At the Edge of the Abyss ~ The Risk Averse Alert

Tuesday, May 15, 2012

At the Edge of the Abyss

The market is right on the edge of the abyss. Its passage over the precipice to a prospective point of no return awaits confirmation via the following two measures...


With last year as our guide and the NYSE new 52-week high-low differential falling away from its 200-day moving average, the abyss comes into view as the differential today but confirms the NYSE Composite Index's further decline from its 2012 peak, today sinking the index to its [still declining] 200-day moving average.

Already well-established is underlying weakness this measure registers. So, conditions conducive to the market's collapse are present, and not yet accounted for. This reckoning could be next on the agenda, as the market's technical condition is weak and still deteriorating.


The NYSE Bullish Percent Index is another technical measure presenting a snapshot of a market at the precipice. Noting this measure's similar disposition early last year one might reasonably suspect a bounce is in store. Yet were the market's collapse imminent, then in formation of but its first leg down occurring from 2012 peak to some near date, the above measure in all probability will "signal" the market's demise still to come, with today's 200-day moving average "support" becoming some soon tomorrow's "resistance" lasting over the [relatively brief] course of an evolving panic whose initiation, indeed, could be at the doorstep.

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.

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