The Risk Averse Alert

If the market hates uncertainty, then technical conditions evidently similar to those just prior to the market's bounce beginning late-February should prove no useful basis for projecting the same positive result presently. Indeed there are negative qualitative differences in otherwise seeming similarity of the market's technical state, now versus late-February, and these rather indicate there's a greater likelihood the market's hate of uncertainty soon will have its day...



At late-February bottom the S&P 500's momentum (bottom panel) "confirmed" that, the index's advance off mid-November 2012 bottom had yet deteriorated. This was a positive. However, no such positive technical confirmation exists now. Here we are at a higher $SPX low than late-February and yet momentum in fact has deteriorated. That's a strike against a late-February repeat of the market's move higher off mid-November 2012 bottom..

Still, $SPX momentum remains positive, while its relative strength (top panel) brings positive confirmation of the S&P 500's advance, at least at successive bottoms since mid-November 2012. Yes, RSI's peak of April has negatively diverged from March, this as $SPX moved higher. Yet so too was this true at February's $SPX peak. So, at least a period bringing the market stability and lasting some days could be seen in order on this account.

$VIX and $CPC, too, both bear technical similarity now versus late-February. Both are in a like, unfavorable state, and this no less with $BPNYA in the red zone (RSI < 30) where the market consistently has proven vulnerable to coming under pressure. This is a negative development to be sure.

So, the path appears paved for an upcoming bout of uncertainty hate. Still, a sideways trend in a pause before this might first make way.



© 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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