Stock Market Early Morning Insights – April 25, 2016

Stock index futures are slightly negative this morning about an hour and a half before the market opens. It seems like many of the gurus are expecting this market to stall, but based upon Friday’s action, I do not see it yet. The Bears are certainly hoping this happens, but until I see the mid-cap and small-cap stocks break down, I don’t believe a correction is imminent.

This unbelievably strong rally that we have seen off of the February lows has certainly not been led by the large tech stocks, although they have participated, and the theory that if the leading tech stocks roll over, the rest of the broad market will follow is not proving out, at least yet.

Some of the well-known tech stocks have done extremely well, especially Tesla which is up 63.71% from the beginning February 12, but the strongest part of the market has been the small-cap and the mid-cap stocks. Until these indexes start showing some distribution, and they are showing accumulation through Friday’s close, this rally remains intact.

This is a GPA beginning on the morning of February 12, 2016 through Friday’s close, April 22, 2016. As you can see the dominant indexes are the small and mid-cap indexes. This is the equal dollar weighted version which differ slightly from the market cap version because I wanted to show you the dominance of gainers versus losers. These numbers show how strong this rally has been, and how wrong the Bears have been.

Friday’s action to the upside was dominated by the small and mid-cap indexes as the VIX fell 5.2% and is all the way back down to 13.22. The dominant sectors were Energy, Financials, and Utilities. At the group level, Exploration and Production was one of the dominant groups, and there was weakness in the Cruise Lines and Airlines which were two of the leading groups for much of this rally.

It looks like today may be a test of the resolve of the Bulls as stock futures we can the closer we get to the opening bell. Crude light is down over 1%, which will of course affect the Energy sector at the open. This is a big earnings week with four of the large cap, widely followed stocks reporting.

There is so much emphasis placed on these stocks by traders and the media, but as the GPA shows, the real strength has been elsewhere in stocks that some traders think do not matter. The results above prove that they do.

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