The Grand Illusion on Must-Be-Senile TV ~ The Risk Averse Alert

Thursday, January 10, 2013

The Grand Illusion on Must-Be-Senile TV

We're all about the NYSE tonight (a.k.a. "the new NASDAQ")...

I've said it before and I'll say it again. The message of the market is, you want a piece of our garbage, then pay up bitch! Okay, well, maybe I haven't said it quite so colorfully.

Negative technical divergences everywhere. Not a good sign, particularly when the Brussels Reichsbank's Count Draghi-ula was reported today trumpeting a good year ahead for credit conditions in the euro-tomb. Countdown to CNBC's David Faber interview "confirming" this view (a la Alan Schwartz of Bear Stearns fame in March 2008) in 3, 2. 1...

Going into today's final ninety minutes only approximately 500 more NYSE-listed issues were advancing versus declining on the day. Well enough is that, at today's close we hardly saw a mass migration into what remains but wildly mis-priced garbage whose prospect of becoming even more so is about as certain as the likelihood credit conditions this year in the euro-tomb will be on the improve. Indeed, a hopelessly insolvent trans-Atlantic banking system resting on a deteriorating Basel standard mandated to become effective in 2015 allowing even junkier credit securities to be converted from trash to treasure at participating central banks is a sure sign further contraction of physical and financial assets driven by a squeeze on some overexposed holder of the latter, this a la Bear Stearns and Lehman, is but one revulsion from reality.

Lord knows, the sea of insane suckers who see no problem with the prospect of a growing supply of deteriorating credits on the books of lenders of last resort, this pushing their balance sheets to some not insignificant double-digit percentage of GDP, are game for enthusiastically subscribing to the Grand Illusion, as no shortage of these folks are inclined to positively prognosticate on "must be senile" TV. Yet step up with real money displaying the kind of buying to put prices up and avert risk prices fall of their own weight, a risk made only the more substantial by deteriorating credit standards at core lenders of last resort? Yeah, right! We're still waiting, and well advised not to hold our breath.

As I recently suggested, in no time at all will Capo Confetti's hyperinflationary happiness be relegated woefully inadequate. By the looks of it this realization is starting to settle in. Well, at least the Fed's promise of $85 billion a month has had the effect of sustaining hope in the Grand Illusion for some days longer in the minds of those most clueless weak hands than was the case when only $40 billion a month could be had (namely, back in September).

I continue subscribing to the view that, what had been a persistently diminishing differential between NYSE new 52-week highs and lows for three years up until a sudden and inexplicable divergent turn in September 2012 (noteworthy especially considering the NYSE Composite printed well-shy of its May 1, 2011 peak—its highest since March '09 bottom) rather exposes urgency to unload as much garbage at the bottom of the capital structure as can possibly be scammed before confidence at the top (where lenders of last resort impact the state of affairs from there on down) evaporates. Contrived crisis abundantly necessary to rejuvenate the perceived relevancy and efficacy of hopelessly insolvent central banks and national treasuries awaits. In the wake will be consolidation of physical and financial assets, their further marginalization, and still no hope this risk-fraught circumstance, itself but the more conducive to mass murder, soon will decidedly abate.

p.s. AAPL and HLF both remain excellent shorting opportunities, technically speaking...

Secrets and Lies of the Bailout
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Word on the Street
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