Stock Market Early Morning Insights – November 8, 2016

Three days of losses were recovered in a single session yesterday as the major market indexes, which were heavily oversold, jumped on the news that the FBI’s investigation of Hillary Clinton’s email did not reveal any incriminating evidence. Shorts were forced to scramble to cover, and the buying continued throughout the day. Volume was slightly above average for the NASDAQ Composite, slightly above average for the SP 400 mid-cap index, and sharply above average for the SP 600 small-cap index.

Much of the buying in the small cap stocks was in the beaten down Biotech and Specialty Pharma stocks. The IBB and the XBI ETF’s were up 3.8% and 4.5% respectively. The IBB was down over 18% over the last 29 trading days before the last 2-day rally, so a bounce was not surprising. On Friday, the SP 600 index chart generated a Strength Seen Returning flag which turned out to be a great call.

Internals were strong internals were strong coming in at slightly less than 5 to 1 positive for stocks $5 and above. Volume was moderate except for the S&P 600. Every stock in the S&P 100 was positive for the day, and the S&P 500 came in at 35.14 to 1 advancers over decliners, 492 advancers to only 14 decliners. This is a massive up day based upon internals. You can find these numbers in the Broad Market Indices folder in the body of this report.

Of course, the question is was yesterday just a one day short covering rally, or is it sustainable? I don’t think we’ll know that until the election is behind us. I expect a lot of volatility over the next few days as election results come in, and are finally digested. If yesterday is any indication, Wall Street wants Hillary Clinton elected. If Trump should win the election, I expect we’ll see a massive selloff, at least initially.

The indexes are still trending down even after yesterday’s sharp reversal. Ian’s multi indicator chart shows a Eureka and Kahuna, both buy signals for the NASDAQ. Also, the oversold Bingo indicator for the NASDAQ worked again. It had generated 2 consecutive days of oversold conditions.

Priceline reported a sharp increase in earnings after the bell and is up sharply this morning. Many of the large cap tech stocks are still beaten down. FB, AAPL, TSLA and AMZN are no longer market leaders for now. Much of the rally yesterday was bottom fishing, but Semiconductor Devices and some of the other risk on groups did well. Steel Producers continue to surprise with four stocks in the GIR top 50.

Stock futures are slightly off this morning and I would be surprised to see a lot of activity until we get a better feel for how this presidential election is going to turn out.

STOCK MARKET EARLY MORNING INSIGHTS

Stock Market Early Morning Insights is a product of Ron Brown Investing. The complete report and all the charts are produced daily before the market opens and distributed by email to subscribers. Reports published on the HGSI Blog are delayed and do not contain all the charts.  For more information about subscribing use this link. MORE INFO