Stock Market Early Morning Insights – July 11, 2016

Friday’s rally was broad-based with 170 out of the 172 groups up for the day. The most dominant groups were Precious Metals and Mining, and surprisingly, Packaged Food, which I consider a defensive group. There were strong gains all around, and the Semiconductor Devices, a risk on group, had a strong day.

The indexes have gone from oversold to overbought in eight trading days, and are now approaching all-time highs and resistance levels. I was not watching the markets on Friday afternoon because I was traveling, and as I looked at the volume numbers today, I was surprised to see that Friday’s volume was only average to below average.

Based upon advancing issues versus declining issues, it was an extremely strong day with heavy institutional buying. I base this observation upon the number of advancing issues versus declining issues in the S&P 100, S&P 500, and the S&P 1500. The S&P 1500 had 42 advancing stocks for every decliner. My 50% Large-Cap Institutional index of stocks which are at least 50% owned by institutions, had nearly 30 to 1 ratio.

You can tell that it was more of a so-called risk on day because the Technology sector Index had 450 advancers, and only 19 decliners. The Energy sector lagged, but it was still 6.39 to 1 positive advancers over decliners. Even though the Metals and Mining stocks led, the XME, the SPDR S&P Metals and Mining ETF was up 4.2%, GLD, the gold ETF, was only up .6%.

There were few losers on Friday as you can see in the report below. The indexes have been at these levels before and have always turned back. I mentioned in my Friday’s report that the indexes needed a catalyst, and maybe it would come in the form of the jobs report. That’s exactly what happened, but it was only a guess on my part, and the move up seemed a bit excessive. I also mentioned that the market looked like it wanted to go up, and for the past several days, up has been the path of least resistance. In spite of the big day on Friday, the indexes remain within consolidation areas.

Today’s stock index futures are positive, but they have done little since 5 AM. Gold, treasury bonds and oil are all backing off this morning, and the Dollar Index is up .28%. Whatever you do, DO NOT chase extended stocks.

I am getting very close with the webinar material, and I plan to begin next week. I will be sending a video link out in the next couple of days explaining what I am going to discuss. If you are on my list of people who have indicated interest, you will receive that link. If you want to commit to the webinars at that time, I will also provide instructions on how to pay.

This is a link to a nice video tribute to Ian and Pat Woodward which was put together by their grandson, Eric. https://youtu.be/BG9jWcpTgrQ

STOCK MARKET EARLY MORNING INSIGHTS

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