Special Risk Capital Management LLC

Not Out of the Woods May 21, 2017

May 19, 2017 – Despite the rally (attempt) from the recent sell off, the market internals remain “iffy” and not broadly strong.  As shown below, we did just touch the lower channel / trend line as a Secondary Test before a recovery, but participation in that rally has been modest at best.  Sentiment is neutral and Money Flow is lower; volume is lethargic.

This does not mean ‘sell’ because we’re still in the upward channel and above support levels (5970), but being extra watchful would be recommended.  What are doing well are the previous strong sectors.  Generally, Technology and Specialty / Niche companies.  Here’s the areas that I’m watching for strength:

Back to the market in general: the pie charts below shows the overall status of the S&P 1500 stocks (a very broad sampling).

Price Strength –Stocks under Accumulation & Distribution –These charts support my idea that “We’re Not Out of the Woods”, at least not just yet.  Perhaps we have a “Sell in May & Go Away” situation and the “Summer Doldrums” have arrived, but more likely the euphoria of the Trump election has succumb to reality that all of the wonderful things promised won’t happen.  Welcome to politics Mr. Trump.  I have taken positions in select International sectors.  Europe & certain Asian countries have been performing well (avoiding Latin America for now).

So we’re back to this market looking for direction and good (or bad) news.  There just doesn’t seem a need to jump all the way in, but there really isn’t a need to sell either.  Have a good week.        ………….  Tom  ………….

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