Special Risk Capital Management LLC

Off We Go ? January 7, 2023

January 6, 2023  The US Markets had a pretty good week, up about 1 ½%, with most of that coming on Friday.  Once the Labor report came out we were off to the races.  The US Dollar dropped like a rock (bullish for stocks) and the Treasury Bonds rocketed higher (lower rates; bullish).  Add to that added volume of traders covering short positions due to the higher hedging in the markets. 

click / double click on chart to enlarge it

The broad NASDAQ Composite Index (shown) has really been in a wide trading range since mid-September.  A short term traders dream but not for longer term investor that are anticipating a change in the market trend.  This market is waiting for two things: a positive / Bullish FED announcement (which many are trying to anticipate and front run) and 4^th quarter earnings.  As the economy slows the effects on earnings become more of a factor.  In the long run, corporate earnings drive stock prices.

The table below shows the reporting dates for key corporate stocks that could drive the market in one direction or the other.

The Short Term Sector Strength table is shown below –

So I’m looking for continued signs of a follow through from Friday before contemplating dipping my toe into the market.  The sector strength table does not exactly support a “risk on” market, so I’m skeptical right now.  Have a good week and a very Happy & Prosperous New Year.    ……  Tom  ……