Special Risk Capital Management LLC

Climbing The Wall February 8, 2020

Feb. 7, 2020 – This market continues to “Climb the Wall of Worry” and keeps on going.  We’re half way through earnings season and so far its been pretty good, though a number of companies have given weaker guidance going forward.  Market Sentiment (chart below) has returned to positive, but Money Flow remains negative.  I’ve labeled the current price formation a possible Up Thrust.  This occurs at new highs with narrow bars (buying = selling) and light volume (decreasing demand).  (click on chart to enlarged it for easier viewing)

Nothing is chiseled in stone so we’ll have to wait but this does indicate a reluctance to push higher in the immediate / short term.  The news will likely be a catalyst should any significant move up or down occur; trader are nervous.  Also I’ve moved the support level up to 9123 on the NASDAQ Composite Index.

Other than that, the table of short term sector strength is shown below.  Of note is the recent strength in the BioTech sector, likely driven by the Corona Virus scare.  The next couple of week will be a critical time for the virus.  It will either show signs of containment, or not.  The infection rate is pretty high right now.

Now much else to say.  I am “lightly long” mostly because it’s getting harder to find good stocks to buy.  This is born out by the fact that fewer and fewer stocks are driving the market indexes higher.  The majority are being left behind.  I’ll post a chart on that next week to illustrate the point.  Until then, have a good week.   …..  Tom  …..

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