Special Risk Capital Management LLC

A Slight Correction at Quaters End September 29, 2012

Since my “Money Flow” and “Price Strength” charts will appear in my Monthly Client Report (click the ‘newsletter’ tab), I won’t repeat them here and I won’t duplicate my market comments.  But, here’s what I see in the chart below:

We were hugging the upper end of the aggressive channel (the red dashed line) and now we’re at the mid-point of that channel; and still rather high in the less aggressive ‘Blue Channel’.  So things are not falling apart but appear to be just a normal correction.  The fact that it happened at the end of the 3rd quarter could be attributed to end of quarter portfolio changes (selling the poor stocks and buying the better ones).  So let’s see what happens next week.

What I’d like to see is a strong rally near the previous high.  The strength of that rally (as indicated by volume) will provide a clue as to whether this formation is actual Distribution or is it just a Pause and eventually leads to Re-Accumulation (and hence higher prices).  The bottom line is this pause is good.  it will give us an idea what’s in store over the next 3-6 months.  So far, I’m optimistic as I don’t see significant Selling going on.  News continues to drive short-term market reactions which is not helpful at all.

Here ar ethe sectors that are going well right now:

Have a good week.      …….. Tom …….