Stock Market Early Morning Insights – November 29, 2016

Stock Market Early Morning Insights – November 29, 2016

Yesterday was the first day that we have seen substantial selling since the Trump rally began. Most of the damage was done in the small-cap indexes, the S&P 600 and the Russell 2000 which is a bit troubling since small-cap stocks have led this rally. Volume was higher as expected as traders returned from the long holiday weekend.

Even though the greatest weakness was in the small-cap stocks, the NASDAQ composite shows a Hanging Man candle which was confirmed by a gap opening to the downside as it closed near the low of the day. This does not mean that this rally is over, but is an alert that the indexes may be stalling.

Support is just below at the 5342.88 level which is the former resistance level. Selling was brisk with decliners leading advancers by a 2.74 to 1 margin. It was more pronounced in the small-cap indexes, which had over 4 decliners for every advancing stock.

The strength yesterday was in the Insurance Brokers group with a top 50 GIR stocks leading the way. HIIQ has appeared multiple times in the top 50, and was up 14.2% yesterday. Several HGSI users who are in my current webinar series are in this stock. It is up 31.1% over a 5-day period. If you look down to the industry groups below, you will see that the Insurance Brokers are at the top of the list based upon my Demand Combo. There are multiple ways to locate strength in HGSI and my favorites are the top 50 GIR, Stocks and Groups Moving to the Upside SmartGroups, and the Industry Groups sorted on the Raw Combo. Each gives a different insight into strength and where the action is.

Traders who chased oil futures and oil stocks yesterday were disappointed once again when any hopes of an OPEC agreement to slow production failed.

Oil futures backed off as the day progressed, and crude light futures are down 2.76% this morning as I write this. In addition to Exploration and Production stocks being down yesterday, Biotech and Specialty Pharma stocks were among some of the weakest. Marine Shipping stocks also were down. The combination of these groups had a strong effect on the S&P 600 and the Russell 2000 small-cap stocks being down for the day. Semiconductor Devices were mixed yesterday, but still dominated the top 50 group inclusion report.

I think it is time to be cautious about initiating too many long positions. I believe this market has gone too far too fast, and needs a breather. Stock futures are flat as I write this, and have fallen from their highs earlier this morning.

For those of you who are in my webinar series, I will be sending out a notice of an updated add-on a little bit later.


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