Special Risk Capital Management LLC

Waiting for the Next Shoe to Drop March 14, 2020

March 13, 2020 – Ok then . . a volatile week that ended in the last half hour on Friday with short covering before the weekend. Is that it? Not expecting a “V” style bottom, but I’m thinking about two scenarios: 1) we bounce around up and down for a few weeks, maybe months, roughly between 8347 and 7194; attempting to build a base. 2) more bad news, both virus and corporate and we continue lower.

The light blue arrows on the chart above give you a rough idea of scenario #1; #2 is just lower. All indicators are Bearish / Negative, with no surprise there. Why not just a rip upwards? Way to much damage done plus the virus threat, plus the likely effects on corporate revenues. We’ll just have to wait this out for more clarity. Next week should provide us with at least a hint of what’s on the minds of traders.

Sector wise there is not much to see on the long side . . possibly long the US Dollar, but that’s about it.

I’m very heavy in Cash and the few remaining holdings are hedged out with a “Q’s” Bear fund / ETF. Now is the time to be patient and wait for an opportunity to re-enter. It make take awhile for that to develop.

Have a good week and Stay Safe. ……….. Tom ………….

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