Friday, November 30, 2012

D-Day December and D-Day to Come

Whether or not we go over the "fiscal cliff," a fiasco appears a lock at this point. Likewise, there still is plenty of time for "legacies" to be cemented, as ingredients just as well could be mixed even over some coming months. As fate would have it, there is an historic date ahead when the stars and Leonardo Fibonacci soon will meet. And wouldn't you know it? It's in 2013.

All the more interesting, too, is the following prospective view of upcoming developments putting the market in quite bad technical shape at what might prove the worst possible moment...



There positively is no doubt about the present likelihood the market is on the verge of sinking. Its technical state simply finds pervasive, objective agreement warning of trouble straight ahead. December, indeed, could be a decidedly difficult month of trading.

Now, although an "outside year" probably is not likely at this point, a trip down to the intermediate-term line of support drawn above (which for a brief time in '08 and '09 was resistance) is a very credible possibility. Such a setback would be enough, too, to meet a previously expressed outlook here anticipating the worst downdraft since March '09 bottom upcoming.

As you can see from my markup, a head and shoulders top appears to be forming. This one has a double head. Not unusual. It's a tendency noted in "Technical Analysis of Stock Trends," as well.

Looking forward we can anticipate the right shoulder's symmetry with the left, and so expect this head and shoulders top to complete its formation anywhere around the middle of next year. "Sell in May and go away" anyone?

As for the Elliott wave count, a "double three' would be seen forming. The first a-b-c up unfolded from March '09 bottom to February 2011 peak. Then, the connecting "x" wave developed into early-October 2011 bottom. And finally, the second a-b-c would be seen forming right into the peak of the right shoulder, with its component waves "alternating" as should be expected. Likewise from March '09 bottom the first "three," a 5-3-5 "zig-zag," and the second "three," a 3-3-5 "flat," would satisfy the Elliott Wave Principle's "alternation guideline." As we see here, too, the Elliott Wave Principle's "like from like" framework finds the component waves of the second "three" (these forming since October 2011 bottom) unfolding in the same fashion as the "double three" itself.

This prospective corrective wave up from March '09 bottom is seen forming a larger wave B, the middle wave of an a-b-c corrective wave down from October 2007 peak. Wave C [down] would commence, then, when the head and shoulders top completes sometime around the middle of next year. As ever, major indexes are targeted to fall to levels last seen in the 1987-1994 period (at least).

As was suggested in "Will Weimar Hyperinflation Come to the U.S.?," 2013 could mark both a major index top and bottom, this a la 1987 in fact. The manner in which the Elliott Wave Principle accounts for "time" using Fibonacci numbers as a measuring stick provides a basis for making this projection. This same, time related, Elliott-based framework also is the reason why the above head and shoulders top becomes a bit more interesting. For your consideration is the crazy fact the 69th anniversary of D-Day (June 4, 2013) is 610 weeks from September 11, 2001 (610 being a Fibonacci number).

Oddly enough, too, an annular Solar Eclipse will occur on May 10, 2013 and be followed by a penumbral Lunar Eclipse on May 25, 2013. How about that. All perfect timing for a big "c" wave down and possibly a "legacy" to be built to boot.

So, sufficient for the moment, then, will be a December 2012 producing a downside reversal on a yearly chart. Already in the books has been a higher high than was reached in 2011. All we need now is a lower close than that on December 30, 2011. This in fact would be just as ominous as would 2012 being an "outside year." Of course, this doesn't have to happen. Yet if a downside reversal should in fact come to pass, then reason to think 2013 could be one lousy year—possibly the worst ever—will become all the more interesting.

There is a lot of technical evidence right now supporting this outlook's probability to be sure. We were reminded this week, too, Morgan Stanley's forecasting sherpa had projected the S&P 500 to close out the year 2012 at 1167. To my way of seeing things right now there is a good chance the man will look like a genius! I wonder if he was looking at the same line of intermediate-term S&P 500 support? I also wonder if his firm further increased its put options position today, as once again, curiously, put options were all the more popular during today's otherwise uneventful trade.



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, November 29, 2012

Hot, Hot, Hot on Planet Panic

Yet another gap higher for the NYSE Composite Index at today's open. Just another way of saying, you wanna a piece of our garbage, then there is no time to think about it. All [healthy] presence of balance is out the window. There's no time for it. Such is life in a market dominated by weak, desperate hands. Strong hands never would make it appear so obvious the future looks so "good" as these gaps higher venture to pretend. Indeed, we can be sure this is all fairly common knowledge, too. Still relatively muted volume confirms much mooted cash on the sidelines quite appreciates the magnitude of the risk at hand.

Just who is the "smarty pants" whose call options bought on Monday were thought likely hedging a not insignificant short position may have been answered today. Was it Lloyd's idea to have the Shadow Greek Prime Minister come out with a "fiscal cliff" proposal whose increase in spending was fit to give Kudlow an aneurism? Let the collapsed negotiation blame game begin! As I have been saying, this very well could be intended. Funny how today's gap higher could make put options suddenly attractive...


$CPC

Now, for all I know the Fed could be working its confetti in options markets these days, and as a community service holding down premiums in the process, too. Of course, this probably would be a service it is contracting out, being an agency in the administration at Free Market U. Likewise being staffed with men and women holding doctorates in short-sightedness, memories of "shitty deals" executed by the firm headed by one Shadow Greek Prime Minister advisor probably have long faded in "faith" lessons have been learned. Let's not forget, too, "the one" leading the people many times has expressed wisdom is never looking back, but forward, and so there is nothing to be concerned about here, and this in the face of a widely held perception among young and old alike agreeing that, everyone who is anyone in Washington is a neo-"con."

All well and good, you might think , that's just the way it is , but, really, it's probably a worthy exercise here to read between the lines and think about who still might be on the scam wagon, particularly now that the temperature on Planet Panic once again has turned hot, hot, hot...


$NYAD 10-day vs. 200-day

Back on October 12th was noted "Technical Confirmation of Impending Weakness" in an outlook uncharacteristically spot on. At that time, though, an Elliott "rising wedge" was thought possibly forming off early-October 2011 bottom. Now, however, seeing the very same technical confirmation at this time but only further suggests this is not the case. Rather the technical development we see occurring yet again here adds to other evidence presented of late suggesting a can of whoop ass is about to be dispensed.

Far be it for me to lament today's pervasive cluelessness among vested interests whose faith in the Fed's "credibility" keeps the money they manage right where the Monetary Mafia wants it: frozen. It will be interesting to see if some European-style bond market blackmail materializes now that phase 1—the fiscal cliff diving competition—has begun a hopelessly insolvent trans-Atlantic banking system's fast path journey to an urgently needed Fed gusher. If so, there won't be anywhere "safe." Likewise, subsequently, competing with "Close cover before striking" as the most-read phrase on the planet could be, "Get use to it." That is at least here anyway.


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, November 28, 2012

You Can Run, But You Cannot Hide

While "Goebbels" continues to ratchet up the [failing] "fiscal cliff" hysteria and the masters of make believe dance along in euphoric optimism that, today's push by Shadow Greek Prime Minister Obama might produce the breakthrough needed to paint fantasy land green in a texture unmistakably resembling a swastika, Jerry Maguire perplexes that, on what proved an upside, outside day, no one showed up with any money. Volume sucked, thereby revealing the stock market's price discovery mechanism still remains very, very broken (and those exploiting it quite panic stricken, too, as they likewise are broke).

So, why don't bankrupt titans of tyranny shine their garbage endlessly pushing the magic recovery button, you wonder? Well, first of all, push too much and everyone will want to look a little closer at what's under the hood. There, more will discover it's all no good. And second, you can't goosestep your way to "prosperity" without extracting blood, that is if you're a died in the wool fascist. Blood is what this dog and pony show called the "fiscal cliff" is barking for. "Unknown" is how ponies easily moved with #my2k treats will perform when the dogs insist upon pissing all over their ancestors' graves, which imposition awaits conclusion of that epic battle Tory Left and Tory Right still cringe to engage, as a failed "Super Congress" and a countdown clock to the "fiscal cliff" very well demonstrate.


$NYAD

And the July 2011 similarity continues. Unlike the Energizer Bunny whose fortune, I hear, is fading on account of rechargeable batteries powering electronic toys so popular these days, the market's technical setup for a date with another tragic December infamy keeps going and going...


$NYAD

Now, this one is a little skewed on account of this morning's sell-off. Yet maybe those NYSE listed issues torched at today's open likewise provided subsequent short squeeze juice to keep Washington focused on its own blood.

Be that as it may, nearly 5% juiced in just over a week doesn't buy much in the way of band-aids these days. It rather appears the wound on Wall Street is very near becoming a fatal, unstoppable gusher.


$BPNYA

You know what they say... You can run, but you cannot hide. Take it away boys...




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, November 27, 2012

Stars Align Another December Infamy

Let's begin this night of a full moon about to meet its eclipse by the earth's penumbra with speculation on a recent concern. The post-election purge of several neo-con U.S. generals starting with the CIA's Petraeus brought bright historian Webster Tarpley to suggest, "The rogue network, now a wounded beast, must be counted doubly dangerous." Of course, this makes sense.

Yet, then again, look who's doing the purging. The man whose lovers' dance with al Qaeda in Libya and Syria precipitated the introduction of House Concurrent Resolution 107 by Republican Congressman Walter Jones (who, by the way, co-sponsored HR 1489 with Democrat Marcy Kaptur).

Now, Tarpley consistently calls Obama "weak." Yet the need for an HCR 107 rather begs to differ, no? Of course, "weak" is meant to characterize Mr. Obama's presidential leadership. So, in fact there's really no disparity. After all, the man has shown himself to be quite the closet neo-con, unwilling to distinguish himself in most critical matters from the pack of Tory subversives dominating the Republican party. Such graceful command of the language he displays spouting red, white and blue sugar coated sweetness for a naive, undiscerning citizenry's consumption simply puts a new face on the "con."

The point I wish to make here is the U.S. president is much more dangerous than most are either willing or able to acknowledge. What perfect cover, too, is the post-election purge for setting up Obama's second term agenda seeking to cement for the ages that revered "legacy" U.S. presidents take with them when they leave office. Of course, we would have to be practically blind not to recognize that [fascist] political current relentlessly demanding unimaginable sacrifice in this, the nation's hour of extraordinary vulnerability and frailty. As such, the list of legacy possibilities is narrowed considerably.

As they say, there are many ways to skin a cat. A mooted second term Secretary of State Susan Rice and Treasury Secretary Jamie Dimon give us some indication, though, of what might be in store. Simply put, it is hard to imagine two more qualified candidates who likely would prove useful prosecuting a Great War. This, too, would  alleviate Capo Confetti's struggle securing his legacy hyperinflating into oblivion King Ponzi's legacy of destroying capitalism, along with the American middle class.

Allow me to suggest, then, that some kind of agenda-setting event, provoked, manufactured, or both, has a better than 50-50 chance of breaking onto the scene any day now. Like I said, the post-election purge now provides excellent cover for those who have a "legacy" to cultivate. The "cover" is for those whose vanity makes such an operation, indeed, desirable. Likewise, there appear many birds that could be killed with just this one stone. Among these, too, includes the social safety net that, all along has been targeted via legislative circumstance leading to the so-called "fiscal cliff." What a way to likewise pigeonhole the incoming, 113th Congress, as well.

Blame my wild speculation here on a full moon about to be eclipsed. All the more on account of the fact this follows the sun's eclipse by the moon two weeks ago. Long-time readers are aware these two celestial events occurring in near proximity to each other have a history of coinciding with stock market crashes. Converging on a political realm bought and paid for by a hopelessly bankrupt financial class whose domain is vanquished and plainly showing it, better I think, to appear crazy speaking about such a seemingly unrelated matter as tonight's missive raises—this in the hope of circumventing another Polish invasion of Nazi Germany—than remain silent and risk watching World War III unfold before our very eyes all because too many of us didn't have either the guts or the brains to silence a bunch of squealing, stuck pigs with absolutely no business calling themselves Americans...


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, November 26, 2012

Doom Signal: Leaders Turned Dogs

 As you know, they don't ring a bell when it comes time for the feces to hit the fan. Yet I did say, "Show me the money!," didn't I. Too bad not even the darling of Wall Street was a facsimile beneficiary of the green likes on a day its price moved 3% higher...


$AAPL

Oh boy. Now there's a leader with a problem. Let's put it this way, since AAPL's September peak there has been an increasing interest trimming their stake, and now bottom fishers, momentarily profiting rather handsomely for but five days work, have much reason to suppose this stock's 200-day moving average probably will be as insurmountable as the so-called "fiscal cliff." Shrinking volume registered during the approach reveals a stock whose owners should be very concerned that, apparently no increase in new interest is materializing following darling AAPL's 28% haircut into this month's bottom. The last of these apparently were lured in the May-September period. Meanwhile, those who bought in earlier have got to be wondering whether wisdom advises waiting for the turn of the calendar before taking profits. Bad enough is the fact that, with each passing day CNBC's "Rise Above" is appearing as much a hopeless cause as the Fed (a matter of circumstance, by the way, I am yet more inclined to argue is intended), thus boding higher capital gains taxes in reward for risking the wait until January. AAPL's RSI reads "poised for a beating," while the stock's negative momentum brings the head to nod up and down in complete agreement.

To make matters worse are other leaders likewise in a very precarious spot. Take, for example, the index AAPL largely supports, and by so doing masks the fact that, the preponderance of its other components remain in a death spiral...


$COMPQ

The picture above, no doubt worth a thousand words, is just as well summarized with one: NASDUNG. Appropriately, too, is this stock exchange's name all caps, as the technical trouble in which its Composite Index currently finds itself is just screaming, "Holy Shit!"

Yet not to be left out are this year's principal equity market recipients of dumb European money...


$INDU

Likewise not a pretty picture painted by the largest of the large caps.

Throw in a Volatility Index looking a lot like July 2011, a NYSE McClellan Summation Index appearing well-poised for the market's imminent throttling, and a CBOE Put/Call Ratio likewise bearing extraordinary similarity to its mid-July 2011 state, this in a manner making it appear everyone is cocksure the market is going higher (either that or some smarty pants is hedging a substantial short position—more likely), and there is just one thing left to say...



How's that for a metaphoric video forecast! Ho, ho, ho. A slide into Christmas should leave but one thing to do for any sentient American whose self-respect and intelligence demands much more than capacity to mimic pathetic fascists flooding the mainstream media...



Art Cashin concluded a CNBC interview today with an interesting observation on this weekend's Catalonian election and the notable statement made in rejection of austerity—that sensitive "pre-condition" for receiving the Brussels Reichsbank's OMT. A forced trip over the "fiscal cliff" in all probability intends the same effect as Count Draghi-ula and his house of euro vampires have been venturing, albeit thus far in vain. Namely, a flood of central bank largess whose utter necessity stands to answer the question, "Will Weimar Hyperinflation Come to the U.S.?" As I said, CNBC's "Rise Above" appears intended to fail, this that thick cover for who is to blame for subsequent chaos be sweetened with a deluge from Capo Confetti making up for the fiscal cliff's consequent shrinkage of Treasury securities available to paper over the mess left by former Fed chairman, King Ponzi.

In conclusion we might start wondering if it is possible 2012 could prove an "outside year" (higher high, lower low and lower close), setting up for a horrendous 2013. Per the "lower low," all that has to happen is early-October 2011 bottom be taken out sometime between tomorrow and December 31st. Certainly by the technical look of things this is not an outside possibility. Rather it is squarely on the radar. All the more is its likelihood made real by the fact that, not a soul on the Fast Money desk today shows even an inkling of fear toward the prospect...


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, November 23, 2012

HFT: Holiday Financial Tricks

You gotta hand it to the bankrupt pricks. Yet in still getting away with all manner of fraud exploiting whatever broken toys it has at its disposal (be it regulatory, legislative or judicial bodies or, like today demonstrated, the market's price discovery mechanism) apparently it is becoming increasingly difficult to mask panic lying behind it...


$NYA

Since the "God save our sinking ship" panic of early-October 2011 there probably have been more upside gaps in the NYSE Composite Index(!) than previously were registered going back all the way to Y2k. Might this possibly argue for a "c" wave (an Elliott 3rd wave) taking the form of a "rising wedge" off October 2011 bottom, as suggested here before? Yeah, no, maybe. The fact of the matter is, though, many of these upside gaps have developed near tops over the interim and have been followed by fairly protracted retracements, so doubt is raised about any Elliott 3rd wave forming here.

This week's "God save our sinking ship" echo, indeed, produced the very same sense about the impetus behind it as was delivered when the market rallied from late-June to early-July 2011. Specifically, something simply is just not right. Have no doubt, an incredibly weak technical backdrop plainly reveals confidence at the bottom rung of the capital structure still remains AWOL, and this after tens of trillions of dollars of lender of last resort largess has been thrown down the trans-Atlantic banking system's sink hole. This week's fraud manufactured with heavy doses of nonsense coming from a rumor mill whose credibility is in a race to the bottom with the Fed but begs a Jerry Maguire moment: show me the money! If, as was the case in early-July 2011, this proves impossible, then there remains every reason to believe the lug nuts are about to fall off this market.

Team Fraud's "fiscal cliff" hysteria has met its likely outcome by way of an EU budget summit that collapsed as fast as it began. What motivation do Democrats in Congress have to negotiate with an opposing party whose legislative initiatives directly brought to fruition imperatives leading to this so-called "fiscal cliff?" The turncoat leading their party certainly will neither need support for his reelection, nor provide anything of value for theirs. So, there's little chance a "grand bargain" will materialize before the 113th Congress is gavelled into session in January.

Then, there was today's rumor of a Fed readying to add another $40 billion per month to its MBS bailout program (a.k.a. QE3) once "Operation Twist" expires in January. Oh yeah? Better tell it to Richmond Fed President Jeffrey Lacker and his like minded supporters making up the majority in the U.S. House of Representatives.

As I was saying, the rumor mill is as broken as the Fed. Meanwhile, the market's technical state simply is abysmal, as I likewise was saying. There are no shortage of measures in worse shape now than was the case in early-May 2012, and early-July 2011 before that. The only saving grace is this week's bump in advancing issues versus decliners. Yet this has occurred in the face of volume showing absolutely no sign of any expansion in long interest. Rather, a pre-programmed "buy the dips" current probably is better assumed behind this week's more than outsized reversal higher (the authors likely being trapped banks, hedge funds and private equity groups whose books are saddled with more than their fair share of wildly mispriced garbage that, more or less is without any market outside the Fed, and so in desperate need of a shine wherever it can be had). Here is where similarity to late-June, early-July 2011 is most compelling.

Now, if something other than heartbreak were likely in store—if still much-touted "value" yet priced into stocks were in fact true cause for owning them—then why wouldn't a not-so-subtly broken price discovery mechanism be exploited to drive share prices considerably lower, this that so-called "bargains" could be had at insanely cheap prices? To my way of seeing things the answer is simple. There exists so much vulnerability threatening asset prices higher up in the capital structure that, a state of panic rather still to this day drives a highly concentrated, collective consensus to exploit the stock market's broken price discovery mechanism in the very manner demonstrated this week (and particularly today). As I have indicated for some time now, a persistently diminishing volume of shares exchanged plainly reveals accumulation is not behind the market's levitation.

So, the trend following the trans-Atlantic banking system's near total meltdown in 2008 remains intact. Underlying this week's advance certainly was no decided pickup in confidence based on a conviction central banks have arrested vulnerabilities threatening the banking system. That said, the preferred, alternate Elliott wave count presented here last Friday might need tweaking, this to the effect of slightly extending formation of the second "three" unfolding since early-October 2011. Specifically, wave b of (b) might prove to be still forming.

If the bankrupt pricks somehow succeed further exploiting a plainly broken price discovery mechanism to draw in enough interest to pay for the effort, then wave c of b of (b) whose formation would be seen beginning last Friday (11/16) could bring major indexes to exceed their respective September peaks over days immediately ahead (and this likely ever so slightly at that). Should this in fact occur, then wave a of b of (b) would be seen forming off June bottom to September peak (recall a view put forward here some weeks ago, this presented via the S&P 500, suggesting five waves up might have formed over this interim). Likewise, too, if wave c of b of (b) is in fact forming, then look for index momentum (see MACD) to peak below its early-May 2012 peak, which itself peaked below index momentum peaks of early July 2011, as well.

No doubt, I do not "like" this possibility. This all the less so given today's extraordinarily imbalanced relative strength as measured at 5-minute intervals...


NYA 5-min

Appreciating just how evidently desperate are those who affected this imbalance, though, let's leave open the possibility a burst higher over the next few days might take out September's peak and finally finish the fake, technically unsubstantiated, levitation characterizing the entirety of this year's trading following last October's "God save our sinking ship" panic. The market's subsequent setback still very well could dwarf anything seen thus far since March '09 bottom, this in keeping with the Elliott wave count I am presently siding with.



* * * * *
© 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, November 21, 2012

Lacker To Learn Loose Lips Sink Ships

On the same day Capo Confetti was wowing the Club in New York the U.S. Monetary Mafia's Richmond Don appeared before the Shadow Open Market Committee's Symposium at another New York City location apparently venturing to do his level best to put the "freeze" in the Fraud Chairman's policy. The event, titled "The Fed’s Monetary Policy Adrift," probably is better seen a smoke screen, however. A variation on the "divide and conquer" strategy looks to be the game plan being deployed by the hopelessly bankrupt Fed.

Apparently, running this ruse through the Federal Reserve's regional bank located in the former capital of the 19th century's U.S. Rebel Confederacy, the Fed's marks—securities holders at every level of the capital structure, both domestic and foreign—are to be more convincingly persuaded by Richmond Fed President Jeffrey Lacker's focus on the Fed's "credibility." Yet wasting no time Lacker gave his unwitting confession that, the Fed in fact has no credibility. This he revealed at the start of his speech summarizing the Fed's track record regarding inflation in the United States.

You see, the frauds who have made careers of wrecking capitalism through their rationalization of a wildcat credit policy blind to distinctions separating an economy's productive debt from its casino-issued credit (whose principal purpose clearly has been to erect an inescapable debt trap) are woefully incapable of discerning how they have, as well, sewn the seeds of hyperinflation and consequent political destruction. Even if you were to believe Lacker's cooing that, "specifically, since December of 1993, inflation (as measured by the price index for personal consumption expenditures) has averaged very close to 2 percent per year," there is the currently pressing matter of runaway energy costs whose impact touches everything. Mere words professing "enhanced public confidence in the Fed’s willingness and ability to keep inflation low and stable" meet this both morally and financially bankrupt institution's utter incapacity to insure its "good performance" into the foreseeable future. Capo Confetti's confession that, certain critical forecasts failed to materialize in the post-2008 crisis period only finds another failed forecast waiting in the wings, this being the one that assumes rising energy costs are but a "temporary" phenomenon. Should the purveyors of such views as these continue their hold on policy, then my forecast is that, the only thing "temporary" will be the relatively low cost of energy, presently, contrasted to what is yet to come.

Suckers properly baited, Lacker goes on to comment on "Communicating Policy Actions." Here, the "freeze" the Fed ventures in its "good cop, bad cop," divide and conquer strategy starts becoming apparent. Yet Lacker's unsubstantiated sophistry evoking images of a Fed acting as clinical psychologist analyzing market perceptions of its policy statements hardly bolsters the Fed's "credibility." Rather, the Federal Reserve's deadly speculative addiction is exposed here to reveal the full measure of panic driving its actions. "How to Hyperinflate Without Giving Away the Store" might more suitably characterize the Fed's new found imperative toward openness in communicating its policy actions. Lacker says, "It should be unobjectionable ... to provide forward guidance that reduces unnecessary uncertainty about the central bank’s reaction function and thereby helps people make better predictions about future monetary policy." Truth is it should be unnecessary to provide any forward guidance at all.

Certainly, Lacker's objection to targeting employment as a component measure driving Fed policy reveals the man's understanding of the hyperinflationary dynamic the Fed is promoting to the effect of collapsing employment prospects. What he essentially is admitting is that, the Fed cannot mask its hyperinflation of credit were employment levels driving its actions. Or, if you prefer a more contentious tone, Lacker is showing a true fascist's colors elevating money, and the status of those who control its distribution throughout the economy, above the human condition itself. (Lacker's sophistry rationalizing his position on this account rightly should be questioned by any American holding "domestic Tranquility" and "the general Welfare" as supreme objectives of U.S. policy of every sort.)

Depending on their political affiliation, I suppose, most observers might judge whether Lacker is playing "good cop" or "bad cop" from his discussion on the Fed's post-crisis programs for conducting asset purchases and intervening in credit markets. Yet no matter which judgment is passed, one simply must conclude his stated objections to current Fed policy are entirely disingenuous. How does one "fully [support] the first wave of purchases of U.S. Treasury securities ... back in 2009" and demure "[rescuing] short-term creditors, [as] the additional precedent reinforces expectations of future rescues and further intensifies moral hazard?" How conveniently does the Richmond Fed President sidestep the fact that, the short-term creditor rescued in 2009 was the Fed itself! Certainly its utter lack of due diligence during the Greenspan era was at the root of 2008's systemically threatening crisis. Private sector creditors who took the fall merely were a "fill in the blank" postscript to the Fed's decades-running accommodation to Ponzi finance. Sorry Lacker, but the Fed's "credibility" has long expired.

It has been a while since it was argued here that, per the matter of maintaining the illusion of the trans-Atlantic banking system's solvency, every minute counts. Yet it is on this account that call for "humility" formerly promoted by Senator Bob Corker (R-TN) now seconded by Richmond Fed President Jeffrey Lacker in his concluding remarks on "Limiting Central Bank Lending" seems little more than an exercise in buying time, this that today's holders of securities at every layer of the capital structure be frozen in perception the banking system is anything but hopelessly insolvent. Limit central bank lending? In your dreams, Lacker! Not gonna happen. So, remaining to be seen is just how much longer the mere suggestion of such a policy change could forestall a rush to the exits (particularly those of core bond markets). Lacker's attempt to reinforce a perception believing the banking system's vulnerability has been stabilized, if not overcome, and so could withstand a more restrictive Fed is laughable. Truth is were central bank lending limited, the banking system would collapse. Yet that central banks have no choice but hyperinflate (outside a major debt reorganization that is), attendant bond market chaos but waits in the wings. The Fed's ongoing, attempted balancing act all too likely is on its last legs within the arena called "credible." If this were not so, then surely the Fed would be talking a lot less...


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, November 20, 2012

Capo Confetti Croons at the Club

While we are waiting for Europe to pony up the plentiful resources both Geithner and Bernanke still claim it possesses to deal with its banking system's insolvency, let's pick apart the Fraud Chairman's speech today before the Economic Club of New York...




Aw, forget that. Just too many misrepresentations and outright lies meant to freeze foreign holders of dollar-denominated debt in the headlights of an approaching freight train. Besides, when "uncertainty in Europe" plays second fiddle to "federal fiscal policy," you can be sure the band leader is a fascist whose seditious agenda plays to a domestic audience likely including many who signed the post-election petition seeking New York's secession from the Union. As crazy as such a shocking initiative as that no doubt is, its sudden appearance on the American stage certainly goes a considerable distance toward substantiating my view that, the political destruction of the U.S. constitutional republic is in fact on the table.

It goes without saying the Fraud Chairman is a Team player, too, given his ringing endorsement of Europe's inexorable drive toward a banking dictatorship which he cited as being the right policy prescription for a continent whose financial regulatory authorities indisputably have displayed even more criminal incompetence than the Fed. One can only hope both Bernanke and Geithner find wisdom holding their breath waiting for the German Bundesbank to goosestep in unison with the U.S. confetti brigade.

(Tonight's usage of the word "confetti" courtesy of Jim Grant.)

Bernice's Q&A if you're either interested or ready for a nap.


$NYMO


The market's leap higher since Friday might at first glance suggest an Elliott "rising wedge" forming off early-October 2011 bottom still is a living possibility. Yet the NYSE McClellan Oscillator is not concurring with this prospect on two counts.

First, no positive divergence was registered prior to Friday's turn higher. Yet both at early-October 2011 bottom and early-June 2012 bottom such a positive divergence in fact was in evidence.

Second, the Oscillator's momentum (bottom panel) remains negative. You can see for yourself what this has meant over the past two years. The market indeed remains vulnerable given its internal condition as presented by this measure.

Now, I would not be surprised if this week closes out in a manner extending today's suspended animation. Insolvent banks, having received word from the Fraud Chairman that, his bag of tricks will not open for a Congress whose "unsustainable spending" otherwise has saved the Fed's bankrupt ass, likewise have squeakers in the media to cheer on a hoped-for Black Friday surge in spending, this at least serving to buy time enough to create the churn necessary to cover the cost of yesterday's CME-goosed short squeeze.

Then again, the unfolding "fiscal cliff" drama rather might be manufacturing cover—providing the "why"—for unloading shares whose gains very well could face higher tax rates by year end, now that several leading Republican Senators who signed Grover Norquist's "no new taxes pledge" are recanting. Never mind other possible reasons like, for example, Madame Lagarde winning the day per Greek debt write-down and sending the European banking system into a tailspin, or the circles of purged warmongers from the U.S. military going rogue and, say, blowing up the Middle East.

With all these figures removed, it is likely to be more difficult for Israel’s Netanyahu to launch his war against Iran in the way that had been planned. He has therefore fallen back on the option of starting a smaller war in Gaza as a means of stabilizing the US-UK-Israel war party while other options are sought. The rogue network, now a wounded beast, must be counted doubly dangerous.
—"Coup and counter-coup in Washington" (Press TV, 11/19/2012)


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, November 19, 2012

Enjoy the View

Well, enjoy the view above the S&P 500's 200-day moving average, because it probably is not going to last long. Yes, the European "dumb money" disease went global today and provided the surge of relative buying interest absent Friday, thereby indicating bottom to the market's decline from September peak is nearing. This, however, is not to say bottom is either "at hand," or even "nearby."

Prior to Friday's presumed confirmation of an imminent August 2011 redux, it was but a week and a day earlier that, the same view was expressed. Then, just one day following my perspective was modified, yet this still had the market on the path to Swoon City. This is exactly where it remains. A trip lower approaching early-June bottom lies on the immediate horizon. This looks to be where the market's initial turn from its September peak will be settling.

Other than today's surge of relative buying interest, not a single technical measure is suggesting the market is out of the woods. No point calling today's volume "unimpressive," as a CME-led, short squeeze driven market has made unimpressive volume on advancing days something of a trend. Whatever it takes to make the books of hopelessly insolvent albatrosses appear sound and on the improve no doubt is the theme behind it. And suckers were buying it today, too. The CBOE Put/Call Ratio (whose momentum continues rising, by the way) reveals the "buy the dips" crowd evidently starving for a fleecing.

And fleeced they will be. That's my guarantee. Again, no need for diffidence. These pigs are goin' down...


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!

Sunday, November 18, 2012

Will Weimar Hyperinflation Come to the U.S.?

Although "inflate or die" thus far has passed muster in the New Era of overt, hyperinflationary bailout contrived by lenders of last resort to "rescue" the hopelessly insolvent trans-Atlantic banking system, truth is this policy response is but part and parcel of a covert hyperinflation ongoing since the early 1970s. In fact many elements making for decided echos of the German Weimar experience over the interim have been plainly evident, this notwithstanding a general unwillingness to look these in the face. However, physical circumstance finding at our monetary system's apex a global, U.S. Dollar System has effectively masked the many similar consequences we have been experiencing. As such we get a sense of John Maynard Keynes insight expressed in his short essay "Inflation" in 1919:

"There is no subtler, no surer means of overturning the existing basis of Society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."

The U.S. dollar's role as global reserve currency certainly has provided a check against the runaway aspects of hyperinflation from becoming entrenched. Likewise has a monetarist mania employing many a sophistic illusion—this of the fascist "creative destruction" sort rationalizing a regime of asset-stripping—whose effect over recent decades has facilitated an explosion of marketable securities representing claims on a wealth that, by no means is up to the task of sustaining the values assigned to these securities. Per such contemporary distinctions making our experience in the post-Bretton Woods era different than that leading to Weimar Germany's hyperinflationary nightmare of the early 1920s, we can readily agree with Doug Noland's analysis, which this week likewise contemplates the matter.

Yet the very fact that, the ultimate worth of a myriad of marketable securities cannot possibly be sustained given collapsed capacity to generate productivity-enhancing wealth (wherein "something" of value is created virtually out of "nothing") presents today's common foundation with Weimar Germany. No matter differences in objects of financial, economic and social focus, then versus now, runaway non-productive debt growth represents our common bond. Yet our vulnerability today is on a scale never before seen.

So, could the truly insane facets of hyperinflation that wracked Weimar Germany in the early 1920s yet come to fruition? You bet they could! Much will depend on political developments once the global, U.S. dollar reserve system is threatened with complete breakdown over the period ahead. Should denial and fantasy continue rationalizing policy initiatives furthering hyperinflationary bailout of a hopelessly insolvent banking system stuffed to the gills with unpayable, unproductive debt, then the very worst of the Weimar experience surely will be ours to relive.

The drive to impose austerity at the core of the U.S. dollar system certainly bodes ill for efforts otherwise attempting to hyperinflate outstanding system debt, and paper over the mountain of it that, simply is unpayable. We are way beyond there being any noteworthy value to monetarist technical machinations venturing to reduce supply of the last of living securities still in demand—U.S. Treasury securities—in the hope interest rates can be held down until the day phantom confidence in the garbage a Wall Street-London imperial cabal has stuffed the trans-Atlantic banking system with returns. Indeed, the very call for austerity is unmistakable admission some significant portion of existing liabilities are gravely threatened with default. We might readily conclude, then, insistence that austerity be imposed at the very core of the U.S. dollar system could herald that system's demise in chaotic unwind of some significant component of today's mountain of unpayable debt. The political response to this risk, once it is more widely recognized, will be key to assessing the likely path forward. So far, willingness to play along with the "fiscal cliff" circus sideshow sadly reveals a political class evidently clueless about what's at stake. No one stops to wonder whether the United States is being isolated, that collapse of the dollar reserve system becomes a fait accompli in a fit of debt repudiation whose probability of occurring in chaotic crisis only has been increasing over recent years.

Should resistance to austerity Team Fraud demands materialize over weeks ahead, keep an eye out for euro-zone-like blackmail exerted on a U.S. Treasury market whose size positively dwarfs any combination of global central banks. These simply cannot prop up the U.S. Treasury forever. Today's Treasury liabilities have a global reach and are not principally held domestically, so blackmail is even more easily applied. Knowing, too, where in 1931 such in kind, devastating pressure was exerted to the effect of collapsing the trans-Atlantic banking system back then, likely suspects thus already can be identified. Indeed, look what London has done to this point to heighten the United States' vulnerability. Going back to London's 1986 "Big Bang" any student of American history can trace an imperial operation targeting the United States for economic and financial destruction.

Per pending crisis of the U.S. dollar system, the goal appears isolation of the United States and, more critically, initiating the process of its political destruction, this by triggering its institutional capacity to deliver a devastating hyperinflationary response. Should institutions of government prove as feckless as those of a stillborn Weimar Republic saddled with a burdensome, unproductive debt incurred prosecuting a Great War whose manufactured initiation (again, by London), violent impact and loss cultivated resentment making impossible any debt repudiation—such a vengeance-driven social consciousness does not today prevent equitable reorganization of dollar denominated debt, however—then subsequent to collapse of today's dollar reserve system, or in tandem with it, a Weimar-like hyperinflation undoubtedly could take hold.

A read I came across of Germany's Thomas Mann commenting on Weimar hyperinflation presents worthy contemplation here:

"A straight line runs from the madness of the German inflation to the madness of the Third Reich. ...The market woman who demanded in a dry tone 'one hundred billion' mark for a single egg, had lost during inflation her ability to be amazed at anything anymore. Since that time nothing was so mad or so atrocious that it could have caused any awe in people anymore. ...
"They learned to look on life as a wild adventure, the outcome of which depended not on their own effort but on sinister, mysterious forces. The millions who were then robbed of their wages and savings become the masses with whom Dr. Goebbels was to operate. ...Having been robbed, the Germans became a nation of robbers."
—Thomas Mann, Princeton University, August 1942

Isolation, then political destruction is a far more likely outcome for the United States than the good garbage everyone else chirps about rationalizing intentions behind policies put in place following the collapse of Adam Smith's Leveraged Ponzi Scheme in 2007-2008. Simultaneously bankrupting and blackmailing the U.S. Treasury, then, evidently is the already well-worn means an ages old imperial enemy has deployed to destroy the constitutional republic that is the United States. Not that this objective's accomplishment is set in stone by any means. In fact, there's plenty of time to avoid this lurid outcome. Yet the ultimate setup making reachable the United States' tragic end already is well in place. Collapsing the U.S. dollar reserve system more than likely represents the gateway by which all hell is to break loose. The "fiscal cliff" fraud is but a means to choking a capital-starved banking system while at the same time further institutionalizing the politics of fascism, the likes of which then would stand ready in the wings once a Weimar-like hyperinflationary blowout runs its course in the United States over the months and years following the U.S. dollar system's demise.

So, any upcoming collapse sinking major U.S. stock indexes to levels last seen in the 1987-1994 period could be precipitated by the effective destruction of the U.S. dollar system. This probably will occur by way of the euro's collapse on account of an inescapable necessity for debt reorganization. It should come as no surprise that, the International Monetary Fund—a long-established institution housing old school, dyed in the wool fascists—today is leading the charge for Greek debt reorganization. One step back, two steps forward is the game this imperial tool is playing.

One final note of a fundamental nature worth concluding with is the matter of a Financial Transaction Sales Tax: a policy prescription recently advocated here. In and of itself this represents no real solution to avoiding the so-called "fiscal cliff." Nor is it an adequate proxy substituting for reinstatement of Glass-Steagall and consequent reorganization of insolvent credits today choking the trans-Atlantic banking system. Rather its pursuit is for the sole sake of making a loud political statement: NO TO FASCISM IN THE UNITED STATES! Taxing every financial transaction facilitated at the front line where support for fascism does its "banking" would be a most effective means for organizing support among an absolute majority of Americans who instinctively recognize the Republic's enemy, this no matter the citizenry's collective intellectual incapacity to fathom its enemy's fascist ways.

Now, on Friday I also promised a technical framework for fearing why a market collapse sinking major U.S. stock indexes back to levels last seen in the 1987-1994 period (at least!) could fully materialize in 2013. It's very simple and employs ideas involving "time" put forward in the Elliott Wave Principle. As I have briefly indicated before, time really plays no part in the development of component waves in an Elliott wave sequence. This matter specifically came up assessing the market's advance off March '09 bottom. In proposing that, five waves up unfolded into February 2011 peak (a possibility I am not presently siding with, per Friday's second alternate wave count), the contrast of time spent forming the 2nd wave versus the 4th was raised, and the conclusion surrounding the considerably longer duration spent forming the 4th wave deferred to this matter of "time" being a non-factor according to the Elliott Wave Principle.

Yet time considerations do in fact still have place in the Elliott Wave Principle, and although I made no mention of this back in '08, it was one of the reasons why I began the "Risk Averse Alert" in March of that year. Its working simply employs Fibonacci numbers over durations marking a top to a top, a top to a bottom, a bottom to a top, or a bottom to a bottom. For example, 2008 marked 34 years from the market's 1974 bottom. The year 2008 also was 21 years from 1987, which year saw both a major top and a major bottom put in place. Finally, 2008 was 8 years from the market's Y2k top. So, by this example you should see how "time" is accounted for in the Elliott Wave Principle. This is the extent of its utility, using Fibonacci numbers as a measuring stick so to speak.

Here's the Fibonacci sequence: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144... Each Fibonacci number is the sum of the preceding two Fibonacci numbers. How this came to be and how relationships in the sequence find countless natural expressions via the "Golden Ratio" I will leave to your love of Renaissance art and architecture, as well as the natural sciences, to at last discover and marvel about.

As for 2013, well that's 5 years from 2008 and 13 years from Y2k. So, then, we have some "technical" basis for anticipating something significant next year. Will it be a top? A bottom? How about both? Only time will tell.

Finally, I have consistently distinguished my long-term outlook from that put forward by Robert Prechter at Elliott Wave International by supposing the start of five waves up in the modern era of the United States might be traced back to the middle of the 19th century around the time of the outbreak of the American Civil War. In this framework 1932 marked bottom to the 2nd wave of five waves up. From 1932 to Y2k was the 3rd wave higher. The 5th wave of the 3rd wave formed following Nixon's abandonment of the Bretton Woods System of fixed exchange rates on August 15, 1971 and was marked by a covert hyperinflation, like I said at the start. My projection forecasting major U.S. stock indexes to fall to levels last seen in the 1987-1994 period corresponds with formation of the 4th wave of five waves up from the mid-19th century. So, the question I will conclude with here is whether the 5th wave up will be marked by a period of overt hyperinflation a la Weimar Germany?

Turning to the book to which I linked at the start, we find Chapter VII is titled, "The Course of Prices of Industrial Shares during the Paper Inflation." Here we find year-by-year details that might prove instructive. I would just note that, when the Weimar Republic's hyperinflation reached its climax in 1923, although share prices were rising, they were badly lagging other "things." In other words, equities were not maintaining their purchasing power. So, even if a 5th wave up completing five waves from the mid-19th century were to coincide with a Weimar redux in the U.S., at some point in its formation share gains probably will pale in comparison to increases in the cost of living.

Oh, and by the way... the year 2021 is 89 years from 1932, 21 years from Y2k, and 8 years from (drum roll) 2013. Might 2021 in the United States parallel Weimar Germany's 1923?



Highly recommended by Doug Noland

* * * * *
© 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, November 16, 2012

Confirming August 2011 Redux

Well, we certainly know where Europe's money fled to today. And wouldn't you know it, already proven "dumb money" just moved into U.S. trash right about at the worst moment.


$NYAD

As I was saying, August 2011 redux, here we are. Ho, Ho, Ho and a lot of selling yet to go is today's message yet again. Urgency to bid stocks higher is not yet seen per today's NYSE advance-decline differential. This is unlike the latter half of May when the market's decline from its March-April peak was nearing its end. Recently detailed here are several similar instances over recent years when A-D likewise signaled an approaching turn higher. May's was just the most recent (marked via the red dot above). Such [relatively] exceptional interest bidding NYSE-listed issues higher simply did not materialize today. Rather only a bounce in a continuing decline probably is most fairly seen. What's more, the likelihood of the market continuing its decline appears bolstered by the above measure's present [perilously declining] momentum. Note similarity to early-August 2011 on this account (see bottom panel).

Today's advance appearing but a bounce (this being suggested by a less than standout NYSE A-D) finds nothing but technical confirmation across the board. Mr. Market is in a bad way right now, and odds are its southbound journey is not even halfway over.


$NYA

As promised an Elliott wave count we could similarly apply across all major indexes and find no [Elliott wave-based] analytical quandary with the fact a broad measure like the NYSE Composite Index has been lagging all other major indexes over the past year, this by not having yet exceeded its May 1, 2011 peak. Here, across all indexes wave (b) of B is seen forming since February 2011 peak.

On this account wave (b) is the middle wave of a 5-3-5 "zig-zag" up from March '09 bottom. It is taking the form of a "double three" (at least) whose further formation is some months away from completing. Satisfaction of the Elliott Wave Principle's "alternation guideline," this as wave (b) continues developing per the above, prospective wave count, would be easily achieved.

Yet the above wave count variation presents neither the market's only likely path forward, nor its most probable. Indeed, the following wave count rather is thought more likely for both technical and fundamental reasons I will further elaborate over the weekend...


$NYA

Here again is an Elliott wave count we could similarly apply across all major indexes. In this case a "double three" is forming off March '09 bottom. Its first "three" took the form of a 5-3-5 "zig-zag" higher from March '09 bottom to February 2011 peak. Its second "three" is alternating by taking the form of a 3-3-5 "flat." This currently forming second "three" has been developing since early-October 2011 following completion of the connecting "x" wave.

With this wave count variation the end of the market's counter-trend rally off March '09 is in sight, unlike the prior alternative detailed above. Likewise, applying this second wave count variation across all major indexes we find distinct differences evident going as far back as 1998 (this in the case of the NASDAQ Composite in particular) satisfactorily accounted for. Per the NYSE Composite Index, as well as the S&P 500, distinctions noted in "Forewarned is Forearmed" likewise remain intact, thus combining with the wave count variation above to present a decided warning that, the market's anticipated demise slated to sink major indexes to levels last seen in the 1987-1994 period (at least) could begin and, indeed, end as soon as 2013.


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!