Stock Market Early Morning Insights – November 21, 2016

Stock Market Early Morning Insights – November 21, 2016

The NASDAQ composite attempted to close at an all-time high, but failed at resistance. Volume was above average, but was down from prior days. Stock index futures this morning indicate that there will be another attempt to break through resistance. The Bongo Weekly locked in to green on Friday telling us that the internal relative strength of the index is strong. The S&P 400 mid-cap in the S&P 600 small-cap indexes both closed at a new high with Banks leading the way.

Once again the top 50 GIR provides a great snapshot of where the strength is in the market. The dominant group is Banks because of the assumption that Dodd Frank will be rolled back or repealed. Semiconductor Devices are a risk on trade, and have been strong for several days. Volume has been heavy in both groups. Exploration and Production stocks appeared in the top 50 because of the bounce in oil futures on Friday. The crude light is up over 2% this morning on hopes of an OPEC production agreement. The weekly chart for crude light is a disaster, but for now the short-term momentum is up.

UNG, the natural gas ETF was up nearly 4% on Friday because cold weather has finally arrived. Anybody who bought UNG back in October in anticipation of cold weather has a lot of ground to make up before breaking even. The ETF topped out at $9.64 and is currently trading at $7.52. According to some analysts, UNG natural gas was a sure bet trade to the long side back in October. Believe the chart, not the analysts.

There’s been a lot of talk lately about Airlines with Warren Buffett buying into the industry. He is despised owning airline stocks in the past, but now he is a believer. I only mention this because 5 weeks ago when I was in San Francisco, I did a presentation and Airlines was the emerging group. HGSI spotted this rotation long before comments appeared in the media.

Many stock analysts are predicting a massive bull run because of a Trump presidency. They point to elimination of for watering down of Dodd/Frank, huge infrastructure spending which will stimulate many industries, although I don’t know where the money is coming from, and reflation of certain assets. Once again, believe the charts, and not the hype.

For now, the major market indexes are up, but you as an individual investor should be concentrating on what individual stocks and groups are doing. It’s obvious that investors and traders cannot get enough of the Bank stocks, Semiconductor Devices, and if oil continues to rebound, Exploration and Production stocks.

This is Thanksgiving week so volume will probably lighten as we move towards the holiday. I expect stocks to continue higher despite the pullback in the NASDAQ composite from an all-time high on Friday.


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