Special Risk Capital Management LLC

We’re Not In Kansas Anymore March 24, 2017

March 24, 2017 – Apologizes to ‘The Wizard of Oz’, but this market trend has broken the lower channel line (note below) and that verifies a “Change in Character” IMHO.  The “Trump Rally” has lost its momentum, but the bigger question is ‘has it lost its direction?’

It’s too early to tell just yet since we’ll need a significant Close below the support level (5748).  Looking at the price and volume action, right now it just looks like the market is weak on a “Lack of Demand” / buying.  Volume is low, so there isn’t a rush to get out of this market, at least not yet.  We could just bounce around in a trading range until earnings come out.  Then, we will likely see some action one way or the other.  The lofty expectations for the Trump admiration are coming back to earth and that’s not really a surprise.  It had to happen, this market can’t continue going at this pace without some pause or correction.

We see confirmation in a weak Money Flow and Bearish Volume Flow indicators.  My Sentiment indicator has switched to  Bearish, but remember, we need price follow through to the downside (below support) before we can raise the “red flag”.  Time to honor stops and pay particular attention to market action.  Is the market down, or is it down on increasing volume?  A big difference.

We do have strength in the market, as show below:

The overall stocks in the broad S&P 1500 Index are showing weakness with the number of stocks in Distribution, and increasing.

Price Strength (below) also parallels that of Accumulation / Distribution (above).

I opened with: “We’re Not In Kansas Anymore”.   But we’ll have to evaluate price and volume next week to get an idea where this market is headed.  Right now, I’d say laterally until earnings forces a move either way.

Have a good week.  …….  Tom  ………

Price chart by MetaStock; pie chart & table by http://www.HighGrowthStock.com. Used with permission.