relative strength reversal — which recovery has been maintained as the market's levitation unexpectedly has persisted — no change in the forecast for foul weather is made necessary, as no indication other than being trapped in the eye of a hurricane is coming from a bountiful harvest of both fundamental and technical data.

If there is one thing 2008 made clear, an "all clear" was not sounded to the riskiest of risk assets. More than all other forms of financial claims, these require mechanics impacting risk all the way up the capital structure function like a well-oiled machine. Well, in case you hadn't noticed the machine still is sputtering badly. We remain in the eye of a hurricane, indeed.


NASDAQ weekly

Risk's disjointed, fragile condition probably goes some way toward explaining why NASDAQ's cumulative advance-decline line more or less remains trapped in a long-running death spiral. Like so many other measures revealing a cognizant consensus perception per the sputtering financial machine choking on hyperinflationary bailout, the revulsion of the riskiest of tangible financial claims is right in your face and it is impossible to deny the message. NASDAQ is in disfavor — it has been for a long time — and this is a problem.

Yet speaking for today's complacency in the face of this sputtering financial machine is the fact that, NASDAQ's many laggards apparently are held for the prospect their years of flailing will be followed by a return to health (or become a momentum darling at any moment). The effect of this is seen reducing selling pressure on the exchange and allowing a handful of leaders to prop up the bunch.

Of course, this will work until it doesn't. It just so happens we are well set up to usher in the moment when it won't. Per anticipated swings upcoming, first down, then back up, their dimensions are uncertain. So, their depiction above is but one possibility among several.

Let me conclude submitting, too, technical conditions now are subtly different than in the 2004-2006 period. Challenges presented during moments of weakness following March '09 bottom have been readily evident (see circled RSI), whereas in the prior period moments of weakness brought no great challenge to NASDAQ's advance off its 2002 bottom. Then, relative strength quickly returned to the positive (above 50). At the same time, too, recoveries in the prior period never lifted relative strength to the degree we have seen since March '09. There was more balance then between the buy- and sell-side. At present, however, we have a greater reflection of complacency allowing a relative handful of NASDAQ-listed issues to lead the way further along a one-way street, lifting relative strength to heights beyond those reached in the 2004-2006 period. Thus, there is reason to doubt present capacity to maintain the market's levitation in a manner similar to that leading into NASDAQ's 2007 top. Indeed, as circumstance has it, all the more is reason to fear we are at the trailing edge of the eye of a hurricane whose greatest damage is still to come.


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, March 26, 2012

Aye-Aye Captain Bailout


Hard to say how much additional technical deterioration will be in evidence before, suddenly, the floor turns soft. One thing certain, though, the cheer that went up today when sailors aboard the Hyperinflationary Happiness gave convincing "Aye-ayes" to Captain Bailout is but another day in the life of a plague-wracked banking system in an age when every minute counts.


$NYA

Prospective formation of a fourth and fifth wave completing five waves up from late-November could develop along lines indicated above. As long as Europe, the Middle East, and Chicago don't blow up, the fading fit of a technical trade losing conviction nevertheless could persist, as it has since early February. Likewise all attending blather from the Hyperinflationary Happiness crew.


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, March 23, 2012

Gas Price Misery Going Wiemar


Bad news. More pain at the pump appears in store...


$GASO

That is if similar technical conditions this time last year are any indication.

You have to wonder, too, whether hyperinflationary breakdown bringing refineries to close might place the world at a Wiemar launch base from which the price of all things from here forward will explode. Indeed, despite fading [positive] momentum (bottom panel) unleaded gasoline's price continues inching higher. It's not difficult to picture an explosive lift from here, with misery, along with political interest in a presidential election year, going parabolic.


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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Thursday, March 22, 2012

Leadership Lacking Coattails


Technical divergences registering over the past month-and-a-half revealing some measure of increasing weakness underlying the market's advance since early-October 2011 now put the market in line for a hit tipping its trend lower. Still, while time avails every minute will be made to count. Indeed, as bad as today was, weak hands with eyes no doubt fixed on the exits did not make a mass exodus...


$NYHL

Apparently, when NYSE laggards were taken out this week (today and Tuesday), its leaders were relatively spared. Still, the air pockets created give a sense of what's ahead when the NYSE's leaders finally are taken out and shot. Failing to have coattails, it is only a matter of time before the market's ever-thinning leadership falls.

Although there appears intention to continue driving the NYSE's leaders higher (thus explaining today's tame $NYHL), today's setback could challenge this position, as the weight of the majority of issues apparently is overwhelming the weight behind leaders. Thus, the market's reaction might differ from earlier this month in the lead-up to yet another demonstration of NYSE leadership only the more lacking coattails.

For the time being the matter of making every minute count finds most likely in store a fourth and a fifth wave of five waves up from late-November 2011, then disaster. There is more than an outside shot, though, something nasty could spring forth and sink the market faster than Greece.


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, March 21, 2012

Plan B: Sink the Euro Zone


Today's House Committee on Oversight and Government Reform hearing into "Europe's Sovereign Debt Crisis: Causes, Consequences for the United States, and Lessons Learned" — a two-and-a-half hour meeting querying the Treasury Secretary and Fed Chairman (starts at about 2:40) — was a bit of a letdown given the buildup...




There really was no discussion of a "Plan B," should the EMU collapse, as Rep. Issa seemed to indicate would be covered during today's hearing in his Bloomberg interview this morning. Rather, the hearing was sprinkled with fact-finding and relatively mild bouts of posturing, while maintaining the sweetness of the sugar coating wrapping today's fantasy of a Great Depression averted by brilliant measures taken by regulators to counter financial crisis whose impact, admittedly, is ongoing. Effectively, today's hearing brought not-so-subtle, yet entirely diplomatic restatement of the U.S. position that, Germany cough up cash, and strengthen the EMU's "firewall."

Now, there were challenges to the credibility of the Fed's stress test in the event European sovereign duress precipitates a chain reaction collapse of euro-zone nations threatening even the German core. Yet this concern seemed more a warning to Germany of dire consequences if its full support of hyperinflationary happiness to and through the Geithner Minimum were not forthcoming, than a provocation of the U.S. Treasury Secretary and Federal Reserve Chairman otherwise begging their due diligence. All told, today's affair could provide circumstance suitable to provoking war. Being that pretending is all the rage these days, who will be blamed when the best laid plans of lunatics inevitably turn to confetti?


$SPX

Everything euro-zone is riding on a fiscal compact and a firewall. Neither are certain to be in place when the next domino falls. Thus, today's House Oversight and Reform Committee hearing served to highlight the urgency of so-called euro-zone "reforms" that, already, are bringing failure to every nation of the euro-zone periphery.

Insisting Europe possesses wealth enough to bail itself out certainly is a less substantive "fix" when contrasted to the Fed's QE2 of 2010, with its implicit backing of the U.S. Treasury. Indeed, this is how we know the "Europe" of today's congressional hearing more accurately could be identified "the German taxpayer." Yet these are no more inclined than their American counterparts to tolerate such demand for sacrifice and pain as is claimed necessary to insure the viability of what already is widely understood an ill-fated charade.

So, consider the market's gain since the ECB took to hyperinflating via LTRO sans any material, unified backing from the euro-zone's member states establishing a "firewall" approaching the Geithner Minimum (let alone the estimated 5 trillion needed this year to avoid a euro-zone banking system implosion). Once again appears undue complacency given today's insistence Europe backstop its all the more obviously insolvent banking system to a degree Germany has thus far doggedly resisted.

Remember the Fed's "exit strategy?" Well, you're looking at it. They're setting up to blame the trans-Atlantic banking system's pending collapse on the suckers who bought into Adam Smith's Leveraged Ponzi Scheme big time when King Ponzi Greenspan ran the Fed. (My understanding, too, is Germany was reluctantly roped into the scheme as a price for reunification with the failed, East German Soviet spoil of WWII. So, now it is being induced to commit national suicide in a process not unlike its 1923 Wiemar experience. No matter whether this succeeds or fails the EMU is doomed and Germany could bear the brunt of the blame.)

This thought, of course, raises to a level of critical importance the matter of a "Plan B" discussed this morning by Rep. Issa. The mere prospect that, chaotic conditions could raise the need for such a "Plan B" is another way of saying goodbye Dodd-Frank and hello Glass-Steagall. Understandably, with pretending still all the rage, "Plan B" is more politically correct language.


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, March 20, 2012

Complacency Knows No Insolvency


With the stock market's continued buoyancy principally being a function of a technical trade inspired by hyperinflationary efforts to forestall the trans-Atlantic banking system's collapse, and with appearances of the banking system's solvency remaining ever more tenuous, the time-buying exercise of the past few years having been more or less a matter of creating momentum among the market's laggards finds today's darlings banks themselves.


$BKX

Shedding a lot of light on just how much a strictly technical trade is underlying the bid on banks is the simple fact that, nothing at all has been solved by legislative efforts pretending the banking system remains solvent, a reality further confirmed by never-ending regulatory endeavors pretending "liquidity" will buy time necessary for balance to be restored between finance and physical economy. The disconnect with fundamental reality an aggressive bid on banks reveals no doubt presents a psychological undercurrent whose present, apparent complacency is fitting a moment likely leading to the market's anticipated collapse.

The real question with the Bank Index is whether following imminent challenge of its March '09 bottom, another similar disconnect will develop (by way of more hyperinflationary happiness, of course) and send $BKX screaming back up again, and thus fittingly presage the market's further collapse sinking major indexes to levels last seen in the 1987-1994 period. This prospect is in keeping with a view that, forming since March '09 bottom is the middle wave (i.e. wave B) of an a-b-c corrective wave down from October 2007 top. The manner in which $BKX has traded since March '09 suggests a great deal of volatility (first downward, then back up) could develop as wave B completes over weeks and months ahead.


company chart (BAC)

Chief Dog among the laggards is the recently diagnosed "tired" BAC, rejuvenated in the fog of a Fed stress test passing grade. Good enough for a technical trade feeding on fantasy backstopped with promises of liquidity for as far as the eye can see. Yet hitting on overhead resistance, both in price and relative strength, BAC concurs with its peers on the risk 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, March 19, 2012

Still Time For Milking


Every minute still counts. And Apple is doing all it can to fill in for a confidence-thin banking system whose hopes just got a little thinner with Apple telegraphing they've nothing better to do with their billions. Which is not to say some large investor soon to receive a substantial dividend might not invest in some new, revolutionary product. Rather, that the banking system likely will suffer a major convulsion and, indeed, risk collapse before this new product ever hits the market. As Friday's update revealed, Apple's NASDAQ coattails are not at all long (as otherwise would be the case were hyperinflationary happiness for as far as the eye can see in fact restoring confidence broadly).

Which, all told, makes today but another day milking ol' Anabell. Now she very still could have more to give over coming weeks. Yet straight away she appears quite ready for a break.


NYSE McClellan

If time is on the market's side, then we could be a fourth and a fifth wave from oblivion. Despite the many negatives above, the way things are shaping up a few weeks or so pounding more nails into the market's coffin seems a perfectly reasonable outlook. That is as long as the Middle East doesn't blow up.


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, March 16, 2012

Dead Animal Spirits With Your Monetary Union?


If you didn't catch my tweet about Christopher Whalen's interview on RT's "Capital Account," you should check it out. We are on the same page per an approaching banking system convulsion...




What about Whalen's suggestion the Fed will have to raise interest rates long before 2014? I'm in the camp believing the Fed follows the market's lead, rather than the other way around. While both now are bankrupt, shark attacks of increasing ferociousness and consequence are to be expected with upward ratcheting of interest rates reflecting waning confidence to show for it. This week's JPM Fed slight confirms this view, both per the Fed's animation solely by the market as well as its fate playing some lesser role in a massively imbalanced balancing act.

Still, leading up to a rising rate eventuality remains the likelihood of one last gasp carrying Treasury bonds (as well as spot gold) higher, this coinciding with the stock market's upcoming retest of March '09 lows. This outlook, no doubt, probably shocks most people. Yet the only thing "shocking" here is March '09 lows, as well as much lower, have remained fixed in the cross hairs for a couple years now, while the probability of such a setback has become all the more technically substantiated. Among evidence exposing the market's underlying weakness continues to be the utter absence of animal spirits, such as NASDAQ reveals...


$NAAD cumulative

Having recently presented NASDAQ's cumulative advance-decline line whose fading peaks from 2010 top belie the NASDAQ Composite's continued move higher these past two years, tune your eyes now to today's divergence versus early-February. NASDAQ's advance not only is stalling, but given fading upside participation these past two years, appears a train wreck waiting to happen.

Again, were animal spirits ruled by hyperinflationary happiness, then NASDAQ's cumulative advance-decline line would be rising. Instead, this measure appears to be continuing its decade-and-running death spiral. Precisely the sort of thing one might anticipate were NASDAQ's collapse back to 300 thought both possible, as well as potentially imminent.

Seeing NASDAQ's cumulative advance-decline line constrained at its falling 200-day moving average takes the eye back to early-July 2011, when a similar circumstance developed. What followed was not pretty.

Next, consider the advance-decline line's momentum surge into early-February (bottom panel) and its subsequent fade. Now look back to early 2010, prior to May's flash crash. The advance-decline line's momentum similarly exploded to the upper end of its range of the past few years, before fading in the lead up to the flash crash. Back then, though, NASDAQ's advance-decline line was confirming the NASDAQ Composite's new, post-March '09 peak set in April 2010. Not so now. Not by a long shot. A major disparity made all the more alarming in contrast to the lead up to May 6, 2010's flash crash thus suggests something far worse could be afoot.

Maybe for some days and weeks more the market might remain fairly levitated. Then again, maybe the drive for war will sooner bring a defining moment. No doubt, manufactured villains are being provoked to do something stupid. Whether they do or not might not matter, as in the manufacturing it is plain assigned villains probably stand to be blamed should something extraordinary happen, as appears increasingly likely. The euro-zone's accelerating insolvency reveals the hour is late for those who created the nightmare whose continuance evidently demands obeisance to acts of destruction of ever greater intensity and effect. Consider war most elementarily, then, a means of breaking resistance to austerity and sacrifice, that every last ounce of humanity be milked to prop up the clear-cut cultural insanity making a dead Ponzi scheme's removal from life support more fearsome than world war.


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, March 15, 2012

Your Toilet Safety Administration (TSA) Update


Did you see the new South Park last night? I am officially appointing myself Honorary Secretary of the "Toilet Safety Administration."

My self-elevation really could not have come at a more appropriate moment, because big names have been crapping on each other with quite some intensity this week, while in our present, technically and fundamentally weak environment there is every reason to suppose risk is ready to take a big dump, and it could be one for the record books.

So, as your trusted Secretary you can be assured toilet paper, long identified, will drain accordingly and with all necessary force.


$SPX

From March '09 bottom has been forming the middle wave of an Elliott, a-b-c corrective wave down from October 2007 top. Specifically, wave (B). My general view per this middle wave (a counter-trend move) forming since March '09 bottom — a time-buying exercise that risks being followed by a throttling far worse than 2008 — has been both longstanding and consistent, although necessarily having to vary in details, as circumstance has painfully dictated. Yet most critically has been endless technical confirmation of this view. Maybe you have to be an Elliott Wave Geek to appreciate the significance of this, but one such geek made Honorable Secretary of the "Toilet Safety Administration" competently sees a rather large plunger in store here at the confluence of the Elliott Wave Principle and Indisputable Technical Evidence Exceptionally Bearish.

As always, the projection above intends to suggest the dimension of a move having strong possibility straight ahead, although not drawn to scale with respect to time. So, in this instance that is to say over the next few months five waves down challenging March '09 bottom have a strong possibility of developing.

All things considered right now, the first of these upcoming five waves down likely will hold the S&P 500 above its early-October 2011 bottom. With the bounce to follow, the "God, save our sinking ship" trade could endure as such in a fashion like Titanic's Captain Smith was depicted in 1997 in the moments leading up to being flushed with his ship to the bottom of the Atlantic.




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, March 14, 2012

Living With Premature Ejerkulation


We've been through tonight's analytical exercise already, but the present, Fed-influenced moment really offers a great opportunity to make a relevant, like-from-like contrast and hammer home a compelling disconnect making for a very bearish case. More on that shortly. First, some relevant orientation.

Complacency right now is astonishingly thick, and this in the face of an incredibly weak macro backdrop, both fundamentally and technically. I might not really know much at all about the nuts and bolts of our wildcat banking industry, but there is one thing I do know about our Federal Reserve banking system. In all the years since the Federal Reserve came into being in 1913 there was never a need for a "stress test" until the year 2009. This is to say a stress test is no sign of fundamental strength. Does this fact not seem more or less lost on everyone?

Bad enough, really, is just one stress test. Worse still is yesterday's second take, which in fact is best seen a living demonstration of "fool me once, shame on you; fool me twice, shame on me." Add Jamie Dimon's premature ejerkulation all over the Fed, and the utter shipwreck that is the trans-Atlantic banking system, completely unmoored from any effective regulatory restraint, presents in our midst a frightfully gasping dinosaur quite threatened with extinction. In doubt only is whether the Fed will survive to celebrate its centennial anniversary.

Europe? An evolving nightmare whose physical economy, as you know, is collapsing. Positively crushed with debt, a bailout junkie whose need is ever more voracious, feeding on the life and blood of the continent to a degree rather frightening, as well as likely leading to revolutionary uprising. The question right now is not when will the euro-zone collapse? The question is when will some significant, investor move to the exits precipitate an avalanche, and make the EMU's collapse a fait accompli? In case you've been asleep these past few years every single instance of European credit market stress has developed virtually overnight. There is no reason to expect the next will be any different. Likewise, there is no reason to think credit market stress is a thing of the past. Indeed, on this point there seems to be a consensus.

Yet during the first five minutes of tonight's Fast Money both Insana and Gartman went so far to explicitly state their firm belief systemic crisis is off the table. An unusual thing for anyone, anytime, to say, particularly on CNBC. Not so much, maybe, given well known vulnerabilities, but considering the market turnaround we have seen over the past six months, rather curious is the sound of an "all clear" in light of unprecedented risks everywhere you turn. Fitting, really — but a variant of the Dimon Disease — given the fact that, technically speaking, the market faces no small risk of imminent unraveling.


$NYA

Contrasting the present moment with technical circumstance following the May 6, 2010 flash crash and its aftermath, we find a common point of reference in Fed action taken to prop up the banking system. It was the day after November 2010 elections the Fed took to QE2, while yesterday was its shot of "confidence" whose "good news" could not wait even 48 hours for some who apparently have no regard for good taste when it comes to gaining competitive advantage.

Just how money talks gains clarity in the contrast. Both the NYSE Composite index's momentum (bottom panel) and volume provide the means for making a distinction revealing a disconnect that, those utterly complacent today are completely missing, and at their own grave peril no less. Technical failures are everywhere in the current instance. The contrast presents nothing short of night and day. We simply must conclude the market, right now, is far more vulnerable strictly from a technical perspective than was the case early-November 2010.

Indeed, the market's dire technical condition might shed some light on Dimon's slight yesterday. Is the firm being positioned as rapidly as possible for the coming kill? Nothing like a well-telegraphed sense of urgency in whose delivering we might better suppose the Fed is dead, at least as any effective, stabilizing agency. Whether there likewise is more than meets the eye per today's insider dissing at Goldman Sachs, the very question is only the more pertinent given yesterday's shenanigans out of JPM. One is left to wonder how much Mr. Smith might have been paid by a Goldman competitor to write his New York Times op-ed piece.

With all this in mind, today's Treasury and gold rout draws into the cross hairs the very volatility projected to coincide with the last gasp higher both these asset classes are likely to enjoy, this as the stock market embarks on the first leg of its journey south enroute to a decimation at whose final end major indexes still remain forecast to sink to levels last seen in the 1987-1994 period. Indeed, the market's misery might begin in just a matter of hours, if it hasn't begun already, as both $UST10Y and $GOLD are respectively meeting their 200-day moving averages and are thought likely to bounce off these decidedly.


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, March 13, 2012

Red Hot Garbage


You gotta hand it to the bankrupt pricks. When every minute counts, they make the most of it. Apparently, the situation at JP Morgan Chase is so frail, the firm found it necessary to front-run the Fed's planned Thursday announcement of so-called "stress test" results. Just how the firm's massive, opaque derivatives book was analyzed by the Fed is anyone's guess. One might suppose relegated to some long tail outside the Fed's parameters was the real risk JPM faces: disorderly debt destruction. Yet the deflationary collapse-o-meter remains well in "danger" territory, this notwithstanding everyone and yo momma suggesting the end of the "bond bubble" is nigh.

Meanwhile, those previously projecting a "blow-off top," might be disappointed to learn that, an across-the-board wealth of technical divergences suggest today's lift could be the last of it (with some measures for months already signaling the market's extraordinary underlying weakness). Although seemingly everyone expects more hyperinflationary happiness from the [bankrupt] Fed, no indication of this being soon forthcoming was given today by the FOMC. And despite February's largest monthly federal budget deficit in U.S. history satisfying the market's voracious appetite for highly-rated securities which to synthesize hedges needed to protect the mountain of junk on bank balance sheets, difficulty Team Fraud's political marionettes are having igniting world war (aiming to bury taxpayers in even more debt otherwise necessary to prosecute such a war) leaves in doubt future supply of qualified securities facilitating an endless stream of hyperinflationary happiness needed to mask a hopelessly insolvent banking system.

Of course, some will claim Dimon's move today to preempt Thursday's planned announcement of the Fed's stress test results but another demonstration of arrogance dominating the banking community. All I might add to this thinking is that in desperation is arrogance typically most obscene. A look at JPM's stock price (let alone its dwindling dividend) over the past 10+ years Dimon has been CEO and one might conclude Wall Street's worst liar, indeed, is on the ropes.

One thing certain is today's lift did nothing to alter the outlook for increased market volatility. If anything, circumstance underlying today's advance only confirms this probability. Muted volume (broadly speaking, while $XLF's swelled), but icing on the cake, suggests the hopelessly insolvent led today by way of a short squeeze (as opposed to anything indicating broad-based accumulation).


$NYHL

If the sound of squealing, stuck pigs about to be slaughtered is filling your ears, this might have something to do with another technical measure appearing at the doorstep of doom. Could there be a more perfect setup for an outlook projecting increased volatility? Here again, like $VIX, momentum of the differential of NYSE new 52-week highs and lows is in a position that, over the past two years has coincided with the onset of market weakness.

So, I wonder if this week might prove a reverse image of last week (whose Tuesday was a dud). The imbalance between arrogance in the banking community and rage in the investment community over garbage banks have sold them is coming to a boil with the so-called mortgage fraud settlement moving toward finality. Banks, obviously, are desperate. So, too, are RMBS investors being made with this so-called "settlement." Just as war in the Middle East appears imminent, likewise does war on Wall Street.


Fast Money
* * * * *

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

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

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


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

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Monday, March 12, 2012

Volatility Ho!


Vexing about the VIX? Here's my take...


$VIX

It's saying the market could soon turn volatile. Consider $VIX momentum (bottom panel). It is climbing and about to cross its 0-line. As was previously observed, the market's counter-trend rally off March '09 bottom consistently has stalled whenever the Volatility Index's momentum turned positive.

Now, what are odds $VIX momentum is about to turn positive?

How much lower is $VIX likely to go?

The market could soon turn volatile. Case closed.


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!

Friday, March 09, 2012

To Whom The Bell Tolls


And now bearings on just what is a "Spanish minute" measuring time elapsed from application of the dirtiest band-aid yet over Greece's mortal wound to implosion of the bankrupt euro-zone...




Adding to still cratering euro-zone finance, too, is the hyperinflationary policy-induced collapse of Europe's physical economy...




Just how does Dallara propose Europe's other debt-trapped basket cases avoid following Greece? Maybe some part of the Greek "deal" has given these nations first rights to explore Greek coastal waters for sunken treasure lost in ancient times? Alas, the hyperinflationary shutdown of energy production could make fuel for such exploration fleets scarcer than gold! Spain, Portugal, Ireland and Italy will be singing debt restructuring in no time at all.

It's not a question of "if" others follow Greece. The question is when will a united front form aiming to avoid isolated victimization under cover of monetarist sophistry, such as would have investors claiming a "loss" on unrealized gains their now defunct risk assets will never see. They're called risk assets for a reason. So, calling a "loss" income that, a fairly compensated risk has cancelled simply is pure sophistry for a gullible public's consumption. By no means were Greek bonds written down by 75%.

Well, we can be happy McDonalds still is hiring, this undoubtedly due to the frantic dealings of the cadre of incompetents traveling the globe desperately trying to reanimate a banking system corpse theirs was no accident in killing, and in so doing propping up the hospitality industry with jobs for chambermaids who risk being Dominique'd by their employers' guests in the hope of being tipped well enough to wash down their shame with a Big Mac and fries.

All satire aside, the hour is getting late if there is any intention to lessen the terror and chaos present circumstance suggests in store as conditions proceed to worsen while intermittent pauses only temporarily halt the globe's long slide into an abyss consuming both wealth and peace. Per the euro-zone's pending implosion and the trans-Atlantic banking system's consequent collapse, it's the "voluntary" aspect of the Greek deal virtually assuring the EMU's disintegration. Thus war appears imperative for those whose power is derived from the fragile, fraud-rife, global financial empire that gave birth to the euro, this as a stopgap measure aiming to forestall collapse, as well as create political conditions conducive to consolidating power in the aftermath. Yet stopping dead in its tracks this downward spiral into an imperial system's brutality requires courage to admit at the root of today's trouble is illegitimate debt amassed in the build-out of a securities-based Ponzi scheme, which debt was all the more compounded following the scheme's collapse in 2008: debt whose restructuring positively requires Glass-Steagall.


NYSE McClellan

Two alternate Elliott wave counts are shown above. The darker labels seem more likely in the current environment (indicating wave 4 of c presently is forming). However the lighter labels, suggesting a sharp turn lower could be imminent, find supporting evidence in the McClellan Oscillator. Deteriorating underlying conditions long established, a moment of severe market weakness might be in store now with the Oscillator having turned decidedly negative.

Still, despite such increasing underlying weakness as the McClellan Oscillator is displaying, the market is holding up rather well. And why shouldn't it? Europe's debt problems are being "solved" and the ECB is now halfway to the Geithner Minimum. Every minute still counts.

Dead ahead could be the proverbial exception to the rule that, no one rings a bell when the market reaches top. Somewhere from the many places where risk of game changing conflict is sharply increasing, odds are a bell will be rung. Trouble is its sounding could prove too late for the average hyperinflation junkie whose stocks today apparently are held in belief they are "cheap." Of course, a scenario leaving most trapped with no hope of exiting is no certainty. Still, it is a risk (and it is increasing).


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!