Special Risk Capital Management LLC

At The Turn ? (Patience Young Jedi) March 19, 2022

March 18,2022 – I see possible indications that we could be at a market turning point of this correction.  My major market model (not shown) is giving me a “heads up” to watch carefully next week.  But why?

First off this market has already priced in the major news issues in the short term.  The terrible situation in Ukraine, the FED interest hike and recent COVID uptick are known.  As long as the “unknown” doesn’t creep in or takes take an unexpected turn for the worse, we could be “OK”.  This is where patience comes in. 

Take a look at the chart above: broken channel up, Close above the “mid-line”, Volume & Money Flow Bullish, Price Strength (black line) Bullish. Time to pay attention, with care.

Friday I was hearing many knowledgeable amateur investors talk about a “follow through day” (a major up on high volume, off a major swing low formation).  Well yeah, that might be but that volume was due to the “triple witching” of stock & futures options and futures contracts.  Make no mistake: most of these contracts were hedges placed to protect portfolios in a down market.  That volume was contract settling, but were there any actual positions taken?  Let’s wait for confirmation next week before we assume anything.

How will we know?  I’d say watch the institutions.  If they think the worst might be over, they will be putting money to work where they can quickly and easily.  Read that as liquid big mega cap technology companies.  Is money flowing out of the fear stocks (metals, staples, defense, utilities, etc.) and into more speculatives?  I’d also keep an eye on the Russell 2000 index (IWM) for hints in comparison to other indexes.  Again . . .  patience, because it’s not all going to happen in a day or two.

The Short Term Sector table gives us some indication of that possible rotation –

That’s it for now.  ‘May the Momentum be with You’ Young Jedis.    Have a good week.  ……  Tom  …….

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