Putting the Dive in the Dive ~ The Risk Averse Alert

Monday, June 03, 2013

Putting the Dive in the Dive

We might conclude by many technical measures the market's pullback of the past week is but a pause in its advance since mid-November 2012. The Volatility Index and CBOE Put/Call Ratio could be viewed this way, as could the NYSE new 52-week high-low differential, just to name a few technical measures suggesting the market is merely consolidating recent gains (that is subject to healthy, fear-driven profit taking) prior to further extending its advance off November 2012 bottom.

Yet one view of the market's internal state is indicating something potentially more problematic likely is in store here...

The 10-day moving average of the NYSE advance-decline differential is breaking down and, more critically, minimally suggesting the market's advance since mid-November 2012 in all probability is nearing its end, or possibly even at risk of reversing. For now, let's continue siding with the former of these two possibilities on account of the view presented here Friday per the S&P 500 Bullish Percent Index.

Word on the Street
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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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