The broad market measure that is the NYSE Composite Index on one hand has been primarily sustained by a concerted selling restraint whose positive effect shows up in a cumulative advance-decline line still rising, and negative in ever-diminishing volume of shares exchanged (which explains the huge, long-standing disparity between the lagging NYSE Composite Index and the NYSE's cumulative advance-decline line).
On the other hand the broad NYSE Composite, unlike those more narrowly focused major indexes, like the S&P 500 and the Dow Jones Industrials, already has registered both relative strength (top panel) and momentum (bottom) deterioration typical of 4th waves versus preceding 2nd waves in a 5-wave advance. The broad market, as revealed by one of the broadest indexes of all, here is flat out confirming the continued significance of the long-standing disparity just mentioned. Concerted selling restraint in a market finding fewer bidders as prices increase already is failing to subdue forces that bring prices to fall of their own weight. So, the broad market measure that is the NYSE Composite Index rather plainly indicates "THE" top is coming. That very dire 2013 thought still coming, such as we have been entertaining here of late, finds unmistakable agreement via circumstance revealed by the broad market's suspiciously weak state.
Per five waves up from mid-November 2012 bottom, the red labeling might prove more likely. As the NYSE Composite's wave 4 of c of b of (b) of B forms over coming days (and possibly weeks), those more narrowly focused major indexes like the S&P 500 and the DJIA in all probability will see their relative strength and momentum display typical 4th wave versus 2nd wave deterioration. Then again, the black labeling could prove correct, which of course means "THE" top is in...
* * * * *© 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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