Special Risk Capital Management LLC

Still “Chugging Along” November 20, 2021

Nov. 19, 2021 –  This market continues to show strength though the rate of climb has eased off a bit, and that’s OK.  While I’m expecting some back and forth volatility into the end of the year, the general trend should continue to be positive / higher.

The indicators remain Bullish with the exception of Money Flow, which has slowed down with the drop off in trading volume.  We should not be surprised to see volume next week to be low going into the (US) Thanksgiving holiday.

 I’d like to make a few more observations about the overall economy and inflation.  First off as we know, over 70% of the US economy is driven by consumer spending and consumer spending is up over 70% from the pandemic low just a few months ago.  This very sudden rise in demand has caught inventories and manufacturing by surprise; they were geared for a slow “recession like” recovery lasting 18-24 months.  Demand exceeded supply, hence inflation of prices.  Basic Econ 101.  Now add to that low consumer debt, cash infusion by the Covid relief packages and mortgage / debt re-fi at historically low interest rates . . . well much more liquidity in the market place.  As “bad” as things seem to be, unemployment is actually low (4.6%); again adding to available cash out there.  Lastly, there has been a 29% reduction in ships waiting in the ports of Los Angeles to unload.  That along with domestic manufacturing picking up means supply is increase to meet that increased demand.  It just doesn’t happen quickly.

Here’s a chart on consumer debt from the St. Louis FED –

A quick look at where the stocks are in the broad S&P 1500 Index.  The pie chart indicates where stock prices are in relation to their 20 day moving average and their standard deviation volatility (i.e. Bollinger Bands).   Overall, fairly evenly spread out (pretty typical).

Lastly the Short Term Sector Strength table is shown below –

Technology sectors continue to lead the way with Consumer Goods & Service not far behind.  I am +90% invested but always looking for a possible pull back.  Don’t know when, but it shouldn’t be much of one as long as earnings remain strong and spending over the Christmas period is good.  We’ll see.  For those that celebrate it, have a Happy Thanksgiving and Stay Safe.    …… Tom …..

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