The Risk Averse Alert

Well, it looks like John Wilkes Booth's hands finally found gainful employment. They're at CNBC, and still useless...

However, notwithstanding the network's catering to a crowd best likened to oblivious sheep being marched to slaughter, the collective, panicked look toward the exits these days of those more in-the-know must be frightful. These truly understand what the July 3, 2012 lead FT editorial calling for Glass-Steagall means. In a word, doom. We're all on the same page because we see where things are going with any further attempt to extend and pretend. There's just no way to get 'er done anymore. And doesn't the ECB know it! If they'd done more today, the euro would have collapsed only faster, along with any hope Spanish and Italian debt might hang in there a bit longer.

So, put this in your pipe and smoke it: accompanying an anticipated, pending third wave down targeting levels last seen in the first half of '09 (at least) could be Geithner's sudden resignation (in a Bruce Ismay of Titanic move), ESM launch fail, Greece, Portugal and probably Ireland defaulting, Monti and Rojoy fleeing for their lives (and unlikely to land in Germany), so-called "too big to fail" derivatives junkies going belly up, a sweeping, bi-partisan push to pass HR 1489 and put it on the President's desk under the implied threat of an immediate impeachment proceeding, Mitt Romney rendered "impotent and obsolete," and/or the United States suggesting it might nationalize its oil industry (that those who might wish to blow up the Middle East be neutralized). In other words, there are big changes coming over weeks ahead. The Financial Times of London said so much, and this loud and clear.

You have to be near useless to ignore this! Right CNBC?



A herculean effort is holding up the market here. Ominous is $NYAD's 10-day moving average diverging from late-June (this in relation to the NYSE Composite Index's performance over the interim), this while the NYSE McClellan Oscillator again is signaling an impending top.

Given this year's persistently deteriorating technical backdrop, along with a markedly devolving fundamental backdrop, the one-sided trade of the past month or so rather seems quite out of place. Not that any new money of any substance is coming into the market (other than possibly that likely fleeing Europe's financial bubonic plague). Rather, weak hands more or less holding on for dear life and refraining from aggressively selling for any myriad of reasons (all of which can be filed under "stupid"), while employing those tricks of the trade run out of Chicago with the accompaniment of a song and dance from CNBC playing the rumor mill and other psychological instruments (file these under "transparency recovered") are the means by which precious minutes have been bought apparently in hope a Chip Diller routine — "Be calm; all is well!" — might catch on and bring in new money parked in short-term Treasury securities. It appears this gig has just about run its course.




© 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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