Special Risk Capital Management LLC

Low Volume – Dull Market April 29, 2018

April 27, 2018 – There is an old saying, “Never Short a Dull Market” and that’s what may be happening.  Next week is another round of earnings reports from the first quarter and this market just wants to wait and see what they are.  Granted that the earnings have been very good (generally), but the guidance going forward has been “luke warm”.  The tax benefits have long since been anticipated and reflected in prices.  It’s the future that concerns Wall Street right now.

I’ve placed some Wyckoff labels on the chart above and the notable one is a possible “LPS ?” in red.  That is the “Last Point of Support” where this market would break upwards IF a major Sign of Strength bar develops.  Low volume, so not much Supply; what we would need is increased demand.  That demand (SOS bar) would be a high volume bar with a wide daily range and a Close near the top.  In short, a break out bar.

Interesting to also note was how the NASDAQ Composite Index stopped right at the previous Support level of 7205 on Friday morning then headed down.  A significant break above 7205 on high volume would lend validity to a SOS bar, but for now that’s just a scenario.  Breaking above 7332 would be a big confirmation.

The table below shows what sectors are currently doing well –

Interesting to see Technology and Emerging Markets still in the basement along with Banks and Finance.  We’ll need to see some leadership in major sectors such as these for any sustained rally.  That’s about all for now.  Have a good week.    ………..  Tom  ………

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