Gene Peroni's Daily Podcast

Common thread among major market indexes. Their patterns are similar, producing a trend of descending peaks but ascending lows.

Today is the 22nd anniversary of the September 11th attacks. May we always remember and honor the civilians, firemen, police, first responders and military who lost their lives on that day. 

The stock market is at a technical crossroads, a test point of sorts. 

The latest survey by the American Association of Individual Investors shows that bearish consensus has fallen significantly, and it is now standing well below its historical norm around 31. 

The sharp and abrupt selloff that we’ve seen in some sectors and themes since mid-July can be interpreted in several ways. My take is… 

Referencing history, August didn’t deliver any real surprises for investors who were more inclined to be stock-picking focused, or more centered on sectors than themes, it wasn’t such a bad month. But those who were looking from a top-down perspective… 

I don’t think it’s a stretch to equate the stock market with a prize fighter who takes on contender after contender and wonks every one of them, and that’s what we’ve seen here in August. 

It should come as no great surprise that technical factors are quite mixed as we come to the end of August. This has been a very choppy, erratic and reactive month for stocks… 

Shortly after mid-July when the major market indices hit what were to be short-term peak levels, I cautioned that August could present seasonal and cyclical headwinds. 

The rally in the Nasdaq yesterday — the biggest one so far this month — was encouraging, but it didn’t pierce through the near-term resistance level. 

Generally speaking, net money flow trends are indicating that money is staying in the stock market, but that it is rotating among different categories. 

A more cautious stance was taken after mid-July around the time major stock indexes peaked. 

The AI craze on Wall Street may be dissipating and this is something to watch closely in the coming days and weeks. Numerous stocks in the AI-related theme are showing signs of ebbing upward momentum… 

Yesterday the spotlight was on the traditional cyclicals — a category I’ve been mentioning for some time as an important group to watch in terms of rotational characteristics. 

We are just about at the midpoint of August and it seems the doldrums are setting in on Wall Street; there seems to be little conviction, buying or selling. 

Looking at a chart of the DJIA for this week’s trading, we see a real sawtooth pattern; I think that this is a trend that we will see for weeks to come. 

In recent weeks I’ve been mentioning that I believe that the stock market is going to adhere to a trading range pattern that could continue well into September, and maybe even a little bit beyond. 

The stock market could be reverting to a more reactive state, something that we have seen in the past, but for some time the market’s focal point was forward looking. 

With a majority of the S&P 500 companies reporting 2nd quarter earnings, the results are not all that terrific. 

Since reaching peak levels earlier in July, a number of technology leaders have consolidated and then rallied back, but the subsequent rallies have not… 

Technology continues it massive lead in the market with the Nasdaq up by nearly 35%, which compares with the S&P 500 up nearly 19% and the Dow is trailing considerably, up just 7%. But one of the storylines here… 

The S&P 500 has notched a new record high and the DJIA has put together a pretty impressive string of daily advances, but still no indication of capitulation on the part of the bears.