Risk On or Die ~ The Risk Averse Alert

Monday, April 09, 2012

Risk On or Die

Weak hands made beneficiaries of a strictly technical trade had better get their risk on, or else...


Trouble is this will mean either spreading love further than reasonably can be expected, or pressing bets on the dwindling handful of darlings underpinning the market's continued levitation. Whatever it takes to stop the NYSE Bullish Percent Index's relative strength (top panel) from falling below 30, however, will be needed if we are to assume there is life yet remaining in the strictly technical trade holding up the stock market. Experience since March '09 bottom has shown the market vulnerable whenever this measure is breached.

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.

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