Special Risk Capital Management LLC

Steady As She Goes ! September 14, 2013

Looking at the “Big Picture”, the chart below shows that this market remains in a trend channel (purple lines) that continues to rise.  Sure we’ve gone from the upper channel line (over bought) back to the lower (oversold) but so far it’s “Steady As She Goes”.

On the shorter term I note at the top of the chart the Flow of Money in and out as the price oscillates between the lines.  If you’re a short-term trader this channel is not of much interest but for longer term folks, it is becoming of more value, as an indicator the longer it continues.  (note: click on any graphic to enlarge it for easy viewing)  

I circled two blips in the volume chart at the lower portion.  I like to note higher “blips” that normal (i.e. recent past) to see if that price bars holds any extra information (these are minor blips).  Unusually high volume on Up bars, in the context of a correction or base building structure can be considered Bullish; toward the top (accumulation structure) it is a statement of Caution.  The opposite is true.  High volume on a weak bar in a topping structure shows distribution (selling) and is Bearish.

The point is high volume can be either good or bad, it all depends upon the structure and the context of the market.

A little Wyckoff observation; OK, that’s out of my system.   🙂   Let’s look at what is strongest in this market:

The Strong Sectors table is more of a shorter term “what’s happening now” view, so understand that it is more dynamic than a long-term investor would care for.  But the idea is IF you have extra investable funds, this may be a good place to start looking.  (I don’t give specific stock or fund recommendations because that’s what people pay me for and it just brings headaches because many folks don’t understand when to sell or what their risk tolerance actually is.  Rule #1: Avoid a major loss of capital; Rule #2: see rule #1.)

Not much else new this week, though there are many potential news items that could generate market moves unexpectedly, so be careful.   Have a good week.       …………….  Tom  …………….

chart courtesy of MetaStock; table by http://www.HighGrowthStock.com; used with permission.