Thursday, February 28, 2013

Elliott Wave Count Confirmation

Here's more confirmation of the Elliott wave count presented here Tuesday. We also have some insight into the market's likely underlying technical state as wave 4 of (c) unfolds. Likewise, we find technical basis for assuming wave 4 of (c), indeed, is presently forming...



During formation of wave 3 of (c) we see the Volatility Index improving on the best levels it reached during formation of wave 1 of (c). This is indicated in green markup.

During current formation of wave 4 of (c) there's a good chance the Volatility Index will remain below its peak reading set when wave (b) bottomed early-June 2012. Wave (b) is the middle wave of an a-b-c "zig-zag" rising from early-October 2011 bottom. This "zig-zag" is the second to form off March '09 bottom, thus making the Elliott corrective wave off that bottom a "double zig-zag," a complex Elliott corrective wave form.

Evidence suggesting wave 4 of (c), indeed, presently is forming can be seen via the Volatility Index's RSI (top panel) and MACD (bottom). These technical measures suggest the market's volatility (reflecting on options premium pricing, which VIX measures) is on the verge of increasing. As wave 4 of (c) projects the market's decline, we find cause here to suspect its setback could be imminent.



Quite the same analysis applied to the Volatility Index likewise is presented via the CBOE Put/Call ratio. Again, the market's imminent decline similarly is being signaled via the put/call ratio's RSI and MACD.

We learned today that, the American Association of Individual Investor sentiment survey saw bullishness fall from 41.8% last week to 28.4% this week. This suggests any imminent, upcoming market decline probably will not be long lived. Of course, this circumstance is fitting our present outlook, wherein wave a of 4 of (c) might be seen presently unfolding, while wave b of 4 of (c) [higher] upcoming could carry the S&P 500 nominally above its wave 3 of (c) peak (set at the open on Wednesday, February 20th).


Word on the Street
* * * * *
© 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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Wednesday, February 27, 2013

It's the Derivatives, Stupid!

Is it some strange coincidence the sudden concern for the Federal Reserve's solvency is intersecting Capo Confetti's meetings this week before a Congress perplexed about the insane budget sequester they, themselves, mandated, the likes now bringing these jellyfish to squabble over how best to piss on grandma and grandpa's grave cutting national defense and gutting social welfare programs their generation brought to government's capacity to "provide for the common defence" and "promote the general Welfare?"

Hardly! Yet revelation of an incompetent academic's handiwork certainly exposes how close we are to the trans-Atlantic banking system's chaotic convulsion. That much we can be sure of.

So, time has come to turn away from the parade and look at the band leader. Everywhere are hacks citing symptoms, while the root cause garners much too little attention.

It's the derivatives, stupid!

That is where unsustainable leverage lives. All the globe's fascist wannabes can turn their attention to whatever failing symptom they like, but all reveal leverage gone from bad to evil. Globalization is said to be "deformed" and that's why debt now appears unsustainable? No! It's the derivatives, stupid! That's how physical imbalances became so profound. That's how the economic field was sown with what is now called "excess capacity" by fascists the world over. There's no excess physical capacity! There's only a shortage of political will to tackle the mountain of work waiting to be done. As I have said all along, there's more work than you can shake a stick at. Obviously, the first thing to be accomplished is removing the scourge of Ivy League incompetents whose job it is to cover up the root cause of imbalances indiscriminately burdening every essential facet of modern society. It's the derivatives, stupid.

The mountain of public- and private-sector debt under which the globe today is buried simply would not have come to be were it not for King Ponzi, Alan Greenspan's endless rationalization of the wonderful risk mitigating qualities he claimed were the magnificent work of that market-driven, shadow banking system for which King Ponzi worked tirelessly to concentrate the Federal Reserve System's credit creation capacity during his reign as Fed chairman. How did the shadow banking system mitigate risk associated with credit it was recklessly creating, this largely for the sake of promoting purely speculative endeavors (while enjoying an infinite multiplier, no less!)? It's the derivatives, stupid.

The name of the game has always been, and still is, asset stripping for the sake of sustaining leverage. The only difference now versus pre-2008 is the game has moved into an ugly phase whose vicious impositions, indeed, were already preordained the minute King Ponzi took reign at the Fed. As if Greenspan's handiwork were not bad enough, the man's successor is proving worse than the disease. His cowardice emboldens jellyfish in Congress to think they are Greeks! All for the cause of asset stripping whose sole purpose is to further perpetuate leverage in whatever form the moment will facilitate.

Can there be any wonder following Monday's market throttling the tides seemingly have turned with Bernanke's apparent success bamboozling a gaggle of lepers masquerading as leaders? None dared challenge the root cause bringing Treasury to parody its Weimar predecessor! It's the derivatives, stupid. Bernanke is protecting these at all costs, while at the same time claiming their beneficiaries are no longer "too big to fail," as these institutions now, supposedly, are captive to the "unwind facilities" built into Dodd-Frank. Yeah, right, we'll see about that, and probably just in time for this useless coward to be driven out of town on a rail when his term as Fed chairman expires next January.



The NYSE McClellan Oscillator provides both substantiation for the Elliott wave count presented yesterday, as well as possible insight into the market's likely technical state once currently forming wave 4 of (c) nears its completion.

Trend exhaustion signified by a presumed Elliott "diagonal triangle" (aka "rising wedge") forming wave (c) off early-June 2012 bottom is confirmed by both the McClellan Oscillator, as well as the Summation Index, while confirmation of the rising wedge's component waves thus far formed is presented via the latter with the Summation Index during formation of wave 3 of (c) rising above the level it reached during formation of wave 1 of (c), thus objectively displaying an Elliott third wave's typical dynamism.

Likewise, we might anticipate the state of various McClellan measures during current formation of wave 4 of (c) to be worse than their respective states during formation of wave 2 of (c). Projected levels each McClellan measure is likely to fall to are indicated above in red markup. As you can see, we have some way to go before these projected technical levels are reached. Thus, too, anticipation of a fairly range-bound trade upcoming, whose upside could exceed the peak of wave 3 of (c) set at the open on Wednesday, February 20th, likewise finds substantiation here. Be that as it may, though, we might reasonably assume hopelessly bankrupt derivatives junkies shot their wad today. The ominous portent of Monday's negative outside day still looms large, so we might safely assume there will not likely be much follow-through.


Word on the Street
* * * * *
© 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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Tuesday, February 26, 2013

The Nearness of the Worst Yet to Come

Yesterday's whacking—a most fitting letdown, given the market's terribly weak underlying technical state—has brought a good bit of clarity to what are the market's most likely immediate prospects. Thin long interest vividly displayed since mid-November 2012 bottom finally came home to roost in a way that likewise revealed the goose that laid the rotten egg is not done producing. As I indicated yesterday, the NYSE advance-decline differential suggests the worst is yet to come sometime immediately ahead during the market's current leg lower.

So, off the table for now (yet still remaining a credible possibility, albeit diminished, however) is prospect five waves up from mid-November 2012 bottom are in the midst of unfolding, with the 4th wave of these currently forming. Rather, three waves up are seen forming into the market's February 19th peak. These have developed in the framework of the following Elliott wave view...



Same old, same old, "double zig-zag" forming off March '09 bottom (whose labeling is a-b-c-x-a-b-c). The second "zig-zag" (i.e. the second a-b-c) has been forming off early-October 2011 bottom. Its "c" wave is seen presently unfolding, having begun off early-June 2012 bottom and taking the form of a "diagonal triangle" (aka a "rising wedge").

Again, if we consider the market's underlying technical state as evidenced by the NYSE advance-decline differential, we see confirmation of the above Elliott wave view. We see this measure's best readings during formation of wave c of 3 of (c), as would be expected. We also see a whole lot of pathetic over the entire duration wave (c) has been forming. Late-August to mid-September 2012: let's objectively call it a barf bag advance. January 3rd to February 19th, 2013: a heavy duty Hefty trash bag lift. All told, though, quite fitting an Elliott wave form—a "rising wedge"—indicating trend exhaustion.

Yesterday was but icing on a baking powder light cake.

Now, too, does the burst in the NYSE new 52-week high-low differential since mid-September "make sense." This further substantiates the above Elliott wave count. Specifically, this measure confirms a "c" wave is in the midst of forming. A "c" wave is an Elliott third wave, and these are typically accompanied by an undercurrent one could objectively call "dynamic." The NYSE new 52-week high-low differential since mid-September has displayed this very "dynamic" underlying quality about the market's advance.

Likewise this measure's fade as wave 3 of (c) reached its peak but further reveals the market's underlying exhaustion, as well. Substantiated too, then, is the likelihood a "rising wedge" is the Elliott wave form developing since early-June 2012.

Now, there really is nothing saying wave 4 of (c) might find delayed the worst yet to come, such as yesterday's setback revealed is likely in store. In fact there's nothing discounting the possibility that, during formation of wave 4 of (c) the February 19th peak of wave 3 of (c) will not be exceeded (how ever slightly this might be). As wave 2 of (c) is seen a "complex" corrective wave form (being either a "double zig-zag" or a "double three"), the Elliott Wave Principle's "alternation guideline" suggests wave 4 of (c) likely will be a "simple" corrective wave form. This means a simple a-b-c is likely to mark the component waves of wave 4 of (c).

An "irregular flat" is one possible, simple a-b-c corrective wave whose component waves subdivide in a 3-3-5 fashion, and whose "b" wave exceeds the peak from which its "a" wave began (i.e. the February 19th peak of wave 3 of (c)). I'm raising the possibility this specific Elliott corrective wave form could mark wave 4 of (c) largely because at no time during formation of wave 2 of (c) was the peak of wave 1 of (c) exceeded. The Elliott Wave Principle's "alternation guideline" suggests developments during formation of wave 4 of (c) are in every conceivable way likely to be different than developments during formation of wave 2 of (c). There's nothing set in stone about this "alternation guideline" driven possibility, though. It's just something to look out for. As desperate weak hands (many of whom are hopelessly bankrupt to boot) have amply shown, anything's possible, and this no matter how ugly the undercurrent. So, it seems reasonable to expect near-term support to develop, now that major indexes are in the vicinity of their respective 50-day moving averages. Then we might look forward to a subsequent bounce, this possibly lifting major indexes nominally above their respective February 19th peaks. After that we could expect the worst yet to come, such as yesterday's thumping otherwise objectively projects, as many observers today likewise were claiming. With these we can agree. Yet first might come a fitting dose of frustration seemingly defying this negative outlook on which we presently find considerable agreement among active market participants.


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.

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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Monday, February 25, 2013

Swindle Victim Shortage Building

Well, at least McDonalds caught a bid today. This probably was in anticipation of new talent likely to join their ranks once industry and finance further shrink at the alter of Bernanke's black magic.

Nevertheless, it was quite the gassing during today's final half hour. All told a big, negative outside day marks the start of a new week. Hard to imagine there being no follow through. How much will depend on whether today's darlings play follow the leader or instead lend support to those that were drained.

Curiously enough today's NYSE advance-decline differential was not as negative as registered early this month on a day whose decline was not as steep as today's. Supposing the market is early in a corrective phase preceding its eventual, final lift higher we can assume the worst is yet to come, although this doesn't have to be tomorrow or any time this week for that matter. In fact given a VIX whose leap today puts it in a state that, suggests volatility's increase is near overdone, it is likely at this point we will see it to come in some before any meaningful follow through to today's selling materializes.

So, let's assume major indexes are likely to approach their respective 50-day moving averages completing the current leg of an ongoing correction that could unfold over several weeks upcoming. We probably can expect a bounce once 50-day moving averages are challenged, as weak hands dominating the market seek out some new swindle over whose destroyed victims their leverage can increase, as it must if their otherwise frightful vulnerability to a death-dealing revulsion is to be further masked. Chances are the sense of it today was that, new swindle victims desperately needed to sustain Team Fraud's charade are not likely to be Italians.


Word on the Street
* * * * *
© 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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Saturday, February 23, 2013

Bernanke Is Finished

The following presentation, titled "Hyperinflation: A Graphic Presentation," does a superb job of detailing the frightfully perilous state of today's banking system and offers a useful visual framework for understanding hyperinflation's physical effect whose negative consequence is poised only to accelerate the physical economy on a downward trajectory if we continue tolerating such criminal incompetents as Bernanke who insist that, supporting a derivatives bubble of such fantastic dimensions as today swamps large, money center banks somehow offers a means to resuscitating employment. Nothing could be further from the truth. Likewise, I'm willing to bet increasing dissent at the Fed comes with full awareness of the downward trajectory both the physical and financial economy are doomed to course with continuance of Bernanke's QE policy.



Now that we have reached a point where the last vestiges of manufacturing production in the U.S. are threatened with shutdown via an equally criminally insane "sequester" born of a "Satan Sandwich" served with the "Budget Control Act of 2011," moving front and center is tangible basis for removing Bernanke as soon as possible. Splits occurring within the Fed's ranks no doubt are poised to become more pronounced, as well as become more pervasive throughout the entire U.S. political spectrum. One million souls threatened to be thrown on the employment scrapheap, whether directly or indirectly, as a consequence of squeezing defense related spending simply will not fly without a serious fight whose manifestation could see antagonists among "too big to fail" titans of tyranny coming under increasing attack, as well.

It is becoming abundantly obvious this legislative initiative principally is occurring in support of the banking system's monstrous derivatives bubble, this to the effect of coercively forcing the availability of physical assets for feeding the [imperial] banking system's infinite need to apply leverage, that the unsustainability of leverage of old be masked, lest this be left to collapse in a chaotic fit of revulsion. Yet this very end—chaotic collapse of the banking system's leverage—is completely inescapable. The now offensive extent to which everything vital to survival of the nation must be sacrificed in order to mask the insolvency of a banking system many times over destroyed is at a point where this being the very cause of the nation's economic and political marginalization is likely to be more publicly impugned the intolerable albatross it in fact is. Growing dissent at the Fed only reveals how close we are to a catharsis likely to create pushback. Forget about diplomatic language couched in monetarist constructs the Fed's dissenters voice. These folks are well aware of what is going on. I dare say Bernanke very likely is finished.

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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.

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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Friday, February 22, 2013

A Market Dominated By Weak Hands

Let's continue our focus on the market's underlying technical state. Despite having concluded technical underpinnings are suspect, there's also something to say about the risk-on/risk-off dichotomy Doug Noland speaks of. Yet let's not forget, too, this dynamic principally is operating in a market dominated by weak hands.

Now, we simply cannot ignore the market's notably poor character revealed on two fronts. First is volume. A market climbs a wall of worry, yet when worry prevails shares are increasingly sold. In a bull market this is of no consequence. Shares are snapped up while the market is driven still higher, and this amidst an expanding volume of shares exchanged. Precisely the exact opposite has prevailed since March '09 bottom. Our contention, then, could be the market in a bear rally climbs a crumbling facade. We know the drill, too. Indeed, the mechanisms used only the more speak of a market dominated by weak hands. Truly, strong hands would not be working Chicago as feverishly as weak hands have these past few years. Using both futures and options (the latter particularly in the 2009-2010 period, which dynamic I identified), the overriding methodology was one where trapped, weak hands—possessing a lender of last resort backstop whose sole benefit has bought time before inevitable revulsion sweeps upon the scene—could insist that, suckers and other miscellaneous captive interests who want a piece of garbage weak hands otherwise are swimming in positively must pay up, because the truth of the matter is weak hands must take on more garbage themselves, and as well increase their leverage, if their position is to remain tenable. We might say this is the same game as accompanied Greenspan's "irrational exuberance," but with a much, much different confidence backdrop—shattered.

The second circumstantial matter revealing the market's notably poor character was reviewed again on Wednesday, showing a relatively razor thin NYSE advance-decline differential coinciding with the market's advance since mid-November 2012. Now, one might argue a "risk on" dynamic at work subsequent to this year's first day of trading, which day also was one of only a few over the past several months where the NYSE advance-decline differential could be cited as confirming the market's positive bias. Overall, though, 2013's first trading day positively was an exception. The rule, prior and since, has seen the market being levitated in an exceptionally dubious manner. More than at any time since March '09 bottom has the market's advancing components driving its march higher been notably soft—indeed, entirely suspect. So, again, "risk on" is a fine and dandy conclusion one might make here, but its protagonists surely are weak hands whose buying and selling—both—is exceptionally restrained, and this quite likely out of utter necessity. The dimension of the market's underlying weakness—further substantiating the view that, the market is dominated by weak hands—in fact is revealed an enduring trait by the NYSE advance-decline differential's 200-day moving average...



Good God, that is just pathetic. Now, the NYSE advance-decline differential's declining 200-day moving average has been noted here before. So, here we see the market's continued levitation is only the more a ruse, as ever fewer advancing issues in the aggregate are supporting the market at nominally higher levels. This simply is a recipe for disaster. Indeed, the evidence we have to objectively claim weak hands are dominating the market rather leaves us to fear that, once this epic lender of last resort, time buying ruse can no longer be sustained, panicked selling all too likely could quickly turn into an avalanche.

Per markup I have drawn on the NYSE advance-decline differential's 10-day moving average, green is positive, red is negative, and you more or less can see what this reveals about the market's underlying condition worth noting in each instance.

The red line drawn across the top is one I have noted here several times before. Most recently was late-November 2012 when the NYSE advance-decline differential's 10-day moving average once again was extending up to it. The same had occurred back in April 2010, and the thinking here was the market might be nearing a crash, as happened on May 6, 2010. Well, apparently, something more in the lead-up to such a possibility will presage any upcoming, negative event, particularly were this likely to be deeper and more long lasting than occurred in 2010. So, developments vis-a-vis the 10-day moving average leading to the market's 2011 peak might be worth keeping an eye out for. Already there's reason to think we're late in the game, as the one-sided dimension of the market's advance whose daily underpinnings are entirely suspect, and yet whose 10-day moving average is off the charts, seems to reveal a complacency among weak hands not likely, one would think, to be rewarded. Likewise, the broader band in which the NYSE advance-decline differential's 10-day moving average has fluctuated since the market's October 2011 bottom might be seen revealing a more tenuous conviction accompanying the market's advance, the likes of which is only the more confirmed by the NYSE advance-decline differential's notably muted state coinciding with the market's advance since mid-November 2012.

Finally, some thoughts per "risk on" revealed by the NYSE new 52-week high-low differential since September 2012. I should have commented on this yesterday in presenting this measure's negatively diverging state coincident with the market's advance since mid-November 2012, but it's just as well here. Given decrepit volume, which still is diminishing as the market continues to advance, and given notably suspect underpinnings accompanying this, what should we make of the sudden burst in the NYSE new 52-week high-low differential since September 2012?

Remember, this measure had topped in 2010, and this at a notably muted level, which was only the more suspicious given how broad was the NYSE's decimation in 2008. Going into April 2010 peak we should have seen considerably more NYSE-listed issues hitting new 52-week highs than we did. Furthermore, with the Fed's fantasy per an "exit strategy" dashed around mid-year 2010, and talk of QE2 suddenly the rage (which talk become the walk the day after Election Day 2010—i.e. early November), the NYSE soon rose above its April 2010 peak, and yet still fewer NYSE-listed issues were hitting new 52-week highs. This condition, indeed, persisted to and through the NYSE Composite's 2011 peak. Likewise, right up until September 2012 was this measure continuing to languish, which, itself, really was no anomaly as the NYSE Composite remained below its 2011 peak, so the number of NYSE-listed issues hitting new 52-week highs by all rights were justifiably restrained.

Then, suddenly, in September 2012, with the NYSE Composite still below its 2011 peak, the number of NYSE-listed issues hitting new 52-week highs just exploded upward, far exceeding their April 2010 peak. Now, I can't remember the exact explanation I previously gave this, but I am certain it is harmonious with weak hands who are dominating this market getting their "risk on." Is this not exactly what we should expect just prior to everything coming undone? Does not this measure's negative divergence coincident with the market's advance since mid-November 2012 in fact confirm weak hands are the dominant force here? It's likely we will witness but further negative divergence per this technical measure right up to the moment the lug nuts start falling off the market...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

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Thursday, February 21, 2013

More Proof of Looming Financial War

Further confirmation of a prospective Elliott wave count presented here yesterday came as a result of today's setback...




We see the differential of NYSE-listed issues hitting new 52-week highs versus those setting new 52-week lows falling below levels reached during formation of wave 2 of (c) (late-December 2012). Thus does the prospect that, presently unfolding is wave 4 of (c) appear confirmed.

Generally speaking, it stands to reason that, a 5-wave advance (in this case forming the component waves of wave (c) off mid-November 2012 bottom) would begin displaying relative, underlying technical weakness during formation of its 4th wave. By the above measure of the market's underlying technical state we see this.

Supplementing yesterday's review of the market's notably weak underlying technical state, too—this objectively revealed by way of a deeply suspect NYSE advance-decline differential accompanying formation of wave 3 of (c)—is the NYSE new 52-week high-low differential's persistent divergence from its mid-September 2012 peak, itself only growing more stark as the market has been pushed higher during these early weeks of 2013.

Desperate, weak hands only stand further exposed on account of this disparity. It's not bad enough these cannot draw in more suckers who might help alleviate their burden of being trapped, such as a still diminishing, daily volume of shares exchanged objectively reveals. The NYSE's negatively diverging high-low differential further demonstrates these weak hands can't even massage each other! But more confirmation a widening conflagration—financial war—is looming...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Wednesday, February 20, 2013

The Garage Sale Market Is Nearing Its End

Whether the Fed slows or accelerates the rate at which it moves further into insolvency via QE is not the issue everyone, it seems, wishes to pretend it is. Their concern rather is with the currency in which their transactions are denominated. If the dollar joins the Japanese yen, and now the British pound, guess where interests rates have to go? To the moon, Alice.

Today's accelerating currency dilemma certainly suggests financial war simply is unavoidable at this point. The New York-London Axis of Fraud extortion of euro-tomb member states for the sake of promoting currency flight in support of the dollar evidently has hit a wall. I understand China has played some part in this by supporting EMU periphery sovereign debt. This would go some way, then, to explain Japan's affront—likely Axis of Fraud coerced—challenging China's export market competitiveness.

Yet sell the yen, buy the dollar apparently isn't enough. Now the British, too, evidently must supplement this effort to keep the dollar from cratering. Violence imposed through austerity, such as the U.K. already has coldly forced upon its subjects to sustain the heartbeat of the great Ponzi scheme called the lifeblood of the British economy, is sure now only to intensify. Not that the Brits care one wit about this. Yet insist upon sharing the pain is Britain's way when the rotten things she creates come uncaged. Isn't that right Herr Hitler? At some point she'll have to raise rates to defend the pound and what will Bubble Boy Ben do then?

There certainly are no shortage of traumatic events that could sweep upon the scene seemingly from out of nowhere and precipitate panic virtually overnight. Instability but growing everywhere we look is dousing the banking system's mountainous pile of Ponzi paper with gasoline. Just one spark and the whole thing goes kaboom. Likewise, we are not alone appreciating this risk, as I said yesterday and many times before, too. Thus, we might better anticipate the market's initial turn down from its ultimate peak to be ten times worse than today. Until this fast approaching moment, we probably can expect hopelessly bankrupt wards of the state to milk every last sucker for everything they've got while these still blindly believe the state has things under control. Oh boy, won't everyone be surprised when they learn the Fed has run out of weapons.




Above is a slight variation on an Elliott wave-based view presented here recently, and it is suggesting the market's counter-trend rally off March '09 bottom could be very near completing. We should expect both RSI (top panel) and MACD (bottom) to register during formation of wave 4 of (c) readings that are worse than those respectively registered during formation of wave 2 of (c).

Just to restate my Elliott wave view, awaiting completion is the second a-b-c of an a-b-c-x-a-b-c "complex" corrective wave that is taking the form of a "double zig-zag" off March '09 bottom. This is slated to complete wave B of a simple a-b-c corrective wave that has been forming in the NYSE Composite index since October 2007.



I have already pointed out the market's incredibly weak underlying technical state revealed by a notably muted NYSE advance-decline differential accompanying the market's advance over the greater duration of this year's advance. This condition, indeed, persisted right up to the NYSE Composite's assumed peak of wave 3 of (c). What a mess—indeed, a disaster in the making, objectively speaking.

It's worth noting here, too, the prospective Elliott wave count presented above is confirmed by the NYSE advance-decline differential whose best reading so far since mid-November 2012 bottom (when wave (c) began its formation) came early in the formation of wave 3 of (c) at the start of this year (indeed, on the first trading day of 2013). Just what a garbage heap we're dealing with here—just how contrived has been the market's subsequent move higher—likewise is objectively displayed by the NYSE advance-decline differential's subsequent behavior. As I said above, when this thing is ready to blow even the initial turn down could be just spectacular, dumbfounding every idiot (and future McDonalds manager) who has regaled us with their mindless, empirical observations claiming stocks are "cheap." So is everything at a garage sale. And you know where things go when they aren't sold once the garage sale is over? Same place stocks are going: in the garbage.


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.

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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Tuesday, February 19, 2013

G-20 Mafia Points Finance to the Mattresses

What is the purpose of allowing currency wars and imposing brutal austerity? Are these policies needed to sustain a mountain of illegitimate debt, no matter how brief the moment this might succeed? Or do these policies rather simply serve an entropic imperial system whose employment of leverage over all things, both physical and financial, positively must increase in whatever manner the moment allows, even to the effect of facilitating catastrophic collapse of all that which otherwise has served to mask its presence?

By today's more evident, upsetting manner in which effective attacks on humanity are being perpetrated we see a bankrupt, so-called "capitalist" system approaching its violent endgame: an objective, too, we might reasonably argue is intended. The consequence of the current period's inexorable lurch deeper into what rightly is perceived a threatened, veritable breakdown of civilization clearly shows up in measures of the stock market's technical underpinnings, as well. There is nothing changed, nothing defied, in what has been consistently presented here for time immemorial demonstrating the disconnect between a rising market and its weak underlying technical state. Calling stocks "garbage" is no stretch of the imagination when values assigned to every last issue are at grave risk of evaporating in chaotic panic precipitated by what can be convincingly argued unsustainable circumstance. Today's oh-so-thinly veiled imperative to impose physical violence on an ever-widening swath of the global economy virtually assures an outcome terribly destructive to many things today widely believed impervious. Financial collapse practically is a foregone conclusion. We might rightly assume, too, that by the market's notably weak underlying technical state we are not alone in this judgement.

Now, if you really think about it, the compromise of global currencies more or less has been ceaselessly progressing since August 15, 1971, the day U.S. President Nixon announced the end of the Bretton Woods system of fixed exchange rates. Likewise has been the imposition of austerity. Real wages, real purchasing power, real wealth have been persistently contracting over the entire interim since the Bretton Woods system was scuttled. The current moment but finds abundant evidence of this ceaseless compromise of global commerce only the more stark. This counterproductive state of affairs—but the more graphically displayed with time's passage—appears slated to degrade still further. There positively is no end in sight to a decades-and-running stumble straight into the abyss. So, then, with ever greater difficulty will those vainly claiming their efforts venture prevention of another Great Depression likely summons ability to mask the fact they are marching the world straight into a Great Calamity.

As I have said before, ours is not a capitalist system. Rather, this is an abomination born of an imperialist nightmare the likes of which in a bygone day gave rise to the United States' Declaration of Independence.

As I also have said before, there is no such thing as a "free market." There is only "political economy." In this arena are competing forms, the likes of which Americans might consider acting with greater thoughtfulness and determination to ensure only the manner of political economy worthy mankind's labor ever is given quarter. What else is this nation's political freedom intended for?

Over the centuries various forms of imperial empire, all commonly marginalizing labor and inflicting unkind, unfeeling, unnecessary suffering, have prevailed over the western world. Yet in formation of the United States came creation of the American System of Political Economy venturing a representative means of maximizing the fruits of labor in a truth-abiding manifestation recognizing the human creative potential. How we became so captive, as we presently are, to this Venetian-like, intrigue-laden, corruption-facilitating, imperial form of "political economy" is a matter of treason whose neutralization somehow must occur if the inescapable calamity presently before us is to be sooner overcome. Thus would a worthy representative of the American republic give little concern to "jobs," now or ever, while with uncompromising persistence instead focus the nation's attention on legacies to which we are all in freedom born. Liberty in fact demands this, for without it there is slavery to the whims of a privileged few who otherwise subdue freedom in such imperial trappings as consume our world more or less completely now. Those who fail seeing this are as blind as a bat and well poised, too, for the beating.

Libertarians beware. There is no liberty when a desperate, hungry man is cutting your throat, that he may steal all you own including your very life. This is the neighborhood we presently are nearing, and your stupidity in rightly citing many forms of today's imperial treason, yet in prescribing cures worse than the disease itself surely leaves you exposed on the wrong side of history!

Forgive my "unhedged" (pun intended) torments directed at hapless libertarians. Surely, the gold these slavishly cherish all too likely will lead them into the ground. The real question, then, is whether there are enough patriots among us to help dig them and their gold out.

No doubt the road to destruction was being paved at the just concluded G-20 summit in Moscow, Russia. Imperial sophists gathered there concluded that, actions whose effect is rapidly devaluing national currencies are but the "domestic affairs" of the given countries in attendance, and should not otherwise be regarded acts of war. Truly, though, the nature of these "domestic affairs" does nothing but inspire yet more pernicious forms of violence! Just look at the euro-tomb periphery for graphic display of a work-in-progress slated to become a global phenomenon. Miscreants of a wasted, aristocratic education should in fact know what violence they, themselves, are condoning! So much evidence of their criminal misdeeds is glaring before their eyes, and yet all they can do is prescribe a still more violent elixir! Apparently, these evil folks are trained to coldly ignore reality, just like any other Nazi at heart. We will see how rigorous is their training when values assigned to wildly overpriced financial trinkets their purposeful blindness vainly ventures to sustain are sinking faster than Titanic in a sea of icebergs with which a calamitous collision their deal with the devil makes a virtual certainty, and this any moment now.

Yes sir, the monetarist school and associated free market libertarians are in a world of trouble right now. Inflation promoted via currency wars certainly stands to turn on its head the false notion that, inflation strictly is a monetary affair. Rather it is the outcome of physical acts of violence, and this no matter how effectively imperial sophistries hide this fact. Like I said, economic warfare bringing increasing harm to humanity has been ongoing since August 15, 1971. This attack's more hidden facets no longer can be disguised. Overt acts of violence inherent in a regime reduced to promoting currency wars now stands to graphically demonstrate to one and all the impossibility of sustaining today's illusion otherwise called a "market-based economy." Ours is nothing of the sort, but rather is an imperial swindle. Acts of violence will come, as they already have since 2008 in particular, in the form of an ever-widening shutdown of the physical economy. Currency wars only the more threaten to put this process on an accelerating trajectory.

Indeed, the effect of "sequestration" on the U.S. federal government's budget is part and parcel with this process. The devious intention here has nothing to do with rectifying market forces underpinning capitalism, but rather ventures subversion of all that sustains capital on a course that, itself, principally promotes the very means by which liberty is fostered in the physical realm.

Gold, as a store of "value," has absolutely no use in a climate of overt violence, the likes of which now through currency wars will be cultivated to still greater extreme. As desperation among victims of increasing economic marginalization grows, gold's "value"—its purchasing power—only the more surely is likely to diminish. Intellectually and morally bankrupt imperial monetarists can flood the globe all they like with "liquidity" amidst atrophying commerce. Yet managing the global economy's contraction while pretending to encourage its resuscitation sustains only a ruse—an increasingly violent one at that, as but more of humanity will be forced to acknowledge. Shutdown of the physical economy is but destined to accelerate if failed measures, amply proven since 2008 and prescribed by some of the world's most corrupt incompetents, continue being tolerated. Violence promoted—misery enforced—only the more certainly will hasten the sale of anything that can fetch a price, with proceeds going to sustain financial structures whose existence must by necessity increasingly impinge upon the well-being of humanity tragically trapped in an ever-deepening pit of imperial destruction. This simply must be, lest the whole rickety house of cards come down in spectacular fashion. Gold, therefore, is doomed to come under intensifying pressure at this point, as are all physical commodities for that matter, and this no matter the fate of today's imperial Ponzi scheme, whether it live on or die.

Now, we ought not assume today's awful dynamic accelerating economic violence hopelessly paralyzes various political influences whose contrary actions might irreversibly upset the rotting apple cart that is the global economy, generally, and the trans-Atlantic banking system in particular. Like I said last Friday, some among victims of ongoing economic marginalization could be inclining toward declaring a debt moratorium, or imposing currency controls. In fact we might rather expect some kind of game-changing reaction well before ongoing hyperinflationary shutdown of the global physical economy imposes misery of unimaginable proportions increasingly throughout the world. Which credible possibility should bring us to wonder whether where a mob family goes when it is in trouble (the mattresses) likewise is where money today is well advised to safely hide...


Word on the Street
* * * * *
© 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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Friday, February 15, 2013

Euro-Tomb Opens Wide

Europe's collapse continues apace, while there is no reason whatsoever to believe Capo Confetti's reckless, hyperinflationary prescription will be offered to Europe in any way similar to those aggressive QE programs momentarily propping up both the U.S. and Britain. Nor is there any reason to believe that, bailout is even on the European menu. Rather, brutal, deflationary austerity, compromising both Europe's physical economy, as well as its banking system, plainly appears the only alternative the euro-tomb is being given, thus threatening the EMU's chaotic breakup, and this sooner than anyone dares speak. Currency wars certainly aren't helping, either.

I see Soros banked $1 billion shorting the yen. Well, some of us understand where the imperative to launch a currency war that, in fact is venturing destruction of both China and Europe originates. How much longer before capital controls sweep across the globe and bring speculative hot money flows to a screeching halt? On the one hand, the euro-tomb needs these if periphery bond markets are to remain supported. On the other hand, today's game of "beggar my neighbor" crushing a Europe whose banking system is three times larger than the U.S. simply raises the prospect of the European banking system's fast approaching leap into the abyss. This could come in only a matter of days at that.

A collapsing European physical economy increasing the pressure on a banking system rotten to the core is as sure as sunrise to bring a bond market revulsion any minute now.

Let's not overlook France's desire to devalue the euro, either. Not only could this prove a case of "be careful what you wish for," but it's questionable whether Germany will agree. Political tensions on the continent very likely are about to reach a boiling point. It is all too clear conditions are being cultivated with an intention to smash the euro-zone. Will austerity continue spreading its wings, with positively no light at the end of the tunnel in sight? Or will Europe gang up on the London-New York Axis of Fraud and organize a debt moratorium?

Oh, the ECB will save the day? What's Draghi going to say? He really, really means "whatever it takes"? As the German Bundesbank has yet to be persuaded, one wonders whether the Count is updating his resume.

How is it no one is noticing the similarity today with 1931?




Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

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Thursday, February 14, 2013

Mining for Lint

If the public battle being waged over Herbalife doesn't show everyone the market is a lost cause, then we might suppose there's nothing that will.

Wasn't Icahn the guy who not long ago said Glass-Steagall probably should not have been repealed? By extension, then, is not the entire stock market best thought a Ponzi scheme, let alone the company Ackman believes is the real deal, the likes of which Icahn is reported to be plowing more money into?

And speaking of "reported" is there really anything these days that can be believed? Judging by Herbalife's trading today, no one is inclined to pad Icahn's deep pockets, that is with anything other than lint. It'll all be over soon...




The above, prospective Elliott wave view applied to the S&P 500 leaves open the prospect that, the broad mass of Ponzi paper could sustain its levitation a few months longer. As for the current creep deeper into nose bleed territory, by all appearances it, as well, probably will be all over soon.

Well, at least we don't have to wonder who's buying this garbage. It's the old timers rationalizing their bid with what now are useless empirical metrics. Every last one we hear spouting some comparison to a bygone era when credit actually had means to be expanded for as far as the eye could see. No more is this true, however.

That's why we can be fairly certain it'll all be over soon...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

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Wednesday, February 13, 2013

Hyperinflationary Shutdown Rising Up to Its Vaseline Moment

Looks like the backdoor subsidy needed to keep the banking system liquified cannot be increased fast enough...



A nearly 7.5% bump in unleaded gasoline's spot price today!! Will this come with Vaseline when the cost is transferred to the pump? There goes the president's proposed increase in the minimum wage! Thank you insolvent banking system! A better proposal than increasing the minimum wage would have been nationalizing the refinery business. Its shutdown at the alter of Capo Confetti's hyperinflationary bailout of parasitic, derivatives laden, hopelessly insolvent money center "banks" is the root cause of skyrocketing gasoline prices.

There's just no getting around the physical economy's inexorable descent into the abyss. Mask this reality all they like with more lender of last resort largess facilitating an increase in indebtedness necessary to sustain credit derivatives activity, the utter instability underlying capacity to indefinitely continue this, the one and only thing propping up GDP, is not far from coming home to roost in some major bank's "surprise" demise.

Truth is this increase in cost for the most basic commodity necessary for running a modern economy is not translating into higher commodity prices generally. Rut ro, Relroy! What this means is that a debt burden even more fearsome than existed a few years back is only the more challenged. We're just waiting for the fat lady to sing now.

So, too, is Bill Gross, evidently waiting much the same. In fact his "Credit Supernova" PIMCO report for February 2013 leaves the impression Bill is a Risk Averse Alert reader. But one recommendation he shares per making money I will pontificate here:
(5) Be cognizant of property rights and confiscatory policies in all governments.

Good advice in a climate featuring aggressive currency devaluations and national treasury officials completely captured by a criminal element whose evil evidently knows no bounds...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Tuesday, February 12, 2013

Desperate Actions, Too, Speak Louder Than Words

There is no reason to wonder how it is the ├╝ber levered are the market's best performers. Who better to exploit a broken price discovery mechanism than its managers! Yet all things financial, generally speaking, positively remain hopelessly bankrupt. A cursory look at the Baltic Dry Index confirms their insolvent state a frightful fate sealed. The glorified hedge fund, GE, only the more appears a rickety garbage heap with its sale of NBC-Universal. Oh, cable is a huge cash generator? Too bad it doesn't come in fast enough. "Shocking!" GE is rising in the after hours. Such is how a broken price discovery mechanism is manipulated.

Trot out any number of feckless CEOs among the hopelessly insolvent as might feel compelled to cross-dress an enamored cheerleader, unaltered is the well-stated case made here revealing no one is buying into fantasy fortunes the likes claim are awaiting the bottom rung of the capital structure. There's just not enough capital in the world to continue supporting wildly overpriced valuations assigned to financial assets of every sort. Indeed, GE today gave the world an ages-old, valuable lesson in how actions speak louder than words. Leave it to a captive, woefully unpenetrating media to sing a much different tune.



Notwithstanding the NYSE McClellan Oscillator's apparent similar relative state contrasted to the period leading into late-August 2012, underlying weakness every McClellan measure likewise presently reveals (this coinciding with the market's advance since June 2012) only but adds to exceptionally suspect states of many other technical measures, leaving one to conclude the market is not about to run away to the upside, as the feckless and undiscerning otherwise would have us believe.

Rather, we're more likely to see a bout of weakness set in here, this possibly lasting some weeks and paving the way for the last hurrah leading up to a train wreck for the record books...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Monday, February 11, 2013

Sequestration: Manna for Asset Stripping Fee Junkies

Just in time for currency wars via competitive devaluations—the Alan Schwartz contingent of the puppet world doth protest too much, thus confirming the very immediacy of the threat—the political appetite for the Wall Street Special of the Day, the Satan Sandwich (a.k.a. "sequestration"), is intensifying. Who better to blame than the two dying U.S. political parties for the fruits of central banks gone wild accumulated over the past few decades about to culminate in cut throat economics on steroids (prescribed by Dr. Devaluation) throwing countless millions on the employment scrap heap?

President Obama, evidently struggling to embrace the significance of the 13th amendment (little wonder given the quality of constitutional law scholarship the Ivy League is now famous for on account of this president's leadership), would be well-advised, indeed, were he to beef up the anti-aircraft batteries surrounding the Fed. Lord only knows who might be inclined to ram a jet airplane right up Capo Confetti's petard, which in so doing could kill countless birds with one stone, among these being sequestration, the debt ceiling, and a treasonous madman, not to mention the imminent threats of skyrocketing unemployment, rising interest rates and a collapsing dollar.

Of course, the Team Fraud Plantation where such dastardly plans typically are hatched (no offense to cavemen conspiracy theorists) will have none of this, as the name of the game now is gimme assets on the cheap, and quickly (paving the way for a new megabank named "The Citibank of American Morgan Stanley Merrill Lynch Mob"). That's what sequestration and competitive devaluation are there for. Their objective is cultivating a climate producing assets on the cheap. Among these will be equities.

What can I say? When the garbage stinks this badly, it's easy to see things for what they are.


Kick That Can
Some truth and some fantasy from Paul Krugman


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!

Friday, February 08, 2013

Beggar My Neighbor: Bank Panics Imminent

Imminent dislocation of key Asian physical economies portended by Japanese announcement of its intention to devalue the yen—an act of "beggar my neighbor" ringing back to the period of the early 1930s when competitive currency devaluations were ventured in a short-sighted, panic-stricken bid to defend national economies— astronomically raises the prospect of consequent banking crises simultaneously breaking out, just like happened in the 1931-1933 period. Destabilize—deflate—global capital flows necessary to prop up a still highly leveraged banking system stuffed to the gills with derivatives exposure the likes of which require capital in such quantities as, indeed, demand extraordinary central bank actions (quantitative easing)—these infinitely pumping liquidity into the banking system—and but one thing is certain to result: insolvency.

Now, do you think the idiot leading the Fed might soon finally surrender to this inevitable outcome, let alone ever recognize the approaching train wreck a currency war is certain to promote? Hell no! Capo Confetti is pre-programed to hyperinflate. Being an incompetent Ivy League academic living in a textbook vacuum detached from intrigue-filled dynamics defining physical reality, the jerk is virtually certain to effect the exact opposite outcome he claims to be pursuing. Good luck, Confetti, flooding the world with your largess while every physical and financial asset that can fetch a price is being put on the market in a desperate bid to stave off insolvency certain to afflict the banking system in a global environment of competitive currency devaluations now knocking at the door! Employment prospects Confetti supposedly ventures to better through endless QE are grim, indeed. Every ill-housed, ill-clad, ill-fed person in America, and the millions more about to join them, can thank the hapless Fed chairman at the appointed hour whose moment is at hand.

Today's Japanese yen devaluation inevitably will become a global phenomenon, too. The game of make believe supposing profound leverage, still building, can be sustained in a cut-throat, competitive climate driving cash flows through the floor is doomed. Once the U.S. dollar joins the party, complete disintegration of the post-Bretton Woods world will ensue.

Even now, the financial economy, strictly technically speaking, is well-poised for its panic-stricken dismantling, which, most immediately, likely portends its chaotic consolidation. So, the first order of business is an imminent, 2008 redux whose devastation is likely to be of an even greater magnitude in its negative effect. This outlook, of course, assumes the current Japanese move to devalue the yen will proceed and, as is likely, spread throughout Asia. This tendency should become fairly obvious over the next few months.

Following the next leg of financial consolidation in today's rapidly failing global economy, the likes of which is tragically precipitating competitive currency devaluations, then will be (all things remaining fairly equal) hyperinflationary blowout hitting the dollar in inexorable collapse making its decline over the past forty years appear merely a blip.

It's all very clear now. As long as primacy continues being given to supporting the derivatives casino called the trans-Atlantic banking system, chaotic convulsion profoundly threatening the world as we know it is a foregone conclusion. This certainty today is being exposed in movement toward competitive currency devaluation initiated by the world's third largest economy, Japan (which only a few years ago was the world's second largest economy, having now been surpassed by China). Cut-throat economics might have seemed attractive in a bygone day when leverage could be easily expanded and absorbed into dubious financial products made in the London-New York Axis of Fraud. However, with confidence in that game now having irreversibly collapsed, the impossibility of sustaining the system of globalization now stands thoroughly exposed.

Hang onto your hats, kids. Here we goooooooo...


Word on the Street
* * * * *
© 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.


There's an easy way to boost your investment discipline...

Get Real-Time Trade Notification!