Special Risk Capital Management LLC

Continuing to Wait and See May 9, 2021

May 7, 2021 – This will be a brief post since I’m “on the road” in Atlanta for Mothers Day. And . . . for those . . . Happy Mothers Day !

We’re about half way through first quarters earning season and the news has generally been as expected / good. So why the pause? I think it’s still more “wait & see” thinking. Concern about (possible) interest rates increasing and if corporate taxes might also increase. This market is “hooked” on low rates and low taxes, no doubt about it.

The chart below is of the very broad NASDAQ Composite Index. While large cap indexes like the S&P 500 and Dow Industrials are at /near all time highs I note that many other broad metrics are at a pause. That said I note most of the indicators on the chart are really not very bullish at all. IF weakness appears it typically shows up first in the smaller companies, so we’ll keep an eye out for weakness here.

I’ve put support at the 13440 level and a close below that would concern me. Resistance is at the 14207 mark. Again I note the rathe low / modest volume; many appear to be waiting.

The short term sector strength is shown below. I note the oil / energy and financials are doing well, technology not so much. Looks like a pause.

I am invested more in “value” securities since “growth” is not moving and could be more vulnerable to a correction IF that were to develop. Have a good week. …………. Tom ………….