Special Risk Capital Management LLC

At (the top) Resistance November 7, 2015

Not much real progress in the market indexes this week, but at least the Small Cap Russell 2000 Index is beginning to “catch up” to the rest of the markets.  Note on the chart below how the broad NASDAQ Composite Index is right about where it was in July.  Now it gets interesting to see if money continues to flow into this market or finds a better place.

(note: you can always click on a chart to enlarge it for easier viewing)

I’ve drawn in a few reverse trend lines to give me an idea where price could be headed if this rate continues.  The 5165 (ish) level is a major resistance point and I wouldn’t be surprised that it pauses in this area for a couple of weeks.  The pie chart below shows just how strong and broad this move has been.  (chart of the S&P 1500 index stock components)  Impressive, but rather “over bought”.

What I am seeing now is strength in the sectors that were beaten down the most during the correction that began in the late summer.  The table below shows the sectors of the stocks on my candidate watch list.

Semiconductor, software, banking and airlines are represented.  Select Internet and healthcare stocks are also in the mix.  It’s a tough time to be buying much of these, so a scale-in approach is likely a good idea if we don’t see signs of weakness soon.

That’s it for now.  Have a good week.  …….  Tom  ……..

Charts by MetaStock & http://www.HighGrowthInvestor.com; used with permission.