Special Risk Capital Management LLC

Back to Breakout Level November 14, 2015

Last week I mentioned that the (US) markets were at resistance, and that likely any further rise would come after a pull back or a pause.  The pull back happened last week.  My suggested price level on the NASDAQ Composite Index was 4905 and we’re just about there now.  That level would be a “natural” point to bounce around and off of, however we can’t dismiss going lower to the next support area (4810).

I note that Sentiment has turned neutral, as well as Money Flow”.  The Accumulation / Distribution Volume (green & red lines) clearly show a heavy bent toward Distribution; that said “red overwhelms green”.  Glance to the bottom and we see volume has been low / modest overall.  I take this to mean that the recent price weakness is being driven more by a “Lack of Demand” than heavy selling.  I really don’t see any recent Buying Climax, though a case could be made that we’re in a possible UTAD (up thrust after distribution) structure that just has not played out yet.

Let’s keep a close eye on how markets react to the terrorist attacks in Paris.  Monday morning will likely see a blip sharply lower (a reaction), then let’s see if buyers step in to take advantage of the wholesale prices.  Volume on any rebound will be of major interest (are buyers coming into this market on Up Bars, or is the move driven by “lack of selling”?  Monday and Tuesday may provide a look into the near future.

I won’t talk about strong market sectors because it’s not appropriate and there really aren’t any stand outs.

Have a good week.         …………..  Tom  ………….