Special Risk Capital Management LLC

On The Floor October 29, 2016

Oct. 28, 2016 –  This market remains within a rather tight trading range.  What we’ve seen is accentually indecision.  Not much reason to go up, and it really doesn’t want to go down either.  Both sides are looking for a good reason to move in either direction.  That was shown on Friday afternoon with the FBI news release; that’s all it took for traders to step back.  Folks are nervous.

I’ve spotted in a “utad” (Up Thrust After Distribution) only because of the Lack of Demand on those narrow price bars that poked higher.  Sure, prices went high, but without conviction (volume).  This is a worse case scenario.  We couldn’t hold the 5250 level so the next price support is around 5170, the previous swing low.  Not much sense in drawing trend lines because of the near horizontal price pattern.

I read that nearly 50% of corporations have reported 3rd quarter earnings and that 73% of those were at or above projections.  So far things are OK, though not as exciting as they were a few years ago during the recovery with major growth.  Maybe investors just have to get used to modest earnings growth.

For now I’m cautious.  Small Cap stocks are showing weakness, volume is low, Sentiment is bearish and nearly everyone appears to be waiting for the election to be over.  My strong sectors of Latin America, Japan and Banks are still good, but a market correction will take them down as well.  Small, thoughtful positions are in order right now; keeping some “powder dry”.

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

chart by MetaStock, used with permission