Special Risk Capital Management LLC

Bounce Off of Support Level; What Next? May 8, 2015

Last week I said that we had to hold the 4905 level (support) and we did.  Wednesday was that test followed by strong up days on Thursday and Friday.  But we’re not out of the woods just yet.  I see the 5020 level just above us and a (rather lame) short term trend line drawn in that same price area may confirm it.

Next week we need to break above that 5020 level with a strong Closing price.  Then I’d like to see Sentiment and Money Flow (above the price chart) confirm with improvements.  I note that while price has been weak, we really have not seen much selling; no high volume down days just yet.

The pie chart above shows what damage has been done to the stocks in the broad S&P 1500 Index.  There has been selling (red), but not major, since it is around the 50% of all stocks.  IF we are at the early stages of a distribution structure, then we would likely bounce off of the 5020 level and head lower.  I’m just not seeing that right now.

So, I’m looking to add to my portfolio IF the market cooperates.  Here are some of the stronger industry sectors I’m considering:

(you can click on any graphic to enlarge it for easy viewing)

Most of these sectors are no strangers since they were strong on the last up swing.  Of course an out of the blue news item could derail a market rally, and we should also pay attention to International opportunities as well (Latin America is holding up well and Europe is showing promise).

That’s it for now.  Be careful out there, this is where it get interesting.   ………  Tom  ………..

price chart by MetaStock; pie charts by http://www.HighGrowthStock.com. Used with permission