Special Risk Capital Management LLC

This (level) Must Hold December 12, 2015

Well it happened on Friday; a number of things simmering in the background came to a head.  Monday and Tuesday will be telling on how this market reacts.  Note the chart below . . .  (click on chart to enlarge)

We’ve broken a (reverse) trend line, money flow is weak, Sentiment turned from Neutral to Bearish.  The previous swing low of 4905 must hold (on the Close) for the market to go back into a trading range.  I note that volume on Friday was not excessive so it looks like a “lack of buyers”; no signs of panic yet.

Perhaps the traders are bringing the market lower one more time to flush out stock from weak hands before “buy the dips”.  That could very well be.  One more swing lower before the end of the year followed by the traditional “Santa Clause Rally” to close out the year would bring extra trading profits.  A nice close to 2015 (we have to be watchful here).

We can see price weakness across the board via the S&P 1500 stocks (above).  No surprise since the small cap stocks have been weak for weeks now.  Going back to last weeks post on the Advance / Decline Summation Index and note that fewer and fewer stocks have been advancing as of late.

Mondays open should gap lower as small investors panic out of the market.  Let’s see if the big guys step in and buy in the afternoon.  This will be a key event either way.  I’m pretty liquid right now as my scans have not produced any good stocks that have decent price structure.  As we get towards Christmas expect volume to drop off.

I’m going to be VERY late with a post next week, since I’m on the road and they’ve got me busy (plus clients come first).  Bottom line: watch early week and when in doubt, be careful.  Cheers.        …………  Tom  ………….