Special Risk Capital Management LLC

Support Level Established, Must Hold May 2, 2015

Our “line in the sand” at 5020 (NASDAQ Composite Index) was easily broken on a closing basis on Thursday.  It was a wide range bar on increasing volume; obviously Distribution / Selling.  The Opening on Friday was a gap higher and a nice recovery.  That low on Thursday is now Support.

The stage is now set.  IF last week was truly an Upthrust (after distribution), then a slight retest of the 5020 area from this level, followed by more selling, would confirm the distribution structure.  In that case prices going lower would be expected.

But . . . the Upthrust formation is not very strong in that those bars should show weak demand (volume) and that does not appear to be the case.  Now volume price analysis on indexes are much harder because the index is a composite of many stocks, most of which lag the market and not lead it.  I also note the lack of selling pressure as measured by my “Money Flow” indicator.  What I see is more Lack of Demand and not really hard selling (so far).  Are the “folks” bringing the market down so they can pick up some bargains?  I’m think ‘in that.  So far the market sentiment indicator has not turns “Bearish” either; back to Neutral from Bullish.

The pie chart below shows what industry sectors stocks in my ‘possible buy candidate list’ are in:  (click on graphic to enlarge)

No surprise that Oil & Gas, software and Semiconductor stocks are a good potion of the listing.

As the British would say “Wait For It !”  Let’s watch the markets early next week.  If buying comes in, then we should follow, if nothing much or worse yet selling comes in, then it’s time to gracefully exit and/or hedge out (if you have not already).

I will be posting my monthly Client Newsletter in that tab above by Monday.  Until then be a good observer, as we’re close to an inflection point (IMHO).   ……..  Tom  ……..

chart by MetaStock; pie chart by http://www.HighGrowthStock.com; used with permission