Special Risk Capital Management LLC

At an Important Level May 11, 2019

May 19, 2019 –  This will be rather short, but that’s O.K. since we’re at an important level.  That support level being 7965 (close to it).  Note on the chart below that every “heads up” indicator has turned negative in the short term, and we’re resting just a small bit below the 7965 level.

While it sounds like we’re in bad shape from news reports, the price action has really not been that bad.  Volume is up just a little, so people are not rushing for the exits and the lows for many bars (days) were made in the morning with a strong close at the end of the day.  People are on edge with all of this trade talk but so far no panic.

Looking at the stocks in the broad S&P 1500 Index we note that there remains a health, near equal, split between the number in Accumulation, Distribution and Neutral.

But I have seen a shift in the sector strength table (below).  The technology stocks have been hit hard while the rotation has been toward “safer” Treasury Bonds, Real Estate, Healthcare and Pharmaceutical sectors.

Of note is that Banks and Financials are hanging in there for now.  Gas/Oil, China and Emerging Markets join Tech at the bottom.

Right now I’m moderately “hedged” via purchase of a “Bear Fund” that will go up when the market goes down.  I look at this as a synthetic Cash position / portfolio insurance that can be added or removed quickly.  Next week will be interesting to see who or what will push this market in one direction or another.  I’m watching bar price action and volume for clues, but right now things look OK for the time being.

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