Stock Market Early Morning Insights – September 20, 2016

Stock Market Early Morning Insights – September 20, 2016


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The major market indexes failed to hold their intraday highs yesterday. The NASDAQ composite came close to challenging the resistance level, but traders took profits as late buyers bought near the high of the day.

An extremely example of this is WIX, and Internet Services stock which traded all the way up to $49.49, but closed at $44.63. Many other stocks that I follow had a similar pattern, but not so extreme. Surprisingly, volume was only slightly above average for WIX as it generated a massive Shooting Star candle.

Of course, the Fed decision is hanging over the market, and the uncertainty of the election has traders and investors on edge, but in spite of this, the indexes are trading near all-time highs. I can only attribute this to the fact that there is nowhere else to invest and hope for any kind of return. With the uncertainty in the markets, risk control is paramount. Do not take on any more risk than necessary.

Yesterday, money continued to flow into Communications Equipment, Semiconductors Devices, Biotech, Medical Devices and Specialty Pharma stocks. These are all familiar groups which have been leading this market. Utility stocks were popular again as investors continue to seek out yield.

Here are two stocks which have relatively low risk entries after a consolidation period: ATEN and TTMI. These are not recommendations: use your own judgment, but I got back into ATEN yesterday. TTMI would have been a better buy yesterday, but it is not far from its consolidation range. Both stocks are in groups that are moving up, and both had Effort to Rise flags yesterday. If you buy either one of them, make sure you know your position sizing and risk.

Stock futures are up again this morning, but that means little as we saw yesterday. Yesterday oil futures were higher, but the oil rally failed, and the indexes pulled back as oil pulled back. Crude oil remains in a downtrend in spite of all the news is constantly trying to prop it up.

We will probably remain in a choppy market, so the best bet is to locate strong stocks in strong groups. If a stock is extended, do not even consider taking it. The risk is too great, and better trades will come along.


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