RISK IS LEAVING THE MARKET

Stealth Movements Warn of Potential Q2 Market Troubles

Published 03-28-14

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Market Tops are a process. There are many tell tales but the clearest to see and watch is Specualtive Risk. Market reversals from tops are often about excess leverage and its associated risk being removed.

It normally starts slowly, but steadily gains momentum. It becomes obvious to the general public when margin calls suddenly force dramatic movements in the market.

So what should we watch for? If a company has no earnings then it must be considered a specualtive play and possibly bordering on a gamble. On the other end of the spectrum, if a company has earnings, a history of earnings and pays dividends then we could say it is not a gamble but an investment. Everything between must be considered to be speculation to some degree.

GAMBLING => SPECULATION => INVESTMENT.

I have laddered some well know an easily found indexes that represent this spectrum of risk taking below.

The following charts are all measured against their 50 Day Moving Average to give us a reference point.

Examine closely the change in patterns as you decrease risk. It tells tells you what is happening with Risk.

Risk is being quietly removed. Slowly at first, then nomrally with gathering momentum across a broader range of risk levels.

EXTREME RISK: NASDAQ INTERNET GROUP

VERY HIGH RISK: NASDAQ BIOTECH GROUP

HIGH RISK: IPO INDEX

MODERATE RISK: RUSSELL 2000

MODERATE RISK: NASDAQ 100

NINVESTMENT GRADE RISK: S&P 500

CONSERVATIVE RISK: DOW JONES

CONCLUSION

Goldman reports Hedge Funds are levered to the hilt on losing: AMZN, GILD, DISH, PCLN, YHOO, and FB positions. This is not a good sign!

Signs of a healthy market are not marked by increasing short positions on Banks!

Don't say you weren't WARNED!

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Gordon T Long    
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Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that you are encouraged to confirm the facts on your own before making important investment commitments.

© Copyright 2013 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or suggestions you receive from him.