Thursday, March 28, 2013

Where Most Blood in the Streets Will Originate

Tea leaves confirm, if you're positive the stock market as you similarly were in 2000 or 2008, then you might be wise to check your own butt if in 2013 you see "blood in the streets" everywhere you look...



Long ago we established that, strong hands more or less were done distributing their equity stakes, leaving the weak (and ├╝ber levered) to play upon a trap door the likes of which none of their meager, ultimately inconsequential dealings will indefinitely keep shut. There is not a single, broad-based technical measure defying this prognosis in fact! Ample evidence exists suggesting an historic bull market in poor houses still continues developing.

Above we see today's [dominating] weak hands are less so commanding increasing excitement for equities, while only more so failing to distract what is an intensifying gaze toward the exits. While April 2010 marked the high point in confidence restored by lenders of last resort in the post 2008 crisis period, the 2nd half of 2011 positively exposed a still living nightmare when central banks were yet again awakened to the trans-Atlantic banking system's insolvency (a condition created by their own reckless doing in fact). Ever since we simply have not seen a QE2-like booster such as what lifted the market into its February 2011 peak. Rather we see increasing jitters peppering a trend featuring diminishing confidence still echoing from this, 2011's 2nd half. This can be viewed prospectively signaling a pending convulsion making August 2011 a relatively minor precursor at that.

Look at this, too, from the perspective of an Elliott wave view supposing that, a "b" wave is forming, whether this be wave B off March '09 bottom or wave (b) of B developing since the market's February 2011 peak. Thus do we see within this unfolding wave B component "c" waves forming over the interim accompanied by a fittingly suspect technical backdrop. This the CBOE Put/Call ratio above is revealing over the past couple years in fact. We are left to conclude that, coincident with the market's advance since early-October 2011 the market's undercurrent exposes a less bullish conviction. We find objective evidence here the market's technical state is becoming increasingly tenuous, this notwithstanding central bank efforts to effect a positive disposition toward financial assets at the bottom rung of the capital structure. Within the framework of an Elliott "b" wave thought developing since March '09 bottom, then, we find here circumstantial evidence supporting an outlook anticipating in the aggregate stock price weakness ahead. Although its extent is by no means being telegraphed by the CBOE Put/Call ratio, its now long-growing probability, indeed, is being signaled here...


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, March 27, 2013

The Wiemar Fed Corollary

Just a friendly reminder that, "prices can fall of their own weight, but it takes buying to put them up"...


This is how it looks when it's all over but for the shouting

Maybe the Wiemar Fed corollary should be "...and a lender of last resort without a backstop does capital flee at any price, while at a falling price with alacrity!"

Now, here's what you wanna contemplate. See the 2011 lead up to the moment when capital fled stocks with alacrity, then the very impact of that flight, and this simply in the context of prices falling of their own weight. Consider notably diminished volume during April-June 2011 a disparity in "buying to put them up."

Fast forward to these past fifteen months following the late-2011 central bank fit answering October's shriek imploring, "God save our sinking ship!" Capital positively continues to flee stocks, and this in a manner revealing far, far greater [buying-to-put-them-up] disparity than April-June 2011.

We can objectively conclude, then, these bad boys are muchos well-poised to fall of their own weight and quite possibly in a big, big, grande way at that. Hmmm. What do ya know, our dire Elliott wave-based view warning March 2009 bottom could be blown out this year like it wasn't even there finds more substance in reality than every central bank on the planet is proving capable of summonsing in the capital hungry confidence game these in fact lost a long, long time ago.


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, March 26, 2013

Southbound Bloodhound

I'm here to report (and I'll bet you're here to confirm) the Minnow Market whose name shrunken volume has written across the stock market's stern is taking on leaks and, indeed, is at grave risk of going down, even to the bottom of the sea...


$BPNYA
NYSE Bullish Percent Index

Not a pretty picture shaping up here. Other recent occasions when the momentum of NYSE issues supporting the market's advance (as measured by the Bullish Percent Index) was fading and threatening to cross below the 0 line (see bottom panel), the market soon afterward came under pressure.

As you know, the case made here over recent days is suggesting sometime later this year March 2009 bottom could be taken out like it was never there. Confirming this possibility would be an initial leg lower promptly developing (as in very, very soon) catching the majority off guard. A very reasonable target in this upcoming, initial phase of 2013's prospective rout is that area of support joining bottoms formed following market pressure in 2010, and then again in 2011. This outlook, then, targets 1150-ish in the S&P 500 and 6500-ish in the NYSE Composite index. Again, a decline of this sort could serve to elevate the probability of a bloodbath later this year.

By the looks of the market's current technical state, this being in evidence above via the NYSE Bullish Percent Index, the probability of a significant setback developing sometime in the very near future certainly appears elevated. Now step back and again consider subtle technical differences accompanying the market's comeback, first following its 2010 stumble, then following its 2011 tumble. The latter recovery, no matter how resilient the market has remained, rather exposes a qualitative technical weakness we have covered here from several angles on various occasions over the past year or so. We might regard this underlying weakness, then, in the context of an upcoming, anticipated setback, which, itself, could turn into a nasty spill, and, indeed, even evolve into a terrible nightmare later this year.

The market's underlying technical state rather supports a likelihood that is virtually on no one's radar to be sure. Yet there it is, more or less substantiating that worst case scenario developed here over the past couple days. Obviously, it's still too early to be smelling blood. Still, when we do, we'll have a good idea why we do, and then, what could soon follow.


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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Monday, March 25, 2013

Like From Like and No Bottom in Sight

Let's follow through on the possibility 2013 will see the market's March 2009 low taken out like it wasn't even there. An earlier likeness to what might be in store as the year progresses deserves our consideration here. Check this out...


$NYA

Turn your attention to the period from February-October 2011. Wave a of (b) [of B] unfolded over this interim. Its component waves are labeled a, b and c.

The distance between $NYA's wave a low and wave b high is marked via a thin red line. As it turned out, wave c fell two widths of that measured distance below the wave a low.

Now consider the larger time frame wherein waves a and b [of (b) of B] unfolded, this from February 2011 to present. Check out the width between $NYA's wave a low (early-October 2011) and its yet to be reached (but likely imminent) wave b high. Now consider two of those widths lower as a prospective wave c of (b) [of B] target.

Could wave a of (b) prove but a foretaste of wave (b) in its entirety? Will wave (b) form an even larger "irregular flat" than formed wave a of (b)?

If it does, then March 2009 bottom will be toast sometime this year, probably late summer or early autumn. Thus, too, might the Elliott corrective wave forming since March '09 ultimately prove a "running correction." This would mean wave (c) of B sees $NYA recovering only to its March 2009 low, following completion of wave (b) of B later this year, targeting $NYA significantly lower than its March '09 bottom.

The Elliott Wave Principle's "alternation guideline" is on fine display throughout formation of wave B since March 2009. Having long been aware of the possibility that, rather than the first a-b-c up completing wave B, these first three waves up might form but wave (a) of B, it's fascinating to behold the makings of a 3-3-5 "[irregular] flat" forming wave (b) of B following on the 5-3-5 "zig-zag" forming wave (a) of B. Likewise do we see the alternation guideline similarly on display contrasting wave a of (b) forming a 3-3-5 "irregular flat" (February-October 2011) with wave b of (b) forming a 5-3-5 "zig-zag" (October 2011-present).

I certainly did not well fathom the duration of time that was likely to transpire extending formation of wave B subsequent to formation of wave A from October 2007 - March 2009. I probably will feel a lot less badly about this, though, should a steep setback obliterating March '09 bottom, indeed, occur over coming months. Let's just say the possibility is not a remote one, particularly with the specter of euro-zone bank runs made more formidable by the evident need to skim depositors for capital backing loans needed to stave off insolvency. Not a pretty picture, while who's in it probably stands to make Lehman Brothers look like a thumbnail print. This is circumstance making March '09 bottom appear a lot more vulnerable than most seem to appreciate at the moment.


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, March 23, 2013

Elliott and a March 2009 Bottom Break

Here's one prospective view, past and forward, offering a certain sense of what the broad market's technical backdrop developed here this week is suggesting 2013 could have in store...



We said October 2007 marked the peak of a 5-wave advance in the NYSE Composite Index dating back to 1932. Since 5 waves down into March 2009 bottom evidently have unfolded, we can be certain the Elliott corrective wave begun October 2007 is not yet completed. These unfold in 3-waves not 5. So, March '09 bottom but marks the end of wave A. Wave B has been forming ever since and is still some distance from its completion. There's still wave C upcoming, as well, whose objective targets indexes falling to levels last seen in the 1987-1994 period.

Best case forward, support on which setbacks since 2010 have reversed could hold up yet again. That said, "hold up" could bring the NYSE Composite a not so pretty 6000 print. Or worse. Not drawn is possibility wave c of (b) of B crushes the market, sending the NYSE Composite far lower than its March 2009 bottom, only to find wave (c) of B carrying the index back up again to that same bottom (but never extending above it): a so-called "running correction" in Elliott parlance. Subsequently, a wave C down to the final resting place at index levels last seen in the 1987-1994 period. Wave C could even take some years to unfold, particularly were one wicked "running correction" on the verge of developing its worst leg, with a trap about to be sprung. Picture wave C forming a "descending triangle," a falling wedge extending five years, say, and just torturing the living snot out of those who will be trapped should wave c of (b) of B upcoming fall through March '09 bottom like it wasn't even there. This is one possibility forward here.



We have many times contrasted the market's advance since early-October 2011 to its advance off late-June 2010 bottom. Here's a color coded curiosity for your consideration.

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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, March 22, 2013

Don Fanucci Starring in July 3, 1776 Redux

The stupidity and cowardice of Europeans these days certainly provides insight into the boldness of those American forbears who brought forth a Declaration of Independence, successfully prosecuting the Revolutionary War and forming a more perfect Union giving federal authorities ultimate power over credit: a capacity constitutionally formulated in the highest law of the land. How easily could a tiny nation state like Cyprus learn from American history and solve their national crisis made onerous by a modern day manifestation of the very same sleazy imperial scam the colonial United States was up against. This would be the act of a "Young Corleone" against a feared "Don Fanucci" who otherwise is a weak and pathetic being, with the role of the "Don" being played by the London-New York Axis of Fraud whose capo among "buttons" is Germany. The "familia" so weak.

It's only a matter of time before one nation among the EMU forms a national bank issuing a [religiously controlled and protected] currency pegged to the euro whose purpose is to buy sovereign-related debt securities solely dedicated to productive investment in the physical economy: a Hamiltonian bank—that is investment whose capacity opens the door to wealth's perpetual, sound leveraging—while simultaneously reorganizing its national banking system's euro-denominated assets and liabilities, come what may to bondholders in the write down, and recapitalizing these banks, soundly reorganized on Glass-Steagall lines, using the new, euro-pegged national currency. It's only a matter of time. There's only so much extortion a man can take, no matter how "weak" he is perceived to be. This is the very nature of a social order that is predestined toward "united states."

Indeed, should Cyprus move in this direction and further bolster the credibility of its action drawing in capital from a foreign ally (Russia) whose production based wealth (protected by nuclear armaments) is given favorable treatment in deposit with its newly formed national banking system, the British Pound and the U.S. Dollar—both imperial currencies promoting fraud and theft in a system virtually enslaving labor (globalization)—would immediately be sent into a dizzying tailspin, as every member of the EMU would by necessity be forced to follow "Young Corleone" Cyprus' lead, thereby strengthening the euro in the process. Just how corrupt and intellectually bankrupt is the Ivy League will be more or less widely known soon after.

That's where we're headed. We're at the door right now. There aren't any small nation states remaining in the EMU which to further swindle. All that remain are big players whose populations face the same fate as Greece, Ireland, Portugal and now Cyprus.

Although Spain and Italy likewise might seem easy plunder for imperial robbery, trouble is fascism it breeds has a bad name in these places and not even Ron Paul's hippie brother Beppe could succeed overcoming this fact. Indeed, the same technology elevating the "social phenomenon" that is Beppe Grillo is likely to bring about his demise, as well, thereby saving Milan another ugly scene at an Esso station.

And don't for a minute think this reality is escaping perception of those who might allocate capital to equities. No one but the most oblivious sucker is eying this garbage! Today's volume on a day, start to finish, positive was among the lowest of the year. NYSE advances versus declines yet another graphic presentation of the word "pathetic" in action. Nobody of consequence really wants any piece of this! It's that simple. Bankrupt weak hands can forestall their forced exit and work a broken price discovery mechanism for as long as no challenge is brought to the illusion of the banking system's solvency. Yet a challenge to this fantasy is fast approaching. Don Fanucci is being stalked, even now. Have no doubt about this, for the market's technical state bears testimony! Whether taken out completely or just further weakened in the lead up to this inevitability, the trans-Atlantic banking system, vividly exposed yet again a gigantic mountain of garbage (this by way of Cyprus' brutal extortion—the very necessity of it), in its present state only appears ever nearer chaotic convulsion, and quite possibly the end of the line in fact...




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, March 21, 2013

A Young Corleone Stalking Fanucci

The only open question looking straight ahead is whether selling will intensify Friday or early next week. Yesterday's garbage bidders bitten are today's dip buyers twice shy.

Wrapped in this imminent setback should be better insight into how bankrupt connoisseurs of chaos are making out with their euro-swindle. We can be fairly certain like any schoolyard bully it is only a matter of time before some dweeb delivers a blow right on the button. Down go the dons of bank deposit skim. Oh yeah, unimpeachable credibility tarnished in a scam only revealing the depths of the trans-Atlantic banking system's insolvency has some young Corleone eying the brazen Don Fanucci's end. Make no mistake about it.

You know, to every rule there is an exception. We might be looking at the exception to "they never ring a bell when it comes time to sell." This Cyprus swindle is just off the charts.



Negative technical divergences occurring at both February and March peaks, while both RSI (top panel) and MACD (bottom), albeit decidedly deteriorating, still remain to the positive side of their respective ranges finds technical circumstance conducive to caging a bit more dumb money before the ultimate culling commences. Chances are the "buy the dips" mantra is about to get a workout, likely with volatility increasing in both directions.

Whether 5 waves up from mid-November 2012 are but one 5th wave of a 5th wave away from completion, or whether the 4th wave of these 5 up from November currently continues to unfold is uncertain. Keep an eye on February 28's intra-day peak. If this is violated during any imminent setback, then the latter likelihood (a 4th wave currently unfolding) increases, and becomes all the more certain if the intra-day low of February 26th likewise is taken out.


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, March 20, 2013

Anticipating Hercules Fail

You wanna see what a Herculean effort propping up garbage looks like?


$NYA weekly
NYSE Composite (weekly) 2003-2013

It's our contention the NYSE Composite Index in October 2007 completed a 5-wave advance from its 1974 bottom. Likewise, these five waves up from 1974 formed a 5th wave completing a 5-wave advance from 1932.

Now, if October 2007, indeed, represents the major top we have reason to believe it is, then if five waves down unfolded from October 2007 to March 2009, there is no possibility of the NYSE Composite rising above its October 2007 peak. So, forming off March 2009 bottom is a "b" wave of an a-b-c down from October 2007 peak.

What, specifically, do we see unfolding since March 2009? Is it an a-b-c-x-a-b-c, "complex" Elliott corrective wave (in this case a "double zig-zag")? Or are waves "a" and "b" and now "c" of a triangle (whose "d" and "e" waves yet remain) unfolding? Possibly some other Elliott corrective wave? Say, a 3-3-5 "flat" forming since February 2011 peak whose "b" wave presently is developing, while still awaiting completion with a turn down to depths possibly even challenging March '09 bottom?

Yes, this is our preferred view presently. Recall the technical backdrop coinciding with the Dow Jones Industrials Average's fluctuations over recent years. We have much reason to suspect the durability of the market's present advance. "Something's not right" is well-communicated by every technical measure coinciding with the market's levitation particularly since early-October 2011 bottom. This is a typical "b" wave quality.

Rather stunning, too, is the work of a one-sided support group frantically marking up garbage listed the NYSE...


$NYAD cumulative
Cumulative NYSE Advance-Decline line 2007-2010

Here we see a measure suggesting the NYSE Composite long ago should have surpassed its October 2007 peak. Still, the index remains considerably south of it. We have been noting this disparity for just about as long as it has been evident. Proof that weak hands are behind the market's levitation is objectively demonstrated by this disparity.

As we all know, too, it's not like every scam in the book isn't being used to feign confidence. Indeed, the NYSE cumulative advance-decline has remained on nothing but a terror as a result...


$NYAD cumulative
Cumulative NYSE Advance-Decline line 2010-2013

Good God! Just imagine what will happen when this one-way street reaches its end! If this is what it takes to keep the NYSE Composite limply elevated, then once there's no more pavement on which to race imaginary money machines (the likes of which just about every financial asset class under the sun has been transformed into by reckless central banks) only one outcome likely remains: a nasty, nasty crash.


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, March 19, 2013

The Hunt for Chaos

Let's be clear. Team Fraud is in the hunt for chaos. A tax on savings accounts in Cyprus to bail out another Indian casino (of course this being fit for cultured Europeans)? Seriously? This had a snowball's chance in hell, it did. As intended. Someone [bankrupt] wants to light a fire in Europe.

And this is right on the heals of last week's feeding frenzy circling J.P. Morgan Chase. J.P. Morgan Chase! This ain't Fred's Bank. Got $1500? I'll put it right here, in the white suit, top right pocket. (That's an old Steve Martin bit, back in the 70s.)

An insane proposal to tax savings accounts coming right on the heals of JPM's skewering, indeed, vividly exposes this firm's woes for what they are: no different than Bear Stearns or Lehman Brothers. Everyone's bankrupt. Everyone's a target. That's how it was in 2008. That's how it still is now.

Yet JPM is a special breed. The attack on it suggests a decisive, U.S. split from London might be in the making.

So, let's see talk of breaking up big bank holding companies become a brisk walk, then. Otherwise, Congress too could play into the hunt for chaos, particularly if legislative movement invariably toward Glass-Steagall proceeds at a crawl.

Reviewing recent history, chaos is preferred because that's how ill-advised, hasty submission to cures worse than the disease are swindled. Has this framework not more or less characterized those most notable crises of the 21st century thus far?

And maybe that's the gist of the JPM feeding frenzy and increasing talk of breaking up big banks. Congress is signaling its sense that, willfully contrived crises are not going to be tolerated. Yet truth is someone likely will have to be punished for this kind of institutional directive to have even negligible impact. Negligible because only hastened is motivation precipitating panic and nothing but a mess will come of it.

Well, big picture, this is scenery decorating 2013 in a manner putting a challenge of March '09 lows in the crosshairs—or at least something of a scare along these lines, anyway. Oddly enough, it seems more are asleep to any negative possibility now than was the case in 2008. They may not ring a bell when it's time to sell, but sowing seeds of panic certainly is becoming fashionable these days...


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, March 18, 2013

Rebalancing? Or Trapped Pigs Squealing?

The past three quarters have seen index rebalancing deliver notable volume spikes, as well as negative price action over days immediately following the rebalancing (the most recent being Friday's)...



We might consider the ultimate potential of this negative index rebalancing follow-through both in the framework of the Elliott wave count we have been siding with here for a few weeks now, as well as recalling the negative backdrop presented here last week, this at longer-term durations extending over the past three years.

Now, via the broad market measure that is the NYSE Composite Index we see full display of increasing underlying technical weakness developing as the market's advance off mid-November 2012 bottom traces out its five waves (these forming wave c of b of (b)). As you can see, noted above are 4th wave versus 2nd wave [relative] deterioration displayed via RSI (top panel) and MACD (bottom). This has yet to occur with other major indexes like the S&P 500. By these same measures (i.e. RSI and MACD) 4th wave versus 2nd wave technical deterioration has yet to register.

Oddly enough the NYSE cumulative advance-decline line remains the same old [pseudo] champion it has been these past three years. Truth remains, though, that were the NYSE Composite index indeed tracking the cumulative advance-decline line, it might be at the gates of St. Peter by now. Yet the index lags badly. There's no real money going into the market, and there hasn't been for a long time.

Should the NYSE Composite be nearing its top, then—the above Elliott wave count suggests this is imminent—its long-standing lag, but paused since mid-November 2012 as banks and financial secured their unending QE (the likes of which simply cannot last forever, and this even if JPM becomes shark bait), might soon be reasserted. Were the broad market to start choking again, while spotlighted indexes (like the Dow Jones Industrials and the S&P 500) continue effectively masking this over coming weeks—remaining fairly buoyant, yet not advancing much higher from here—then our [Elliott wave-based] outlook anticipating a bloodbath sometime in 2013 would be bolstered by this added, physical evidence revealing an already long-evident capital deficiency sustaining the broad market's continued levitation is worsening.


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, March 15, 2013

Shark Feeding Frenzy In Chum-Rich Waters

The alignment of technical measures signaling an elevated likelihood the stock market is on the verge of turning lower adds yet another foreboding configuration to its constellation...


$BPNYA

Here we see an ominously poised NYSE Bullish Percent Index whose recent past presents negative technical circumstance yet furthering that foreboding evidence exposed here earlier this week.

First was pain at the pump. Then, transmitters of the euro disease. And, finally, Daddy Dow turned safe haven (relatively speaking). All present evidence warning of trouble ahead.

We probably should not take this lightly, particularly as serious difficulty is a view forward generally off the radar of those participating in the cheerleading competition at CNBC and Bloomberg. All the more, especially, with everyone and yo momma donning shark teeth and bloodying the water exposing the flesh of the derivatives king, J.P. Morgan Chase.

Let the feeding frenzy begin! Now, what do you suppose odds are the chief U.S. patron of Venice on the Thames is just going to lie down and be ripped apart without so much as reacting in a manner threatening to drag down the rest of its kind with it?

We might also file the attack on  JPM under "all things are not what they seem." After all, Europe is not passively lying down to the destruction of sovereign institutions that exist to fortify the social fabric of nation states among the European community at large. Nor is the U.S. for that matter. This while Venice on the Thames ceaselessly brutalizes its captive subjects on the theory money is a better arbiter of a society's viability than is manifesting principles reflecting on the human condition, such as are eloquently elaborated in the U.S. Constitution's Preamble. What better way, then, to further blind acquiescence to virtual color revolutions becoming increasingly popular these days? These veritably feed on chaos the likes of which J.P. Morgan Chase now is well-positioned to detonate.

"Change you can believe" in the U.S. was our virtual color revolution, and yet only a weak, shadow Greek Prime Minister all too favorable to an imperialist agenda has come of it. While this U.S. President ventures a "grand bargain" seeking savage cuts in government whose claimed necessity fails honest assessment of circumstance underlying its cause—the utter bankruptcy of the imperial system of globalization under which the United States over the past forty years has been transformed from the world's richest creditor nation to its most wretched, morally vanquished debtor shouldering an impossible burden—resistance to this sellout only increases, virtually immobilizing its chief political patrons on both sides of the aisle, making the U.S. federal government a literal paper tiger whose capacity to exercise any real power promoting stability is standing on legs shown to be increasingly weakened. In other words, perfectly poised for destruction, with J.P. Morgan Chase providing a means to kneecap Ivy League sellouts who wouldn't know Alexander Hamilton from a Hamilton Beach toaster (not to mention a citizenry who wouldn't know a fascist from a fudgsicle), and send the U.S. into a chaotic, downward spiral of ungovernability.

In Italy we have the politics of attrition and attendant chaos wrapped up in the 5-Star Movement of Beppe Grillo, the union smashing, wage gouging, anti-investment, proto-fascist archetype around which another abused republic's citizens foolishly seek "change" whose only likely outcome will usher their own destruction. Ron Paul's hippie brother is no more well-suited to represent Italian interests than are any of the leading members of both major U.S. political parties. All are inept marionettes of supranational, imperial empire whose intellectual home base is Venice on the Thames. What these say is of no consequence. Rather what these do reveal their true colors. All promote chaos whose end more or less serves the modern day manifestation of an oligarchical system whose origins date back to the Roman Empire.

What bankrupt oligarchs whose patronage belongs to Venice on the Thames won't do to steal their way back to solvency is anyone's guess. They'll sacrifice their own to be sure, if one step back makes more certain two steps forward in some desired direction, with 9/11 certainly standing an extraordinarily vivid display of this principle in practice. Maybe the same will be said about J.P. Morgan Chase one day soon, as well, should its demise in fact be intended...


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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Thursday, March 14, 2013

Katy, Bar the Door

While garbage fest celebrations continue in blind-to-crime fantasy land we are confronted with still more evidence of trouble brewing, today exposed by increasing favor shown the king of trash...


$INDU

Might the Dow Jones Industrials Average be better named "The 'You Can Run, But You Cannot Hide' Sentiment Gauge of Ponzi Finance?" Its relative performance versus the S&P 500 (see bottom panel) presents a most compelling case arguing for this change.

When the Dow's performance has begun besting the S&P 500's these past few years the consequence has proven negative for the entire asset class. Likewise, when this relative performance relationship crosses above its 20-day EMA (exponential moving average) wisdom advises Katy bar the door.

The thing to watch right now is the Percentage Price Oscillator (PPO) displayed in the top panel. Once it turns down, look out. Once it turns negative, chances are we will witness a panic if the Dow's relative performance versus the S&P 500 continues ascending.

Although we have some way to go before PPO sinks to the negative, the market's advance off its mid-November 2012 low very well could be nearing its termination, as the upside relative performance crossover of its 20-day EMA evidently is warning.




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, March 13, 2013

Caution: Wet Paint

Is the paint dry yet, you wonder? Almost...



The tracking index of transmitters of the euro disease bears a striking resemblance to pain at the pump, this by the technical position both presently share in common. Yet whether the pump's pain intensifies or abates, very near exhausted appears capacity to pretend looming on the broker-dealer horizon is resurrection of a bygone day's status quo, much as we might suppose likewise is the case for the wide array of wildly mispriced garbage this group peddles across the globe.

We should add to yesterday's view humble recognition a 4th wave of 5 waves up from mid-November 2012 bottom still could be in the midst of forming, thus leaving some weeks yet to come before pain is broadly felt. We might find all technical measures eventually confirming underlying technical weakness developing in the evolution of 5 waves up from November 2012 (whereas right now many measures, but not all, already reveal this). Clarity should come during the market's pending pullback, once today's continuation of a slow creep higher reaches its conclusion sometime over hours ahead.

The key thing to watch will be major index peaks of February 28th. If the 4th wave of 5 waves up from mid-November 2012 in fact ended on Tuesday, February 26th, then the 1st wave of the 5th peaked on the 28th. Yet should this peak of February 28th be taken out—violated to the downside—then either the 4th wave of 5 waves up from November still is forming, or we might discover reason to suspect the 5th wave is taking the form of a "rising wedge" whose five component waves each subdivide in threes (and whose 1st wave unfolded off the February 26th low and is nearing its peak).

For the time being we appear condemned to watch paint dry, and this possibly no matter if the slow creep higher of recent days concludes in some few moments. Any decided turn lower upcoming might prove equally slow to develop before reaching its ultimate climax sometime during the next couple weeks.


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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Tuesday, March 12, 2013

Pump Primed for Pain

First, a public service warning...


$GASO

Get ready for a sharp increase in your contribution to the cash flow flooding into a hopelessly insolvent banking system hooked on derivatives and evidently in need of much more capital than Capo Confetti can shovel into its coffers.

Now, to pull this off, they'll need to keep all the ninnies at CNBC squeaking in ecstasy over a stock market dominated by weak hands that simply cannot afford to further curtail participation to any degree sending volume crashing and accelerating the long running liquidity drain that has been dogging U.S. equities markets these past few years. This means more black magic conjuring fantastic illusions of "value in demand" probably lies in store here. In other words, a market pullback of any consequence is likely to be delayed. Yet once this no longer can be forestalled, we might expect a bloodletting of far greater consequence, and this sooner than we thus far have assumed.


NYSE McClellan Oscillator

If we take last week's Elliott Wave view suggesting a "c" wave up has been unfolding since mid-November 2012 bottom—this completing an a-b-c [corrective] wave up from early-October 2011 bottom—and further dissect the manner in which this "c" wave is seeing increasing underlying technical weakness develop coincident with its formation, we can set aside certain expectations laid forth both yesterday and Friday, and suppose these are being met in other representative ways, while illuminating the reason why conditions we otherwise were expecting are likely to be defied.

To wit, coincident with formation of five component waves forming wave c up from mid-November 2012 bottom we were expecting both daily RSI and MACD to display increasing underlying weakness during formation of the 4th wave versus the 2nd. Given this, Friday's assumption was that, the 4th wave of wave c, unfolding since approximately February 20th, likely would continue its formation over coming days. Its further development was to see an impending declining leg whose effect likely would sink daily RSI and MACD below levels these measures respectively registered at the late-December 2012 conclusion of the 2nd wave of wave c. We can set this expectation aside for now, however.

Indeed, we already see this anticipated condition displayed via the NYSE McClellan Oscillator. Likewise, increasing underlying technical weakness is more broadly revealed here, as well. In fact objective basis for claiming "something's not right" (as the assumed place within the larger Elliott wave count off March '09 bottom advises) is decidedly substantiated by the McClellan Oscillator's ever diminishing print, this even since well before the mid-November 2012 bottom from which wave c began.

There are other technical measures likewise suggesting the 4th wave of wave c in fact already is completed (this on February 26th). The NYSE advance-decline differential, as well as the new 52-week high-low differential reveal the same [typical] 4th wave versus 2nd wave technical deterioration as does the McClellan Oscillator above. Ditto the CBOE put/call ratio.

So, we can assume the 5th wave of wave c in fact is now well underway. This also means it'll all be over soon. That is all the mindless banter claiming central bank omniscience and sound reasoning.

Now, why was it Capo Confetti last September became compelled to apply Fed grease until kingdom come? Markets weren't buoyant enough? Hardly! Uber leveraged albatrosses with highly correlated credit derivatives exposure needed yet further risk-taking encouragement? Probably.

And that is why yesterday's anticipation for a spike in the Volatility Index exceeding its late-December 2012 peak probably is unlikely. The bankrupt pricks and their misguided daddy simply cannot easily endure even the least scare at this point. Yet neither is a fearful posture evidently warranted, now that Capo Confetti and his fleet of Chinook helicopters evidently are operating under code red conditions. Recall how the market's decline into mid-November 2012 barely nudged the VIX higher. We might better fathom why now. Likewise should we gain better insight into why pinning VIX to the floor is both desirable, and more to the point, probably utterly necessary. So, forget about the Volatility Index exceeding its late-December 2012 peak anytime between now and completion of wave c. Given dire circumstance just about every central bank on the planet has had no choice but confirm with a vengeance, far greater is likelihood the next VIX spike coincides with central banks being prostrated in some significantly upsetting manner.

It's along this same line of thinking Friday's expectation per daily RSI and MACD is better dashed. Well enough is the fact a "c" wave is an Elliott third wave, which typically is the most dynamic Elliott wave. If by the measures of daily RSI and MACD 4th wave versus 2nd wave technical deterioration is not displayed in the present instance, we can count this evidence confirming an Elliott third wave (in this case wave c). Gravy is added rationale supplied above uncovering the likely reason for a quiescent VIX of late. The market's present capacity to endure a scare (such as would commensurately sink RSI and MACD) simply is razor thin.

So, in closing we should ponder the evidence and wonder whether protagonists of a hopelessly insolvent banking system might be scheming to create an energy-induced contraction of the physical economy whose principal purpose might venture accelerating the availability of assets on the cheap. Let's not forget a woefully fragile financial economy likely to be squeezed, as well. All those bad marionettes in Washington flying off the reservation with increasing talk about breaking up big banks then might be given pause, while a new, orchestrated swindle viciously precipitates systemically threatening chaos conducive to hastening further consolidation of both physical and financial assets and rejuvenates Team Fraud's imperative to "save" the world from yet another Great Depression...


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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Monday, March 11, 2013

Liquidity Drought

Wouldn't you know it. On yet another dead volume day we read "HFT and liquidity are not all they are cracked up to be." Now, an environment evidently marked by shrinking liquidity must be bad news for a market backstopped by bankrupt derivatives junkies whose leverage somehow must increase. For the time being these might be grateful no one of consequence has yet been forced to raise capital wherever this might be had. Trouble is "the cost of Capital Intermediation has increased significantly over the 35 years of financial market deregulation in the United States" and this surely must be impinging on confidence. Throw in rampant HFT abuse of so-called "whales" and we have all the ingredients for a liquidity drought occurring precisely at the wrong moment.

Heck, this could become a problem as soon as tomorrow...


$SPX

Negative technical divergences presently registering via RSI and MACD suggest the market is in a vulnerable state similar to early-April 2012. FYI: today's S&P 500 volume was the second lowest of the year.

Technical similarly to this same prior period from the perspective of the Volatility Index likewise suggests the market, near-term, is vulnerable, and longer-term, not likely to find sentiment quite so sanguine...


$VIX

Where's this going? I mean, how much cheaper can options premiums get? These are pertinent questions at a moment when the stock market's liquidity rather plainly is evaporating.

Capital these days largely must be going into leveraged trades whose viability certainly is no more secure than was the case in 2008. How can there be more security, seeing risk concentrated in still fewer hands? I'll bet Greenspan gets it. All he ever talked about was risk mitigation. This ain't it. Little wonder, then, the political arena over the past week has been buzzing about breaking up "too big to fail" titans of tyranny euphemistically called "banks." What are the odds everyone and the Attorney General have their eyes on a fire burning somewhere right now?

Judging by the market's technical state, smoke is being detected. Maybe today this appears to be coming from but a small, smoldering pile of straw. Yet for the mountain of deadwood surrounding it, who knows when a stiff wind might blow and ignite a firestorm? Could be tomorrow...


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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Friday, March 08, 2013

Insolvency Driving Future Action

Not quite the positive day I thought possible today. Still, certainly a step in the right direction. What's more, the market's advance off its Tuesday, February 26th low still appears to have legs. Truth is, though, these could be completely exhausted before Monday's trading upcoming finishes.

So, let's continue with possibility the 4th wave of 5 waves up from mid-November 2012 bottom has been in the midst of forming since the market's February 20th peak...


$SPX

As this 4th wave continues its formation, an impending declining leg should see RSI and MACD sink below respective levels these measures fell to when the 2nd wave of 5 waves up from mid-November completed late-December 2012. Increasing underlying technical weakness, such as typically is displayed during formation of a 4th wave of 5 waves higher (this versus the preceding 2nd wave in a 5-wave advancing sequence), thus will be confirmed. Then we should have greater confidence the Elliott Wave based viewpoint presented here this week (via the DJIA and the S&P 500) finds the market drawing nearer a significant reversal lower, much as other technical measures whose persistently weakening state likewise suggest (see, for example, $BPNYA, whose negative divergence at higher $NYA peaks has been ongoing since February 2010 peak).

Of course, we could add so much more to evidence revealing the market's underlying state is crippled. Why bother, though, when you could just reread every bit of commentary presented here for months on end and find the same technical analysis exposing the market's weakness past remains no less insightful and foreboding today.

How is it that no one asks if global central banks led by the U.S. Federal Reserve were all powerful in their ability to smoothly steer provisions of finance and its subsequent, economic application, then why haven't these gone balls to the walls since day 1? What has been restraining their aggressive intervention all these decades?

Here's what: THE BANKING SYSTEM'S SOLVENCY.

Guess what? This no longer is the case! That's why central banks have gone wildly reckless with QE. This ultimately is the price of King Ponzi's work (Greenspan).

This bears repeating. The Fed's useful role as lender of last resort was ruined the minute Alan Greenspan was tolerated by Congress—indeed, revered. Lenders of last resort exist never to be tapped. Their function largely is geared toward preventing panic, this that a loosely claimed capability as lender of last resort never be put to the test. However this functional hierarchy was destroyed by Greenspan via those securities-based credit allocation mechanisms his Fed endlessly endorsed. Here, this wildcat banking system of Greenspan's we have called "Adam Smith's Leveraged Ponzi Scheme." Many in Congress took the bait, hook, line and sinker. So too, then, has the U.S. Treasury been relegated as hopelessly trapped as most every major national treasury on the planet.

Make no mistake, friend. This condition will not forever persist. It's only a matter of time when the next phase unfolds in reaction to this, while what might come of it finds variables on opposite ends of the spectrum, so there's no telling the likely detonators of panic. Yet panic is a virtual certainty. What today is being propped up simply is unsustainable. Now a rhetorical question: what happens when the solvency of an uber levered banking system no longer can be feigned? Kaboom. 

Having reached a point where accelerating shutdown of both the physical and financial economy are clearly on the horizon as a consequence of "beggar my neighbor" competitive currency devaluations gone wild (we might say yet another in the "gone wild" series to move into its bankruptcy phase), the thing to watch is politics. Anything promoting political weakness in chaos likely will serve to support hopelessly insolvent, "too big to fail" titans of tyranny at the trans-Atlantic banking system's core. Little wonder, really, Goldman Sachs is excited about Beppe Grillo. Here's something, though, the firm should think about in its kind regard expressed toward such a nation-wrecking provocateur as this Grillo: the firm's bankruptcy is exposed by its evident hunger for assets made available on the cheap.

Many evidently are betting on the EMU's imminent demise. Yet credit made available by the trans-Atlantic's central banks—this provision, of course, was made reckless by its being poured down a bottomless sinkhole of speculative garbage for which there is no market—stands as a precedent. Such credit in fact could be issued to finance productive development, as well as it has been issued to cover up the trans-Atlantic banking system's giant mountain of [derivatives] garbage. So, how long before the EMU's core countries react to the Axis of Fraud's politically charged wrecking ball is now the most relevant question. All kind of controls are available to defend against what surely must be perceived the Axis of Fraud's ongoing, European stickup (whose growing al Qaeda presence but looming on the continent's periphery probably is best seen for what it really is: Team Fraud's Foreign Legion standing ready for action)...


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!