The question is not whether there's any money backing those whose sanguine complacency survived today's beating, such that a challenge of recent highs might soon be mounted. Rather, the question is whether suckers who have been holding on for dear life are about to be run over by a freight train. More aptly, has today's breakdown increased the risk of a rush for the exits? To this question the answer is certain. A panic could imminently develop.
Raising this view is a NYSE Bullish Percent Index now squarely signalling danger (vis-a-vis RSI below 30), while $VIX momentum likewise today turned positive (see MACD). Both ominous developments in one day. All quite unexpected. And while volume picked up, hedging of long equities positions taken on today did not...
It all adds up to our old friend Chip Diller.
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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.
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