Stock Market Early Morning Insights – November 2, 2016

The major market indexes fell victim to the uncertainty of the upcoming presidential election and fell precipitously intraday before recovering slightly going into the close. The NASDAQ composite came very close to testing major support at the 5097 level when it touched a low of 5112.32. Volume was heavier than the day before, but it was not extreme volume which would indicate panic selling across the board.

Many of the “risk on” groups were weak, but surprisingly there was scattered strength in the Healthcare Sector. The IBB and the XBI Biotech ETFs were a couple of bright spots in a dreadful market. The IBB was up .9%, and the XBI was up 1.2%. Both are severely beaten down ETFs and groups, but this is evidence that there is some bottom fishing going on. Both generated Strength Seen Returning flags, and if you are into beaten down ETFs and groups, they are worth watching to see if true accumulation occurs.

The S&P 400 mid-cap in the S&P 600 small-cap indexes both rallied at the open yesterday, but failed miserably, as neither was able to hold short-term support. Now that support becomes resistance as you can see in the charts in the body of this report.

Of course, with the uncertainty in the indexes several Precious Metal Mining stocks appear in the top 50 GIR. Infrastructure Software and Application Software were well represented. Some Banks are also doing well with their earnings behind them.

If the NASDAQ composite breaks what I consider critical support around the 5097 level at the close, this market is in real trouble. The strength has been in tech stocks, especially the large capitalization tech stocks, and if they continue to roll over, leadership is gone.

Apple was supposed to benefit from Samsung’s trouble, but supply is overcoming demand as fear grips the market. Since Apple reported earnings, there is little positive in the chart. All rally attempts since October 27th have been sold into. Even AMZN is showing signs of rolling over after earnings. MSFT is one of the large cap stocks that looks like it may hold above the earnings gap.

Stock indexes futures are down again this morning. The Crude light rally seems to be over as the futures expand to the downside. The /CL futures just could not hold above the $52 resistance level.

Capital preservation is required in this market.

STOCK MARKET EARLY MORNING INSIGHTS

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