Special Risk Capital Management LLC

A Short Week . . . Continued Strength July 4, 2014

This was a short trading week, with very light volume, so there’s not much use is making long comments.  🙂  But let’s keep things in perspective here.

chart by MetaStock; used with permission

The chart above shows that we blew right through the 4370 Resistance level (previous swing high level).  We’re also in the upper half of the price channel; above that green mid-channel line.  That shows a lot of strength, but also increased vulnerability to price corrections (a.k.a. “over bought”).  Normally I’d look at volume to see if demand was holding up (a good sign) or tapering off (a bearish sign; an Up Thrust) but we really can’t because of the light holiday volume.  This light volume doesn’t really tell us anything, so we’ll have to wait until early next week to see if demand continues to push prices higher, or if folks get nervous and profit taking rolls in (a.k.a. supply coming into the market; volume increases with Signs of Weakness).

I see near term support at around the 4340 level and have to go allll the way back to March, 2000 to see a previous peak at 4700 (“the Internet Bubble” era).  The bottom line is we’re in new territory with this high ground.  I don’t see any major issues . . yet, but the higher we go, the riskier it gets.  Have a great holiday weekend.   ….  Tom  ….

P.S.  My July Client newsletter is posted under that tab, FYI.