Stock Market Early Morning Insights – August 24, 2016

The major market indexes that I track gave mixed signals once again yesterday. The NASDAQ composite gapped open but closed near its low which generated a No Demand Flag. On the other hand, the S&P 400 mid-cap and the S&P 600 small-cap indexes both gapped open and held above the opening gaps. Volume was light all the way around, but we are in late August when volume is normally light.

All three indexes remain above their 10 day, 10 bucket volume points of control with the NASDAQ composite being positive for the last 39 trading sessions. It has been a remarkable run which was absolutely unexpected. With earnings season mostly out of the way, stocks are trading purely on demand and supply without the gyrations caused by earnings announcements. Of course, there are still some earnings to come, as there always are, but for the most part earnings are behind us.

I was surprised at the strength of yesterday’s market when I began looking at the information generated today in HGSI. Anybody who is serious about knowing what’s going on in the market should be using HGSI because all of the pertinent information is right in front of us.

What surprised me the most this morning was the number of industry groups that advanced yesterday compared to the number of declining groups. The ratio was 4.52 to 1 positive with 140 advancers and only 31 decliners. Even though the NASDAQ composite generated a no demand flag, the Technology sector was the strongest index with four advancers for every decliner. The Semiconductor index, the SOX, continues to be on fire with 24 advancers to only 6 decliners.

At the industry level, Homebuilders dominated after a strong housing report. Infrastructure Software was also in huge demand. Homebuilders were 24 to 1 positive, and infrastructure software was 42 to 1 positive. Application Software also had a very strong showing as did Pollution Control Equipment. If you don’t look at anything else in the main body of this report, always check out results of the top 50 GIR and the stocks and groups moving to the upside and downside SmartGroups. This will give you an instant picture of what went on in the market during the prior session. You can also run an update intraday to get a 15-minute delayed lock at the market. This is invaluable information if you are serious about making money in stocks.

Oil rallied off of its lows yesterday, but crude light futures are down nearly 2% this morning. The intraday rally sparked interest in the Exploration and Production stocks, and they were well represented in the stocks and groups moving to the upside. I expect oil and energy stocks to continue to chop around. I believe this is one of the most manipulated markets in the world, primarily because of the constant flow of contradictory news releases.

For now, the major market indexes remain in an uptrend. The only hiccup so far was the no demand flag generated for the NASDAQ composite, but this was offset by the strength in the industry groups and the S&P 400 mid-cap and the S&P 600 small-cap indexes.

STOCK MARKET EARLY MORNING INSIGHTS

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