Stock Market Early Morning Insights – November 4, 2016

The NASDAQ composite broke support on heavier volume and was down for the 8th consecutive day. This is not occurred since the market meltdown in 2008. Panic is beginning to set in as volume remained above average, 19% above the 50-day moving average volume. New highs swamped new lows and the arms index indicated heavy selling.

With the negativity and falling indexes, I was surprised that the decliners only led the advancers by a 1.85 to 1 margin in the NASDAQ composite. The NYSE was even less coming in about 1.5 to 1 negative. As I said in a previous report when the indexes are falling sharply like this, I expect to see a ratio of 4 or 5 to 1 decliners over advancers. This could mean one of two scenarios the way I see it, panic has not yet fully set in, or many traders are expecting a rally to begin soon.

My top 50 group inclusion report shows buying in a few “risk on” groups, Semiconductor Devices, Infrastructure Software, and Application Software. Steel Producers and Steel Raw Material Suppliers are also dominant in the list Along with Precious Metal Mining stocks. The Healthcare Sector was the worst performing sector with Biotech and Specialty Pharma getting hit hard. If you want to look at a beaten down group for possible accumulation, take a look at the Homebuilders. It looks to me like a few of the stocks in the group are sold out.

The jobs report is out and the number of new jobs created was less than expected, but the unemployment rate dropped in wages rose more than expected. The reaction from stock futures was muted, but they are now beginning to rise.

Until this election is over, I am standing aside. Those of you who were on the short side should be doing well, but be aware of the unexpected bounce on any major election news.

STOCK MARKET EARLY MORNING INSIGHTS

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