Stock Market Early Morning Insights – December 20, 2016

There was an uptick in accumulation yesterday, plus the VIX is down near historical low levels. Traders and institutions are not paying for protection in the form or expensive puts, so the anticipation is that stock indexes will continue to rise. The DJI is only 117 points away from 20,000, and institutions want to see the 20,000-level surpassed. I would not bet against this happening.

The NASDAQ was unable to break past resistance yesterday, but volume was light, meaning less activity. The strength was once again in Semiconductor Devices, Banks and Communications Equipment. NVDA leads the semiconductor devices group, and broke out to a new high. If you want to see some beautiful VPA flag signals, bring up a chart of NVDA.

NVDA has appeared 85 times in 2016 in the Top 50 GIR beginning on February 17th. The day before appearing, NVDA generated an Effort to Rise flag as early money came into the stock. The Semiconductor Devices group began to move up at the same time. Since then, NVDA is up nearly 300%, and there have been multiple chances to get into stock based upon the Top 50 GIR, VPA flags, and group movement.

Healthcare stocks did not perform well yesterday. The Biotech group was down again as the Healthcare sector struggles with a D accumulation ranking.

There were 2 decliners for every advancers in the Biotech group.

Stock futures are up this morning, and oil is trying to re-establish its upward momentum, but is stuck in a congestion area. Long term bonds have been absolutely destroyed since July with interest rates on the rise, and an exodus from a flight to safety.  The dollar index continues to establish new highs and is trading inversely to the 30-year bond.

Because we cannot predict what will happen, risk control is paramount. I think the indexes are going higher, but any trades I take will have stops in place. We live in a dangerous and unpredictable world, and news will drive the market in the short term. Ultimately, demand and supply, fear and greed drive markets, but a trader can get hurt badly in the short term without having a stop point, so please know your risk.

Have a safe and happy Holiday Season, and if you celebrate Christmas, have a Merry Christmas!

Ron

STOCK MARKET EARLY MORNING INSIGHTS

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