Stock Market Early Morning Insights – April 4, 2016

Stock Market Early Morning Insights – April 4, 2016

Friday’s sharp intraday reversal once again demonstrated that the Bulls are in control of this market. The early morning weakness was absorbed, and traders who had been trying to pick the top got their heads handed to them once again. Newly initiated short positions in the futures on Friday soon sent those shorts running for cover, and of course this only drives the market higher.

Some traders and speculators do not realize that trends do not change in an instant. It takes time to go from a series of higher highs and lower lows to a breakdown of support and then lower highs and lower lows. Trends should be monitored on multiple charts including daily weekly and monthly charts along with a 60-minute intraday chart to see when trends may be shifting. One thing I have learned over the years is that the ego and the need to be right do tremendous amount of damage to trader’s equity.

There has been absolutely no suggestion that the trend is reversing in the major indexes and futures that I follow. There have been a couple days of hesitation, which were short-lived, but not a hint that the bullish trend off of the W bottom is subsiding. In fact, the S&P E-mini’s are getting very close to a breakout above the 2015 highs on the continuous contract. This is where the major market indexes stand relative to their 52 week highs and lows.


Recently, I have spent several hours going back to Wyckoff’s original writings from his course, and also from two of his books, Stock Market Techniques. Throughout his books, and his original home study course, he emphasizes that we must do our own analysis and not pay attention to what others think or say. The market and stocks tell us all we need to know based upon price and volume, demand and supply, and support and resistance. Looking for guidance elsewhere only leads to confusion and indecision. What Wyckoff wrote between 80 and 100 years ago still holds true today.

The trends for the stock indexes remain up until we start to see them change. Shorts continue to get hammered and will as long as they are trying to pick the top. Ironically, the more short positions initiated by bears, the more fuel that is added to the bullish side when shorts have to cover. Friday was a perfect example of that.

The top 50 GIR gives a great view of where the strength is in this market. Cement and Aggregates, Packaged Food, Restaurants, Semiconductors Devices etc. all stand out in the report. Biotech and Specialty Pharma stocks are under accumulation, and are gaining momentum.


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