Special Risk Capital Management LLC

“Coiled Spring” September 7, 2016

Sept. 2, 2016 –  I’ve done over 200 posts and this is the first one that I’ve been “late” with  Sorry about that, but hurricane Hermine had something to do with it and this blog came in down the list of priorities over the weekend.  But the good news is that not a whole lot has changed.  The US markets have not really gone any where over the past month +.  Check out the chart below and you’ll see that the summer doldrums came in about mid summer and really set in during the month of August.

What many technicians would call this would be a “coiled spring”.  That is price action that appears to wind around itself like a spring.  The idea is that the price action will eventually unwind itself in one direction or the other and do so quickly.  I marked the tight trend line break in early August as the Change in Character for this market.  Since then is has just gone sideways.

Market Sentiment remains positive but volume and “Money Flow” are low and slow.  It just seems that investors and traders alike are happy to wait for some item to move the market.  Valuations are high, so stocks are generally not cheap, but where else can you invest money?  International bonds are at or near zero % and the US interest rates are not much higher.  And so the spring just gets coiled tighter and tighter for now.  It could really head in either direction.

Be patient and safe.     ……………  Tom  …………….