Stock Market Early Morning Insights – June 17, 2016

Only two things control the markets, fear and greed. Fear was rampant yesterday when the S&P E-mini futures traded all the way down to 2040.75, but rallied all the way back up to close at 2068.25 when the momentum changed on the news that Brexit was being suspended. The NASDAQ composite traded down to 4778.78, but turned around to close at 4044.92. For much of the morning decliners were leading advancers by a 5 to 1 margin, and it looked like the market was going to break.

Emotional traders who were buying option premium were whipsawed and saw their capital take a huge hit. The VIX had an intraday high of 22.89 and is currently trading at 19.54. If you like market movement and volatility, this is your kind of market. Today is options expiration day which could add to the volatility.

Even after the intraday turnaround the leading groups at the end of the day were conservative, or risk off groups with money once again flowing into REITs, Utilities, and Consumer Staples. Energy stocks were hit hard as oil sold off another day, but crude light futures are up 2.37% today as the dollar index weakens. There should be a bounce in energy stocks if oil continues to rally.

Yesterday those who chased precious metals at the open, or covered their shorts due to panic, probably bought at the high of the day and ended with losses. Gold futures collapsed as the stock indexes turned around. The high for the high yesterday was 1318.90, and the close is all the way down at 1281.50. Gold futures are rallying this morning and are up .43%, so the drop may just be temporary.

Stock index futures are flat as I write this, but have been negative most of the morning. The indexes remain in limbo on very light volume which suggests that there is little conviction in either direction for the longer term. This is the type of market where you have to be glued to your screen if you want to trade the short-term swings, but I don’t think most of you play that game. If you are long make sure you know your risk, and where you will get out of positions if the markets falter.

STOCK MARKET EARLY MORNING INSIGHTS

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