Stock Market Early Morning Insights – November 1, 2016

Stock Market Early Morning Insights – November 1, 2016

There were some indications of the major market indexes finding support yesterday. Although the NASDAQ composite was essentially flat for the day and closed near the low of the day, the spread on the candle was small, and volume was lighter. Consequently, this generated a No Supply flag, a sign of strength. The index closed at 5189 with near-term support at 5170. If that support is broken, the next major support is right around the 5100 level.

The S&P 400 mid-cap in the S&P 600 small-cap indexes both generated bullish Strength Seen Returning flags. Both indexes had heavier volume than the prior day. The VPA trends remain down on both indexes, but yesterday showed that there is still some buying support.

Utilities, Infrastructure Software, Banks, Computer Hardware and Storage, and some Semiconductor Devices stocks showed strength. Of course, the Precious Metal Mining stocks were among the leaders in the low-priced stock category. Energy-related stocks, Biotech, Specialty Pharma and Marine Shipping stocks were among the weakest.

I doubt if the major market indexes will move far in either direction until the election is over. This could change if it looks like one of the presidential candidates appears to be gaining a clear advantage, but I am not willing to speculate on direction at this point, so I am currently avoiding risking much of my capital.

I am neutral on market direction, but as always, there is strength in certain groups and sectors. I think some of the banks are interesting, especially if their earnings are out-of-the-way. With the election only a week away, I think this is a good time to sit and wait before making a financial commitment to the stock market.


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