Special Risk Capital Management LLC

Climbing the Upper Channel February 10, 2017

Feb. 10, 2017 – As the 60’s Rock-n-Roll saying goes: “And the hits just keep on coming !”, and so does this market rally.  Prices continue to hug that upper trend channel line (purple).  The latest rally was (supposedly) sparked by Trump commenting that he’d have a tax reform plan out in the next 2-3 weeks.  This market has high expectations for the new administration.  How it delivers remains to be seen, though past execution of plans leaves room for concern.

In any case “it is what it is” and the markets continue higher.  I’ve spotted in new support price levels to watch for.  The 5575 level is the last price pivot level and the 5522 is the low for the last weekly “significant bar”.  The significant bar idea is based off of Wyckoff’s idea that the low of a major weekly up bar is significant since it showed where significant buying had come into the market.  I may start plotting that level here in the future.

One area I’ve been working on is evaluating industry sectors based on the performance of the stocks in those sectors.  Sure price is important, but so are the number of stocks advancing and the volume of those, compared to the declines.  Strong & broad participation are very positive for continued strength.  The idea of market analysis, then sector / industry analysis, before stock analysis, is very Wyckoff based as well.  Today we call it “top down analysis”, but it goes way back to the 1920’s.

So here’s my latest ranking (it could evolve, nothing is 100% set) of major industries, using the behavior of all stocks in those sectors.

The colored bar is a percentile ranking and the raw score is next to it.  My goal is to (quickly) provide good information on where to look for opportunities.  That said, I continue to like Metals & Mining, China, Technology and Emerging Markets (especially Latin America).

Always looking for comments & feedback from readers.  Take Care and have a good week.   ………  Tom  ……..

Price chart by MetaStock; table by http://www.HighGrowthStock.com; used with permission.