Stock Market Early Morning Insights – June 13, 2016

It’s difficult to think about the markets after the tragedies we witnessed over the weekend in Florida. In addition to the largest mass shooting in US history Saturday night in Orlando, on Friday night, a talented young female singer was gunned down for no apparent reason by fanatic with a gun only a few blocks away. She has been relegated to page two due to the horror of the mass slaughter at the nightclub. I have heard only few politicians mention the words gun violence; instead, it is their steady stream of usual platitudes of praying for the victims and their families. Ironically, these murders will create more business for the gun industry. It will be back to business on Wall Street where fear and greed rule.

Friday was an extremely weak day based upon the internals. The NASDAQ 100 now contains 105 stocks, and 100 of them were negative for the day. The Broad Market Indices folder shows just how weak the internals were. The defensive stocks were almost positive with 12 advancers compared to 14 decliners, but after that decliners led by a 2 to 1 margin, and it went down from there was some indexes showing a 20 to 1 ratio decliners over advancers. Five industry groups were positive, while 166 were down for the day.

Volume was relatively light once again, so panic selling has not set in. For example, the S&P 400 mid-cap index shows light volume, but decliners that advancers by more than a 10 to 1 margin. Even though the VIX shot up 16.3% as option traders paid up for protection, volume remained light.

If this is a market top, is going to take a while to see a develop. Money has flowed into stocks because of the turnaround in oil prices, and also because there is nowhere else to get a return. Consequently, every pullback is seen by some as a buying opportunity.

There were several negatives on Friday including the gaps down, the extremely weak internals, and closes in the lower end of the daily trading ranges. To offset this, the less than average volume suggests that the Bulls still have the upper hand based upon the volume point of control, especially in the small and mid-cap indexes. The tech stocks in the NASDAQ 100 and the NASDAQ composite seem to have handed the advantage back to the Bears.

This morning, stock index futures are negative, but are often their lows. Asian markets were hit hard overnight, and European markets are down with the DAX off 1.25% and the FTSE down around .70%. One worry, is the possibility of the Brits leaving the European Community, and another, of course, is a world-wide slowdown in economic activity.

The stock indexes are not yet broken, but risk is high. It may be best to stand aside for now to see what direction the broader markets take.

STOCK MARKET EARLY MORNING INSIGHTS

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