Special Risk Capital Management LLC

Early Positive Signs May 29, 2021

May 28, 2021 – I’m starting to see some return of positive short term market indicators. These are coming from the Russell 2000 Index (primarily small cap stocks), which tend to indicate “risk on” or “risk off”. The broad NASDAQ Composite Index (below) is showing some early signs as well. To soon to say the the coast is clear, but perhaps we can get to a “muddle through” summer and not go into the Summer Doldrums.

From what I see above, Market Sentiment is slightly bullish, Money Flow remains bearish, Volume Flow is not determined (?) and Price Strength is now neutral. At least the steady down price channel was broken to the up side and volume has increased. I do note that Friday, the last bar, closed toward the lower range. Concern remains about inflation; not a surprise since the economy is awash with liquidity.

We also see early signs of returning strength in the SP 1500 stocks. The first pie chart is where they stand in relation to their individual 20 day moving averages. We’re seeing an increase in Strong and Neutral slices here.

Next are the same 1500 stocks and their 5 day percent price returns. Again, more greens and less red slices. Overall a good week for many stocks.

And finally a table of where the strength is coming from. The short term sector strength table is below.

Interesting to note that the Technology sectors are beginning to rise toward the top. Encouraging. So I’m looking at next week to confirm at least some of this strength. I doubt if the past long steady climb returns, but we may see indications that certain sectors and stocks in those sectors are gaining ground in a more predictable way. So the yellow flag is flying. Be careful and be skeptical but also don’t be afraid, since we can always back away IF conditions don’t follow through.

To those in the U.S., have a great holiday weekend (US markets are closed on Monday, but international markets are not . . hint). …………….. Tom ……………

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