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OTHERS OF NOTE
RISK IS LEAVING THE MARKET
Stealth Movements Warn of Potential Q2 Market Troubles
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
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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