Special Risk Capital Management LLC

A Good Place to Stop, but . . . May 14, 2021

May 14, 2021 -We’ve known that the markets are “overvalued” and certainly nervous about interest rates and inflation, so this drop is not much of a surprise. Looking at the chart below, the 12985 level would be a “logical” / nice place to stop a correction, but . . .

But . . . the low volume ‘up bar’ on Friday (note arrow on the volume portion) gives me pause. A nice move higher on low volume . . . not much commitment to stopping at least not yet. The other indicators remain bearish so let’s wait and see what Monday / Tuesday of next week brings.

The pie chart below shows the 5 day % return of 48 major industries. Only one (recreational) managed a decent week and there is a lot of weakness out there.

Earnings continue but are now slowing. There are a few ‘darlings” but nothing really that surprising. It just seems like the market is looking for leadership and a excuse to resume the steady upward trek. Retail sales were good but the street was expecting a lot more. The Consumer Confidence indicator will be coming out May 25th but that’s over a week away. We need some bullish news coming out of somewhere.

The Short Term Sector Strength table is below –

Banks and Materials continue to do well. Oil / Energy as well, but how long can that continue? All of these are basing off of the increase in economic activity . . . . as pretty much expected. Where is the new growth?

I’ve pulled in some positions for Cash but remain about 70% invested. Waiting for the next move in either direction as the signs are rather mixed as of Friday afternoon. Have a good week. ………… Tom ………..

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