Stock Market Early Morning Insights – July 12, 2016

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The S&P 500 index closed at an all-time high, and after the market closed, and Alcoa started the earnings season with an earning beat.

Both could portend a strong summer rally with markets around the world rising on Japanese stimulus, and a sudden optimism about economic growth. A few weeks ago, the headlines were suggesting an opposite story of economic malaise, and economic contraction after the Brexit vote was counted. Suddenly, the negative perception has reversed.

We don’t know what the true story is; what we do know is that stocks, commodities, etc. trade based upon perception, fear and greed, and supply and demand. At the moment, greed and demand dominate, but that can change quickly, as we just witnessed. Markets are manipulated, and if you don’t believe it, just take a look at any market index chart for the past two weeks.

Here are a few observations from my morning analysis: the VIX was up slightly yesterday on a strong market day; the S&P 500 broke out to a new high on less than average volume; the NASDAQ Composite, the S&P 400 and S&P 600 all traded with less than average volume; and breadth was not strong. The NASDAQ Composite only had two advancers for every decliner. The S&P 500 wasn’t much better at 2.25 to 1. The lack of volume and participation could be partially due to the summer slowdown with many traders on vacation, but this seems less likely with internet access nearly everywhere. Anyone with a smartphone can trade from the beach!

Money continued to flow into Semiconductor Devices, and the beaten down Solar group had a strong day with 16 advancers vs. 1 decliner. Biotech and Specialty Pharma stocks were weak along with Energy stocks. The most in demand group based upon my combo ranking was the Internet Media group, and Precious Metals and Mining stocks continue to rise. The entire group is up nearly 200% since the beginning of the year!

Many stocks are extended, and should not be chased. The trends are up for the major market indexes, and oil is rebound today based upon, guess what, a news story. Oil stockpile figures will be released later this morning.

STOCK MARKET EARLY MORNING INSIGHTS

Stock Market Early Morning Insights is a product of Ron Brown Investing. The complete report and all the charts are produced daily before the market opens and distributed by email to subscribers. Reports published on the HGSI Blog are delayed and do not contain all the charts.  For more information about subscribing use this link. MORE INFO