Special Risk Capital Management LLC

Slow Markets into the (U.S.) Holiday November 23, 2019

Nov. 22, 2019 – I continue to be a little on the cautious side, mainly because of the run up we’ve had and more than a few “non-price” indicators turning negative.  As an example, the amount of money flowing into Money Market funds has significantly increased and market breath is declining.  The number of stocks hitting new lows are about the same as hitting new highs for the year.  I note the market Sentiment indicator below is also negative.

So what’s a market technician to do?  Since prices are going higher as noted by the market indexes, one should follow the trend noting that it is a “stock pickers” market.  Not everything is doing well.  BTW, money and volume flow indictors (above) are still OK.  The near term support level on the NASDAQ Composite Index is at 8441 (a pause level) and the next lowest is at 8325 (a level for a modest correction).  Economic and trade news is driving the market now; corporate earnings are mostly out of the way.

Looking at the stocks in the broad S&P 1500 Index we see the following:

% of Stocks in Accumulation or Distribution –Generally fairly balanced between the 3 levels; usually a healthy sign.

% of Stocks with Price Strength –Here a little different story.  More red than green, but far more yellow.  This gets back to “non price” market internals.

Short Term Sector Strength is in the table below –

Heath Care / Pharma and Financials are leading the pack, with Technology stocks a little behind.  But note government bonds making a rise too, and Utilities.  Hummm, a play towards defense perhaps.

Next week in the U.S. is a slow one going into the Thanksgiving holiday.  I’d expect low volume, but also note that late last week had low volume as well.  An early “drop” on the holiday or a “Lack of Demand” (i.e. buying)?  We may have to wait for the week after to find out.  Until then  watch what sectors are increasing in strength and which are weaker.

Wishing all in the U.S. a Happy Thanksgiving.  Take Care.       ……….. Tom ……….

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