Special Risk Capital Management LLC

Market weak and Within a Range January 18, 2015

Sorry this posting is late, but this past week has been unbelievably busy.  The good news the worst is over and I’m settling back in.  So, here goes my “short take” on this market . . .

Overall, there continues to be weakness in this market.  Witness how poorly it reacts to classical “bad news”.  Volatility is still fairly high (another indication) and prices continue to do short term moves up and down.  Take a look at the chart below and you’ll see that we’re in a trading range of 4810 on the high side and 4565 on the low.

I’ve relabeled some key Wyckoff inflection points to reflect what could be a Distribution structure.  The key level will be a close below 4565 and a follow through the next day.  Otherwise this is just a Re-accumulation pattern.  The volume signature on any move lower will be the tip off as to which structure it is.  Right now the volume is more supportive of Re-accumulation.

One thing that concerns me this the strength of certain sectors.  Rising US Dollar, Government Bonds, short International and Real Estate, are all pretty defensive or Bearish.  Sure there has been recent moves in Semiconductors and Biotech, but those are less “trending” and perhaps more short term.  We’ll see if those moves last week will carry into next week.

So trend following is tough now, and we must be cautious with any positions; don’t get “married” to any stock in here.  Have a good week.  ….  Tom  …..

chart courtesy of MetaStock; used with permission.  click on graphic to enlarge