Long ago we established that, strong hands more or less were done distributing their equity stakes, leaving the weak (and über levered) to play upon a trap door the likes of which none of their meager, ultimately inconsequential dealings will indefinitely keep shut. There is not a single, broad-based technical measure defying this prognosis in fact! Ample evidence exists suggesting an historic bull market in poor houses still continues developing.
Above we see today's [dominating] weak hands are less so commanding increasing excitement for equities, while only more so failing to distract what is an intensifying gaze toward the exits. While April 2010 marked the high point in confidence restored by lenders of last resort in the post 2008 crisis period, the 2nd half of 2011 positively exposed a still living nightmare when central banks were yet again awakened to the trans-Atlantic banking system's insolvency (a condition created by their own reckless doing in fact). Ever since we simply have not seen a QE2-like booster such as what lifted the market into its February 2011 peak. Rather we see increasing jitters peppering a trend featuring diminishing confidence still echoing from this, 2011's 2nd half. This can be viewed prospectively signaling a pending convulsion making August 2011 a relatively minor precursor at that.
Look at this, too, from the perspective of an Elliott wave view supposing that, a "b" wave is forming, whether this be wave B off March '09 bottom or wave (b) of B developing since the market's February 2011 peak. Thus do we see within this unfolding wave B component "c" waves forming over the interim accompanied by a fittingly suspect technical backdrop. This the CBOE Put/Call ratio above is revealing over the past couple years in fact. We are left to conclude that, coincident with the market's advance since early-October 2011 the market's undercurrent exposes a less bullish conviction. We find objective evidence here the market's technical state is becoming increasingly tenuous, this notwithstanding central bank efforts to effect a positive disposition toward financial assets at the bottom rung of the capital structure. Within the framework of an Elliott "b" wave thought developing since March '09 bottom, then, we find here circumstantial evidence supporting an outlook anticipating in the aggregate stock price weakness ahead. Although its extent is by no means being telegraphed by the CBOE Put/Call ratio, its now long-growing probability, indeed, is being signaled here...
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