Damn the Torpedoes! ~ The Risk Averse Alert

Sunday, April 14, 2013

Damn the Torpedoes!

I'm not sure what's eating the individual investor, but I just checked the weekly sentiment survey conducted by the American Association of Individual Investors and discovered something rather alarming...

Only 19% are bullish? And 55% are bearish? What's up with that? Are these American individual investors or Cypriot?

Nothing even remotely similar is revealed via other sentiment surveys. This from Baron's...

What gives? Are we possibly looking at money originating from European bank runs migrating to the U.S. to the effect of prospectively extending what is thought the market's last gasp leading up to its collapse?

We certainly find nothing terribly compelling in the market's technical backdrop suggesting a blow-off is in the making. Yet hopelessly insolvent weak hands thought dominating the U.S. stock market certainly have perfected the art of levitating garbage, while capital required to sustain the rotten core of a derivatives laden dung pile evidently is forthcoming from points both east and west, so, who knows, maybe the above Elliott wave view will prove correct, and finally see the individual investor more convincingly, and with greater conviction, come on board much nearer the moment the euro-zone invariably collapses.

One other thing got my attention following this week's rather unexpected rally...

Friday's very modest pullback generated a lot more put option buying than would seem logical ... unless, of course, the global casino's free money gush is proving enough to actually afford long position hedging.

Now, don't get me wrong. The individual investor really plays little if any part in the makings of either a bull or bear market. Yet regularly prove behind the curve in his or her short-term sentiment is rather common knowledge. Last July we saw bullish sentiment among individual investors reach the low 20s, while on a few occasions since it was in the upper 20s. This past week's 19.3% really is an eye-opener! It would appear there still remains room to run up the bid on garbage, then, and this, quite possibly, substantially no less. I'm not terribly pleased to report this, yet get in front of it we might better...

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© 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.

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