Special Risk Capital Management LLC

Off The Top Channel September 8, 2018

Sept. 7, 2018 – As pretty much expected from last week, price did soften and headed lower bouncing off the upper long term channel (dashed gray line).  An approximate estimated low price would be in the neighborhood of the lower channel line, which I’ve highlighted as the 7700 level.

Of worthy note is that the Sentiment, Volume and Money Flow indicators have turned down.  Price Strength is down & red as well.  Time to be extra watchful to see how your holdings are reacting to the lower general market.  A quick look at the chart above does not indicate “panic selling” as the volume is modest to lower.  It appears that what we see is just a lack of buyers for the time being.  Hence (if things don’t deteriorate) this should be a shallow correction; thus the lower channel as a likely target.

I’ve pulled in my Index long positions to Cash and cut back on my sector holdings.  My market model suggests hedging my stock positions IF further weakness develops.  Buying a “bear fund” to hedge is like buying insurance; one holding helps to counteract the other.

The pie chart below show a mild weakening, but so far nothing major.  (These show the % of the total stocks in the broad S&P 1500 index that are in this status.)

Price Strength –Accumulation / Distribution –I really don’t see any sectors, whether they be long or short, that merit much consideration to buy currently.  IF the market continues to soften then sector bear funds may be in order, but let’s not jump to any conclusion just yet.  Of course, news is always a “wild card”.  This market is weak, and piling on bad news would push it even further lower.

Have a good week.     …………  Tom  ……………

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