Stock Market Early Morning Insights – March 11, 2016

TECH TALK… This is the 3nd webinar on the HGSI Volume Price Analysis Suite of Indicators. “HGSI VPA Float Turnover & Float Turnover Channel” Wed, Mar 16, 2016 4:30 PM – 5:45 PM EDT  REGISTER HERE

Yesterday turned into a massive shakeout day as the SPX traded in a 35-point range, and ultimately closed where it began the day. Many traders probably assumed that yesterday would be a layup with the ECB easing, but it turned out to be anything but.

Those who chased the E-mini futures higher on extremely heavy volume after the announcement, found themselves in massive losing positions. Emotional traders not only got caught in the E-mini reversal, but also in the Dollar Index/Euro reversal. Gold futures traded down initially on the news, but quickly reversed to close near the high of the trading session. It was a wild day to say the least.

It looks as if stocks are going to see the effect of the easing today with E-mini futures up nearly 1%, and NASDAQ 100 futures up over 1% as I write this. Crude light is trading up over 2%, and gold and bonds are slightly negative. The dollar index is up .54%, and the Euro is -.66%.

To appreciate yesterday’s volatility, you should take a look at the EUR/USD in your real-time program. There was a lot of money both made and lost in yesterday’s volatile session. When you consider the leveraged involved in Forex, it was a hugely emotional day. I can understand why some traders stay away on central bank announcement days.

Volume on the NASDAQ composite was less than average, which is a bit surprising for the wide ranging day. Volume was also lighter for the S&P small-cap and the S&P mid-cap indexes. Maybe this is just a result of traders stepping back to observe the effect of the ECB’s action.

The strength was once again in Integrated Utilities, Precious Metal and Mining stocks, Specialty Apparel Stores, Mass Merchants, and Steel Producers. Steel Producers were falling sharply yesterday until Credit Suisse discovered that steel stocks may be a bargain after they are already up 100% from their 52-week lows. US Steel, which I featured the other day traded as low as $11.92, but had a massive reversal to close at $14.37 on the upgrade. The steel stocks look like they are poised to go higher. If you look at the pie chart below of the stocks in groups moving up, you’ll see that five Steel Producers made the list in the under $15 category. Semi-conductor stocks are firming.

On the negative side, Biotech and Specialty Pharma stocks dominated the downside.

So what can we expect today? Good question. An hour before the opening bell, stock and oil futures are holding their gains, but bonds have creep to the positive side. The long legged Doji candle that formed in the SPX yesterday illustrates just how uncertain market direction is, but with the ECB easing and oil prices on the rise, I have to favor the bullish side even though there is massive overhead resistance to the left on the chart.

The SPX has to get above 2010 and hold that level. The NASDAQ composite still has a long way to go, but it’s initial goal is above the 4750 level. Stocks are going to open strong following Europe’s lead. The DAX is currently up 3.26%, a massive move up!

Have a good weekend. I am revising some of my VPA views and charts and should have them ready to distribute to subscribers late next week.

ABOUT STOCK MARKET EARLY MORNING INSIGHTS

Stock Market Early Morning Insights is a product of Ron Brown Investing. The complete report and all the charts are produced daily before the market opens and distributed by email to subscribers. Reports published on the HGSI Blog are delayed and do not contain all the charts.  For more information about subscribing use this link. MORE INFO