Special Risk Capital Management LLC

At Equilibrium (i.e. not much movement) July 26, 2013

For being in the middle of earnings season, not much is happening in the stock market.  A quick check of the chart is in order:

I note at the top of the chart (the red histogram) the short-term “Money Flow” that money had flowed out (i.e. Distribution; tho light) then returned.  I’ve circled the last 10 days in blue to emphasize that there really has not been much movement over those 10 days.  Also I draw your attention to the relative small daily range (i.e. height) of those bars.  Richard Wyckoff might have called this absorption, that is Buyers are absorbing what the Sellers are giving them.  Thus the buying and selling are at equilibrium.   Sounds like the Summer Doldrums to me.

Last week I expressed concerns that we were approaching the top of the (longer term) price channel (lines in purple), and that could slow this market down or even cause a minor correction.  looks like we’re getting that sideways movement right now, but that’s OK, perfectly healthy.

A longer term look at Money Flow (pie chart below) still is fairly Bullish with the green areas out pacing the red sections.  So it’s basically “steady as she goes”, to use a nautical term.  (note: the pie chart is of the S&P 1500 stocks, a very broad index)

A quick scan of the table below shows what sectors are the healthiest in the near term.  These are the top 15 sectors out of the 68 major sectors.

Have a good week and enjoy the Summer . . . . the market is on vacation.  🙂    …….  Tom  ……..

As always, click the graphic to enlarge it for easy viewing; chart courtesy of MetaStock, pie chart & table from http://www.HighGrowthInvestor.com; all used with permission.