Blow-Off Top Buzz Kill ~ The Risk Averse Alert

Thursday, March 01, 2012

Blow-Off Top Buzz Kill

Guy Adami tonight raised the prospect of a blow-off top ahead. So, let's review the possibility, as I continue to believe it slight at best. In fact, even more convinced of this now am I than the last time I raised this possibility.

My conviction presently is bolstered by the state of animal spirits underlying NASDAQ's performance over the past three years...


As NASDAQ has stepped higher, its internal condition only has continued to worsen...


Bottabing, bottaboom. They've shot their wad and, indeed, they're already starting to fall asleep. At best, a late-2010, early-2011 prolonged technical trade might be in store from here forward, but I have my doubts.

Standing out like a sore thumb is NASDAQ Composite's stellar momentum into its early-February peak — the best seen in more than three years — and this notwithstanding NASDAQ's much diminished leadership as measured by NASDAQ's declining 52-week high-low differential. Consider this disparity but further manifestation of sanguine psychology dominating today's stock market. A clear and present danger. Something about which Art Cashen forlornly cautioned today...

All I can do here is reiterate my fear that, any minute now a wicked unraveling could commence. This is possibility far more likely than a blow-off top. Indeed, by all appearances there simply isn't enough hyperinflationary happiness to get things really moving. Investor confidence is shot and Europe is rioting with increasing intensity, which, I suspect is exactly how one might describe all eyes gazing the exits right now.

Fast Money
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