The Risk Averse Alert

Well, today began as anticipated, but subsequent selling did not materialize. That's a "problem" per any outlook believing top might be in.




RSI registering a new high during the formation of what was thought yesterday to be wave 5 of c is not a problem. A "c" wave (being a third wave) can be expected to display most dynamic underpinnings during its formation. Thus, 5-minute RSI performance from yesterday's open through today's is not atypical.

The problem with the "top is in" thesis came with the move to new high ground during today's last hour. The five waves of a presumed wave c apparently are not completed. And with top not far overhead, maybe no a-b-c correcting the initial decline from top is forming at all. Maybe instead top is not yet in.




There's something to be said about relative strength (RSI) and momentum (MACD) remaining on the buy-side of their respective ranges. Judging by similar conditions a few months back when both relative strength and momentum were fading — diverging as $COMPQ continued trading higher — one is well-advised at this point not to pound the table about any top being in.

Yet fading these underlying indicators are! Likewise fading is fear (the sell orders that are the "wall of worry's" mortar), as volume testifies. Therefore, rest assured, top is near. And this in the grand scheme of things is all that matters at this moment in history when what lies ahead is a storm for the ages.




© The Risk Averse Alert — Advocating a patient, disciplined approach to stock market investing. Overriding objective is limiting financial risk. Minimizing investment capital loss is a priority.

Analysis centers on the stock market's path of least resistance. Long-term, this drives a simple strategy for safely investing a 401(k) for maximum profit. Intermediate-term, investing with stock index tracking-ETFs (both their long and short varieties) is advanced. Short-term, stock index options occasionally offer extraordinary profit opportunities when the stock market is moving along its projected path.

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