Stock Market Early Morning Insights – November 18, 2016

The melt up continued for the stock indexes. The NASDAQ composite is approaching an all-time high at the 5343 level as it closed at 99.83% of its daily range yesterday. Volume was above average, but was not excessive. Internals were not overwhelmingly positive only finishing at 1.62 to 1.

The S&P 400 mid-cap index continued to melt up as it broke above a one day hesitation before gapping open and closing at the upper end of its range on Thursday. The S&P 600 small-cap index also made a new high, but the candle bodies are getting smaller as traders digest gains and look for stocks that are not overly extended.

The bond market is an absolute disaster reacting to inflationary pressures and imminent rate hikes. I read this morning that this is been the worst bond selloff in ¼ of a century. Conversely the Dollar Index has moved up for 10 consecutive days.

In some groups this market is getting totally out of hand If you want to see craziness, look at a chart of DRYS, the Marine Shipping Stock. It went from $4.50 to a high of $102 and back down to $11 in a five day period! Yesterday I included an image of 10 Marine shipping having excessive moves, but none compared to DRYS.

The big Tech stocks that sold off last week have sold some strength over the past few days. I mentioned that Microsoft look like it had the best chance among the Canary stocks to recover from the selling, and it did as it almost challenged its old hi yesterday. It seemed like Microsoft hasn’t done much over the years, but it has over the longer term. At the market bottom in March 2009, it was selling for $14.87. Its recent high was $61.37, so its return for 8 years has been 400% plus the evidence if anyone got in at the absolute bottom and held, which is highly unlikely. Sometimes buy-and-hold does work if your timing is impeccable.

Homebuilders had a good day yesterday, and Semiconductor Devices continue to dominate the top 50 GIR. There is unusual strength in the indexes that we have not seen for a long time. I still think the indexes have come too far too fast, but we can’t fight the trend. For now, we have to remain bullish.

Have a good weekend!

STOCK MARKET EARLY MORNING INSIGHTS

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