Special Risk Capital Management LLC

No Easy Task June 8, 2013

This is not easy.  For starters, I’m on the road working out of a small laptop and I hate small screens.  Secondly is this market.  Reading it is no easy task and I’m hearing that from a number of professionals too.  So, what next?

The chart above (for the Wyckoff students among us) is labeled as Distribution (Buying Climax bc, and Automatic Reaction ar), then as Accumulation (spring spr).  So what is it?  Yes.  It really could be either.  Here’s my point:  True the Trend line was broken along with a Support level (red), so caution would dictate being out of the market.  But that bar on Thursday (spring) had a nice reversal and up on Friday (accumulation).  But is it?  Note the very light volume on Friday.  That’s not a mad rush of Buying coming into this market.  Also note how the lower (blue) trendine held. 

In short, anything could happen going forward.  That line could hold (and must) then I would expect next week to move back up with increasing volume.  But, if it does not hold and we see renewed selling, I’m going Short (in a small way).  My Market Model (which is totally formula driven) is in Cash and NOT Short.  So it confirms this theory.

Time to sit back and observe, and that’s easiest to do IF you have minimal exposure.  Have a good week.

………………….  Tom  …………………..