The Risk Averse Alert

As the U.S. dollar and crude oil both shoot higher, we will see just how fabulous is a steepening yield curve to banks whose customers only stand to be further squeezed sustaining the illusion today's still uber levered, money center banks are anything but hopelessly insolvent. Double trouble is this dire condition running right up to Confetti's Fed, whose balance sheet is in a race to the bottom with longer-dated bonds. Silence is not golden in panic into short-dated core credit securities, while those longer-dated are trimmed.

Growing instability throughout the Mediterranean is front and center now. Evidently, core currency support is being secured via manufactured runs squeezing but more victims of a still collapsing Ponzi scheme, while the British pound's conspicuous beating stands out like a sore thumb. Is there growing fear bail-in is about to go wild? Or is the pound simply riding the Muslim Brotherhood's coattails?

Noland nails this day's seeming trading anomaly to be sure. Global dollar suck brings equities a bid, not because a steepening yield curve is a positive, but rather that spreading panic still somehow seem rational and under control. Yet there still is no good technical reason to take the bait. Two weeks straight now the market's bounce appears setting up a still steeper turn away from May's peak. This message our favored technical tea leaves continue broadcasting.

Live mines on a sea of hot money certainly raise probability of increasing volatility. Seeing this in currencies and interest rates—both gigantic markets—certainly raises a similar danger here for lowly equities.



© 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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