Special Risk Capital Management LLC

Much Ado About . . . . (nothing) August 9, 2013

I was (not really) surprised when the “talking heads” on the financial media began talking about this being the first week in the last 6 that was a “down week”.  Really?  And did we all expect each and every week to be an “up week” in a Bull market (or a “down week” in a Bear)?  Of course not.  This year has really spoiled us into thinking the trend must continue day after day, week after week, but it doesn’t.

A quick look at the chart shows that we’re (still) toward the upper end of the price channel (purple).  That’s were advances slow down and this week it did; that’s all.

As I mentioned in previous posts, I expect the rest of the Summer to be volatile with little hint of the markets next real move.  I think we may just have to wait until after Labor Day.  Richard Wyckoff (i believe) would call this action “stair steps”, which are nothing more than consolidation periods within an overall move.  Volume (supply of shares) is light and the daily spread of the price bar is rather narrow.  Not much action . . . . vacation time perhaps.

Above we see the top sectors ranked by recent strength.  These are the top 20 sectors out of a possible 68 sectors.  Hopefully your portfolio represents most of these as it looks like a stock pickers environment.  That is, the market may be slowing with a consolidation pattern but there are stocks that are moving ahead.  I also note that for most of this year the Russell 2000 Index (small capital stocks) have been the strongest (i.e. “risk on” trade), but recently the NASDAQ 100 Index has moved to the top.  Perhaps large cap tech stocks are finally beginning to show some strength.  Something to watch.

That’s about it for now.  Not much exciting to discuss.  Enjoy the Summer but remain vigilant.   . . . . . Tom  . . . . .

price chart courtesy of MetaStock; sector table by http://www.HighGrowthStock.com; used with permission; click on graphics to enlarge.