Despite having been bitten more than once supposing the market's counter-trend rally off March '09 bottom might be on the verge of reversing lower with a vengeance, underlying weakness presently revealing the market is on precarious footing overwhelms any impulse to be shy. Truth is the market's current technical state once again exposes a risk whose recently developed outcome would prove more devastating than anything previously thought possible over the immediate period ahead. As indicated yesterday, the market's long-anticipated sinking already could be underway.
Combining the compromised technical condition of major indexes (whose relative strength and momentum have turned negative) with fading participation sustaining the market's levitation, it is quite reasonable to fear the worst and stat, as the following measures likewise suggest...
Call this one "the stink of garbage hard to ignore."
And call this one " hey, we know it's garbage, but why not insure it while the cost still is relatively cheap?"
All told, the risk of a hard turn lower challenging last October's bottom is not out of the question.
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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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