Gene Peroni's Daily Podcast

As we move through the 2nd quarter earnings reporting season, there isn’t anything really dramatic to report. The earnings seem to be supporting the individual stock prices. 

Buying momentum among a number of the forefront technology leaders was evident in last Thursday’s session with high-volume selloffs pretty much across the board. 

The DJIA has severely lagged behind the S&P 500 and Nasdaq year to date. The Dow is up by a little more than 6%, while the S&P 500 is up ~18% and the Nasdaq ~34%. 

Gene Peroni’s Daily Podcast: Rotation is an important element for a healthy market environment and it’s an important characteristic in a sustainable market advance. 

You don’t have to be a contrarian to recognize that there are other stock sectors and themes that are doing quite well beyond the “Magnificent 7” technology names that have been mathematically driving the S&P 500 higher. 

I mentioned last Friday that the major market indices were approaching targets that I thought might not be seen until later this year. For instance… 

Some years ago it was Alcoa that officially launched the earnings reporting season, but today it’s the financials and this morning several financials are reporting and beating Wall Street expectations. 

There was encouraging news on the inflation front, but no real tendency to sell into the good news. 

The fact that just a handful of companies are driving the performance of the S&P 500 year to date makes for good academic fodder and is mathematically correct, but otherwise I think…

The market is in a limbo stage as we await the 2nd quarter earnings reporting season. This often happens where we do get some consolidation, rotation and hesitation ahead of the earnings reporting season. 

Surely after the lows that were struck last October I had noted how Growth was breaking its downward momentum. As we finished off the first half of 2023, I’ve seen indications that Growth might be breaking its upward momentum. 

Some bears are doubling down on their dire predictions for the stock market, which is music to the ears of contrarians. Some would say the market is climbing a “Wall of Worry”… 

To the casual, Main Street observer — and even to some seasoned Wall Streeters — the market’s advance year to date might seem confusing, even confounding for the bearish, but the market’s persistent and steady gains indicate… 

As I monitor technical factors, it seems that the market’s state right now is a bit rudderless, in a limbo stage, which means it will probably stay in a trading range over the short run. 

With only three sessions remaining in the 1st half of 2023, it's clear the prediction I made in the 4th quarter of last year is not going to come to fruition — that call was that the Dow could challenge its all-time highs by the end of the 1st half of this year. 

In recent sessions there has been stepped up rotation where we have seen some profit taking in technology categories into some of the more traditional cyclicals. 

With the market in a consolidation phase, I thought it might be appropriate to revisit and revise my support and upside target levels for the major market indices. 

Artificial Intelligence, and other of the tech-related sectors, were generally under selling pressure yesterday. Not a big surprise given the big gains they have amassed year to date. 

“Event or non-event?” is the question as we await today’s Fed decision. I’m going with non-event mostly because of the action in the underlying market. 

The stock market is in Fed-watch mode…or is it? It seems the market’s focal point has been stretching more toward the horizon, and is not so reactive to day-to-day events, or even the Fed meeting. 

I’m not a big proponent of the 20% rule — that rule calls for the market to be in a bullish cycle if a particular index goes up by 20% or more from its low point, or bear market if down by 20% or more. 

This week’s market action has reinforced the pivot qualities of last Friday’s trading and I think we could see a continuation of that. 

There is an A-list of sectors and themes that appear to be establishing attractive technical bottoming and base formations that could indicate reversals for these categories.