August 2011 Redux ~ The Risk Averse Alert

Thursday, November 08, 2012

August 2011 Redux

Somewhat a precarious moment at hand here. Not quite like early-August 2011, but not that much different either...

The contrast to the early moments of the August 2011 gassing has two points of reference. First, relative strength (top panel) approaching an oversold reading (30), and this as the S&P 500 falls below its 200-day moving average.

The second point of reference comes by way of the S&P 500's Bullish Percent Index, itself printing below its 200-day moving average, while its relative strength is in the death zone below 30.

August 1, 2011, the S&P 500 fell below its 200-day moving average, bringing the index's relative strength right to the doorstep of an oversold reading (at 30), just like now.

And pretty much the same state of affairs with the index's Bullish Percent Index. Thus, our present concern.

We can suppose, too, though, that August 2011 was a decidedly weaker moment, technically speaking. The S&P 500's 50-day moving average, although printing above its 200-day moving average like now, clearly was trending lower then, whereas today it is but flattening out. Likewise, the S&P 500's Bullish Percent Index going into August 2011 was fast falling away from its declining 200-day moving average. This measure's present circumstance, however, does not appear quite as weak.

It appears a safe bet the market is likely to fall further. Certainly true here, too, is the fact that, several technical measures still have yet to exceed their worst readings from early-April this year, as has been and continues to be anticipated. The extent to which one might assume this circumstance finds the current moment possessing some measure of relative, underlying technical strength, broadly speaking, could prove a factor mitigating damage likely yet to come, however.

Word on the Street
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