Special Risk Capital Management LLC

A Fallback to Center Channel: OK February 21, 2021

Feb. 19, 2021 – This week the market pulled away from the upper trend channel (purple parallel lines) and is hovering around the center. And that’s OK. A continued drop to the lower line would not be surprising in view of how far we’ve come and so quickly.

As long as we stay above 12895 there may be concern, but not danger. Also of note is the drop in volume; lack of demand. And that’s OK too. What is interesting is the previous leaders, Technology sectors, are now just doing OK. The short term leaders are Material, Financial and Oil sectors. It’s to soon to say this is a significant sector rotation, but it’s something to keep an eye on. At least Semiconductors continue to be strong under the Tech umbrella.

A chart of a wide selection of industry sectors (46 of them) and how they performed over the past 5 days is shown below.

Looking at the over sum of “green” and “yellow” performance compared to the “red” actually confirms the idea of a pause to refresh right now. Everyday can’t be a rip roaring “Up Day” for everything . . . it just can’t last very long.

So I remain invested and doing minor changes to go with the current trend. If this trend toward a more defined move continues we’ll just naturally go there too. But this could be a concern driven by rising interest rates & inflation, it which case Materials and Financials could just be a short term blip. Stay Tuned as they say.

Have a good week. ……….. Tom …………

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