The fact there has been a "death cross" of the S&P 500's Bullish Percent Index 50-day moving average below its 200-day moving average is compelling evidence suggesting today's surge carrying the S&P 500 yet higher into record territory is on its last leg.
Occurring within the confines of an Elliott 3rd wave (i.e. wave (c) higher unfolding since early-June 2012), here again we see a display of "dynamism" typically accompanying formation of Elliott 3rd waves. Levitation of the S&P 500's Bullish Percent Index this year certainly testifies to this. Having reached a peak at over 90%(!) in May, we can cite another feather in the cap of a market displaying technical dynamism.
Yet undeniable is this measure's decided weakening since May. Bankrupt garbage pushers are hitting a wall. Thus, we close out this week pressed right up against it, with nothing to do but fall.
So, returning to the Elliott-based view covered here this week, we can expect technical weakness accompanying formation of the 4th wave of 5 waves higher since June 2012 to bring the S&P 500's Bullish Percent Index below its level of mid-November 2012. The setup for this likelihood presently is compelling. Already, the S&P 500's Bullish Percent Index is showing a decided tendency toward weakening, so our outlook for the market to come under pressure over the near-term is further supported here.
* * * * *© 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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