Special Risk Capital Management LLC

“Don’t Fight The FED” September 15, 2012

Marty Zweig once said “Don’t Fight the FED”, a reference to going along when a central bank eases money flow and turns it up.  We’ve seen that in Europe, the US and to some extent China.  Low interest rates will be with us for a while until world economies recover.  And so . . . market respond accordingly . . . . UP.

This will be a short post since I’m working on a small laptop, which is not a joy to work on; inhibits creativity.  🙂

OK, the markets when up quickly and largely this week. Are “Happy Days Here Again?”  In the short run Yes, but . . .

Above we note the NASDAQ Composite Index.  It broke up (direction wise) and looks strong.  The low volume of the range bound are last week is behind us.  Volume picked up as the market went higher.  We’ll continue to watch this price bar and volume relationships because if the price bar (spread) continue to increase and the volume suddenly drops, or if the bar narrows on very high volume I’ll be concerned.  These would indicate a lack of buyers and a major distribution (respectively).  In the mean time let’s ride this market.  A drop below the 3090 level will get my attention, but for now let’s enjoy it.  All it will take is some bad news to disrupt the journey and that can happen at any time.

What’s doing well?  Precious Metals, Banks, Wireless, BioTech, Financials and Basic Materials are strongest.  I also see Internet and Consumer Service stocks doing well in here.  I note that Small Cap. stocks are out performing the Larger Cap. stocks, a sign of “risk on” by short-term investors.  That’s OK, but always a concern.  The tables below show the 10 Best and 10 Worst Stock Sectors.  FYI

10 Best-

10 Worst–

Have a great week, and as always, be watchful.  In this geo-political environment anything could “upset the apple cart” and do it quickly.          ………….  Tom ……………