Special Risk Capital Management LLC

Signs of a Pause February 2, 2019

Feb. 1, 2019 – While the overall trend of this market remains up, by mid week there were some signs starting to show themselves of a possible weakening of momentum.  In my more complex market model I got a “Caution – Move to Cash” signal that continued into Thursday but never triggered into an position change.  This model is fairly sensitive so not every “Caution” gets confirmed, but the case remains that momentum could very likely be changing.  Bar Strength has dropped and Fridays bar spread (the price difference between the high & low) was very narrow.  Narrow bars show that selling and buying are about equal and after a nice run up that could mean a pull back.

The chart above does show current prices at / near the 7225 resistance level so let’s keep an eye out next week for some type of pull back / pause; it’s overdue anyway.  A look at the number of stocks in the S&P 1500 Index that are in Accumulation / Distribution is shown below.  Very strong indeed.

Also the number of stocks that are showing strong Price Strength is equally impressive.

With so much “green” a pause or minor correction would be normal.  For this reason I’m a little hesitate to add any more positions right now.  I’d like to see what this market does in the next 2-3 days first.  We are starting to wrap up the earnings season now and the results have been generally OK with a few surprises.

Here’s a look at what Industry Sectors are strongest in the relative short term:
I’m about 75% invested right now, waiting to complete re-accumulation, but watchful in the near term.  Have a good week.  ……  Tom  ……

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