Stock Market Early Morning Insights – November 7, 2016

Stock indexes performed poorly last week, broke support, and it looked like further downside was inevitable. A close look at the major market index charts shows an extremely oversold market, with an attempt for the Bulls to hold the line on Friday. The NASDAQ composite generated an Inverted Hammer Candle which is a bullish candle. It shows that there was buying throughout much of the day, but at the end of the day the sellers overwhelmed the buyers.

The internals for the NASDAQ composite also tell us that buyers were slightly dominant because advancers led decliners by a 1.2 to 1 margin. Even though the NASDAQ closed down for the day, the Inverted Hammer, and the slightly positive internals indicate some buying. The small-cap S&P 600 generated a Strength Seen Returning flag. The index was positive for the day, but gave back early gains as the day progressed.

Ian’s multi indicator chart generated a 2nd index Bingo, which is an oversold indicator. All the indicators in the ribbon show how oversold this market is, and the closing price is outside of the Bollinger bands.

It’s obvious who Wall Street wants to see when the presidential election. As soon as the news broke that Hillary Clinton would not be indicted because no new evidence was found in the latest batch of emails, stock futures shot up immediately. Currently futures are up about 1.4% in the S&P E-mini’s, and 1.57% in the NASDAQ E-mini’s. There was a lot of short covering when the news broke, and it just goes to illustrate how dangerous this market is.

The indexes could swing violently during the next couple of days as the election winds down. Wednesday will more than likely be an emotional day if there is a non-contested winner in the presidential contest. If it is close, and is a contested election, look out because volatility will be extreme.

What am I doing today? I will look for some decent candidates that have been setting up despite the market turmoil, but I certainly won’t be overly aggressive in this news driven environment.

I mentioned on Friday to look at the Homebuilders because there were signs of accumulation. They followed through to the upside, and five stocks in the group appeared in the Stocks and Groups Moving to the Upside SmartGroup. None appeared in the top 50 GIR, because they are so beaten down. If they have another good day today, we may see some of the stocks appearing in the top 50.

I am not going to get caught up in the emotion of the market today. If the indexes hold, there will be plenty of opportunities to get long after the election.

STOCK MARKET EARLY MORNING INSIGHTS

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