Might the Dow Jones Industrials Average be better named "The 'You Can Run, But You Cannot Hide' Sentiment Gauge of Ponzi Finance?" Its relative performance versus the S&P 500 (see bottom panel) presents a most compelling case arguing for this change.
When the Dow's performance has begun besting the S&P 500's these past few years the consequence has proven negative for the entire asset class. Likewise, when this relative performance relationship crosses above its 20-day EMA (exponential moving average) wisdom advises Katy bar the door.
The thing to watch right now is the Percentage Price Oscillator (PPO) displayed in the top panel. Once it turns down, look out. Once it turns negative, chances are we will witness a panic if the Dow's relative performance versus the S&P 500 continues ascending.
Although we have some way to go before PPO sinks to the negative, the market's advance off its mid-November 2012 low very well could be nearing its termination, as the upside relative performance crossover of its 20-day EMA evidently is warning.
* * * * *© 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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