Whenever the market has been under pressure there has been a tendency to "save the day" somewhere in the vicinity of what ultimately proved to be bottom. This is demonstrated by an advance-decline differential leaping above best levels registered during the market's preceding decline. Duly noted, too, is the fact this did not occur until the NYSE advance-decline differential's momentum had reached a negative extreme (see bottom panel).
So, with the market's advance into September peak no less suspect than its advance at the start of the year and interest in further bidding up the garbage fading fast, we have this prospective "heads up" alerting us to when we might be in the ballpark of a bottom.
* * * * *© 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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