Stock Market Early Morning Insights – September 12, 2016

Here are my trading results since June 12 to September 7, 2016 using at $25,000 account.  You don’t need a large account to make money: https://1drv.ms/u/s!AshhTFqIPakDgsI3tm_MfUR9YiGF9A

For those who attended my last webinar series and those who are interested in attending I will hold another series of webinars that teach the techniques that I use beginning in late October.  If you are interested contact me at ron@highgrowthstock.com.

Friday was a disastrous day for the Bulls, and a gleeful day for the Bears. Bulls have pretty much had their way for several years thanks to accommodative central bankers around the world, and the hint of this accommodation ending was a great excuse for a market selloff. The NASDAQ composite went from a breakout above resistance on Wednesday to form one of the most bearish candles on Friday that we have seen in quite some time. Not a single industry group was positive as traders and investors headed for the exits. Most of the indexes closed at the bottom of their intraday ranges on heavy volume, but I don’t see that it was climatic volume.

If it were climatic volume, we would have seen a massive volume spike rather than just above average volume. Compare Friday’s volume to June 24 and 28 to see what I mean. June 24 was another Friday, and the 27th was a Monday and a follow-through day to the downside. The volume on June 24 was much higher than Friday’s volume, and the volume on June 27 was higher than we saw last Friday. Both of those days in June showed climatic volume. We have not seen that yet in this selloff. A massive rally began on June 28 which was the beginning of the move to new highs.

If you look back to June 27 in these reports, you will find that the percentage volume to the 50 day moving average volume was 130.4% on June 24, and it was only 25.4% last Friday. Does this mean Friday’s selloff was not nearly as panic driven as the long black candle indicates? We will just have to wait to see the result. According to the futures at 6:30 AM central time, and to markets around the world, we are going to follow through to the downside this morning at the open.

No question, a lot of damage done on Friday with one of the ugliest bearish candles I have seen in quite some time. In one day, all gains for the last three months were wiped out for the indexes, but the gains were minimal during that time period as the indexes traded sideways. Traders who bought the breakout on Wednesday were immediately trapped in bad trades.

Not a single industry group was positive, so consequently all of the stocks in the top 50 group inclusion report are in groups that were down. A few of the stocks managed to stay positive, but most were down for the day. REITs and other interest sensitive groups like utilities were hard hit, but some of the worst damage was in metal and mining stocks. Several ETF’s were down over 3%, and none of the ETF’s that I track were positive. It was just an ugly day overall, and the only bright spot was the lack of selling volume compared to similar days in the past.

Of course, stock futures are down this morning, but they have stabilized as I write this at 6:45 AM. From what I saw over the weekend, most analysts are on the sell side now. This sudden reversal pretty much blindsided most traders. I am curious to see if today’s selling will be absorbed, or if panic will set in and drive the indexes much lower. I would not be putting on short positions right now, because markets often do with the majority of the traders are not expecting. We saw this last week on the failed breakout of the NASDAQ, and we could see it this week as the bears are expecting a lot more downside.

STOCK MARKET EARLY MORNING INSIGHTS

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