Stock Market Early Morning Insights – August 2, 2016

The NASDAQ composite was out to another new high, but it did so on internals that were essentially flat. There were 1219 advancing stocks and 1184 declining stocks which suggests that this rally is narrowing. Volume was about average.

Several groups made positive moves in the top 50 GIR including Application Software, Internet Media, Precious Metal and Mining, Biotech, Medical Devices, and a few Semiconductor Devices. These groups were all confirmed in the Stocks and Groups Moving to the Upside.

Energy stocks were especially weak as crude light futures temporarily dipped below $40 per barrel. This morning, bullish oil traders are trying to hold the line at $40 with oil up slightly. It wasn’t too many days ago that I was commenting that the oil bulls were defending the $45 level, and that certainly did not hold.

This is another big earnings day with 244 stocks reporting according to my list. There may be more, but these are the stocks that are assigned to groups in HGSI. Many well-known companies are reporting which should create some volatility in the markets. This is a list of the top 10 market cap stocks reporting today.

I read yesterday that Goldman Sachs downgraded stocks for the next three months. That’s probably why the indexes pulled back after a positive opening. I tell you right now that nobody, except maybe some of their clients, cares what Goldman Sachs has to say about stocks going forward. They have a 50-50 chance of being correct, but so does anyone who takes the other side of the argument. We will just have to see how it plays out.

The NASDAQ composite is on a roll right now, and it’s going to take a while for it to turn down. Stock futures are currently trading down about .1%. We did see a spike in the VIX yesterday, and is up another 2.81% this morning, but is still down at the 12.79 level which is low. With some interest in the VIX, this just means that traders and institutions are starting to pay some premium for downside protection.

For now, the trends all remain up, but breadth has been narrowing, which is a concern.

STOCK MARKET EARLY MORNING INSIGHTS

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