Special Risk Capital Management LLC

Can’t Decide ? Neither Can The Market November 19, 2011

This will be short, as I’m editing the post out of my 10″ laptop (a 21″ screen spoils you). 🙂

Not a good week this past week; prices down and volume up (note chart below, purple lines).  Looks like investors can’t decide whether to put money in or take it out of this environment.  If you’re confused, don’t feel alone.  Over the past 3 weeks I’ve talked to many money managers face to face and they’re not sure either. (IF there is ever a “sure” thing anyway)  Many have told me this is the worst market (to read) in the past 30 years.

Why so tough?  The economic and political environments.  Seems like folks are concerned about slipping down and afraid of missing a move up.  It’s not easy trying to figure out where to be right now, as the news whips investors around quickly.

The “pie chart” below shows where stock price are in the broad S&P 1500 index.  More Yellow (caution) than previous weeks, and less green (strong up trends).  So we’re more careful at this point.  With Thanksgiving coming up next week I expect trading volume to be low, which is an environment for potential volatility (a few people or computer programs can move things easier.)

Strongest sectors are mainly defensive: Distributors, Construction Materials, Communication Equipment, Tobacco, Utilities and Food and Staples.