Stock Market Early Morning Insights – October 31, 2016

Happy Halloween!

Expect more sudden market reversals like Friday’s on news which could affect the outcome of the presidential race. Normally, traders would be focused on earnings news and results, but the dominant driver now seems to be the election, so risk control is paramount. If you don’t like being whipsawed, you may want to consider standing aside during this dangerous period.

The broader markets are weak, but the NASDAQ Composite is still holding above support, and remains in a contraction phase. The Composite is at the same level it was back on August 4th, but is only 2.9% from its 52-week high, but it is only up 3.6% from the beginning of the year.

This has been a frustrating year for most traders and hedge funds. Hedge funds are seeing huge outflows because they have done nothing for the past three years, while the buy and hold index investor has seen a 20.66% return by holding the SPY, and the QQQ is up 40.81% during that same 3-year period. This has been a Fed and ECB induced multi-year rally. Most of those gains were during the earlier years of the rally; the last year has been frustrating to say the least as the indexes contracted.

This is not to say there have not been some huge winners this year, which is the advantage of prospecting for your own stocks and ETFs. In the NASDAQ 100, NVDA is up 118.52%, AMAT is up 56.53%, and NTES is up 53.92%. NTES appeared 83 times in the Top 50 GIR, NVDA 73 times, and AMAT 41 times, so there were plenty of appearance to make up aware of these leading stocks.

The S&P 400 mid-cap in the S&P 600 small-cap indexes are both considerably weaker than the NASDAQ composite and the NASDAQ 100. These are dangerous times for the indexes, but they have not yet totally broken down. It is a time for caution.

Stock index futures are slightly positive this morning, but that means nothing. Oil was not able to hold above the $50 per barrel level and now seems headed down again. What looked like a breakout of a W formation for the oil futures failed to materialize.

Thank you to those of you have signed up for my next webinar series. I plan to begin tomorrow near the end of the market day. I will be emailing instructions along with links to a few videos that I have produced.

STOCK MARKET EARLY MORNING INSIGHTS

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