Stock Market Early Morning Insights – April 5, 2016

The major market indexes suffered a slight pullback yesterday on lighter volume. This morning, stock index futures are down around two thirds of a point, but are currently trading off of their overnight lows.

Yesterday’s weakness was primarily in the oil futures in the oil sector, the same sector which led this rally off of the lows. Crude light futures have fallen back considerably over the past 10 days from a high of slightly above $42 per barrel down to the current price of $35.68. We have seen rotation out of the stocks in this sector during that same 10-day period.

I pointed out a few times and it looks like the Healthcare sector and the Biotech and Specialty Pharma groups in particular look like they want to go higher. Health-related ETF’s were about the only ETF’s that were positive yesterday. The Semiconductor stocks, which have also been leading this market, fell victim to some profit taking yesterday, but all three VPA trends remain up for the group.

Today should give us a good indication if the bulls remain in control of this market. The NASDAQ Composite candles formed an inside day on lighter volume to generate a No Supply, a sign of strength flag. The flag was generated because of the narrow spread of the candle, and the declining volume from the prior day. Internals were about 1.4 to 1 negative for the NASDAQ, but were much worse for the NYSE at 2.83 to 1. With a weak open, the bears will be in control initially, but buying absorption by the bulls with a higher close than the open will be a sign of strength, and a confirmation of the no supply flag that was generated yesterday.

As I mentioned above, the Healthcare Sector was the only sector showing strength yesterday. This continues a pattern of accumulation that we have seen on and off over the past few weeks. The Energy and Materials Sectors seem to be under distribution, but gold futures are up this morning.

STOCK MARKET EARLY MORNING INSIGHTS

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