Special Risk Capital Management LLC

In Limbo October 21, 2016

Oct. 21, 2016 – This market just seems to be in limbo.  Narrow range bars on decreasing volume with very little price movement (see chart below).  We’re just stuck around the 5250 level on the NASDAQ waiting for something.  Well, next week there is a full schedule of 3rd quarter earnings coming out.  These are big, well known companies and any surprise (good or bad) could be a potential market mover, or at least shake up their respective sectors.

Money & Volume flow is anemic, sentiment is bearish, so there’s not a bunch of things to be bullish about, except the market is holding its own.  I don’t see a LPSY (Last Point of Supply) formation on this chart, so that helps to form my “limbo” idea.  Looking at the individual stock activity in the broad S&P 1500 Index below:

Accumulation (buying) and Distribution (selling) in the pie chart above pretty much confirm the thesis of a market in limbo, waiting for something.

Price Strength (above) appears to confirm the limbo idea as well, though bends a bit toward weaker.

Looking at individual sectors may tell a different story.  Airline & Oil Service stocks and International shares (Latin America & Japan) are doing relatively well.  I have done some select buying in those areas, but I’m keeping them on a tight leash since my Market Model is Neutral to slightly Bearish right now.  Perhaps investors are waiting to the election to be over, but I think earnings are a bigger factor in their decision models.

And so we take small cautious positions and wait for better setups.  Have a good week.  …….. Tom  …….

(Price graph by MetaStock; pie charts by http://www.HighGrowthStock.com.  Used with permission.)