Confidence Cooling Fast ~ The Risk Averse Alert

Monday, October 15, 2012

Confidence Cooling Fast

Pisani was chirping today about major indexes being within a couple percent of recent highs, insinuating, I guess, confidence has not left the market. Whether one might beg to differ really is of no consequence. What's most relevant right now is that, the market holds up so well despite confidence cooling so fast...

Already the NYSE 52-week high-low differential is on the verge of challenging its 2012 lows. This, too, is rather fitting my Elliott wave view. A rising wedge's 4th wave thought currently early forming finds an element of underlying technical circumstance well on the way to confirming its place in fact.

This measure, too, subtly displays increasing underlying weakness in relation to its performance since early-June. Thus, the market's anticipated, continued decline (completing wave a of 4) might commence sooner rather than later.

Both relative strength (top panel) and momentum (bottom) have decisively weakened to an extent making comparison to similar circumstance going into May of this year worth taking notice. The path to seeing wave a of 4 in fact prove the more damaging (alternating from wave a of 2), while both relative strength and momentum weaken beyond wave 2 lows, could be upon us. Just how quickly this materializes is for twelve days remaining in October's trading, really, to decide at this point.

Fast Money
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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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