5 waves forming wave (c) up from mid-November 2012—these prospectively completing a counter-trend rally off March '09 bottom—find typical technical confirmation during formation of each wave (c) component labeled above. Technical dynamism we see displayed during wave 3, and deterioration during wave 4 substantiate simple rules underlying the Elliott Wave Principle. We can reasonably assume wave 4 completed in June, too. Then again, this might prove untrue. Wave 4 of (c) might still be forming with a downside eying Chuck's 30 dipping to its 200-day moving average, and stat.
Assuming wave 4 of (c) completed in June, we could be in front of a pleasant summer for Western European players and their London-New York precious gem merchants. August could be bliss even to ... what is it ... Dow 16,500-17,000: a 5-wave Elliott channel's upper parallel.
Subsequently, then, imagine a September blitzkrieg seeking concessions—pain—in support of the euro, doing this in the heat of the final weeks leading to German national elections. Liquid swindle is safely assumed greased and ready for a swoon, possibly one of considerable consequence, too, even turning 2013 negative--sinking Chuck's 30 into the range of its wave (b) in a hurry, and this but forming wave (1) of C, or some other Elliott-based possibility should disaster be averted, as seems likely right now, doesn't it?
Maybe it shouldn't. Were wave 4 of (c) uncompleted, leaving open possibility Chuck's 30 sinks to its 200-day moving average here, bringing it right into the range of its "4th wave of one lesser degree" in fact (i.e. wave iv of 3), thus meeting an Elliott "guideline," and then what follows fails to carry Chuck's 30 above its May peak—a so-called "5th wave failure"—well, this would set up nicely for a heaping helping of volatility. Maybe a hint of euro-swindle is imminent. Maybe a misdirect of some sort. Maybe nothing upsets August. Still, September should prove challenging, if not extraordinarily so.
* * * * *© 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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