Stock Market Early Morning Insights – October 18, 2016

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The three major indexes that I track all generated No Supply VPA flags yesterday. Even though all three were down yesterday, selling was minimal due to the light volume and narrow spreads of the candles. This morning, stock futures are up sharply as earnings season picks up. Goldman Sachs reported today and handily beat earnings.

The major market indexes are still within their trading ranges even though expansion to the downside has occurred over the past several days. The NASDAQ composite is still trading above the gap that was created clear back on August 5th. The S&P 400 mid-cap and the S&P 600 small-cap indexes are weaker than the NASDAQ composite, but neither has taken out major support. If strong earnings continue to be reported, the path of least resistance is up, not down.

Strength was not in most of the risk on groups with the exception of Application Software which has for stocks in the top 50 GIR. Other than that, it was a mixed bag even though a couple of the Airline stocks made the top 50 list. There was some movement into Gold Miners, Utilities and Bonds as oil pulled back slightly. The weakness appears to have been in Biotech, Specialty Pharma and Exploration and Production stocks.

Several banks are reporting earnings today and Intel is also reporting after the closing bell. Intel is trading up in the premarket so earnings expectations must be favorable. This is going to be in earnings driven period, so be aware of earnings for any new positions you are considering, or any stocks that you are currently in.

Futures have risen several points since I began writing this, so we are going to have a strong open. I noticed many stocks are showing a Test for Supply or a No Supply VPA flag. Even without the strong futures this morning, after yesterday’s close on very light volume, it felt like stocks were due for a rebound.

STOCK MARKET EARLY MORNING INSIGHTS

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