Special Risk Capital Management LLC

Looking for Market Follow Through Next May 5, 2018

May 4, 2018 – The markets were generally lower this week until Friday; that’s when the jobs report came out.  Everyone found what they wanted in it.  Unemployment dropped to 3.9% (low) and wage growth was minimal (low inflation pressures).  So Friday was a recovery day.

I had a small hedge in place to protect our portfolios in this environment, but took them off (according to plan) on Friday.  That market model is now in 100% cash waiting for confirmation of a trend . . . in either direction.  I’ve placed Wyckoff key bar labels on the chart to signify a possible structure scenario.  Of note is the low on Thursday as a potential LPS (last point of supply).  Such a structure is Bullish and (theoretically) the market should take off higher very soon.  What does concern me is the rather low volume on Friday, indicating a lack of sellers and mostly low volume buyers that pushed prices.  Covering shorts it appears to me.

Of note also is the close very near the 7205 level (red line).  That was our resistance level short term.  I need to see a break above 7332 to feel more comfortable though.  Sentiment is positive but Money and Volume Flows are pretty neutral right now.  Price Strength is neutral to bearish as well.  Let’s see how the stocks in the broad S&P 1500 Index are fairing:

% of Stocks, Price Strength –

% of Stocks in Accumulation / Distribution –

Both pie charts are fairly even and that’s usually a healthy sign.  I’m still looking at more defensive sectors like Rising Dollar, Japan, Oil and Utilities now, but that could change quickly next week IF the market goes higher.  That’s it for this week.  The coming week should provide us some clues for the next move,  but uncertainty remains with earnings and geo-political issues in play.     ………..  Tom  ………..

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